Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

May 15, 2000

Documents

10-Q: Quarterly report pursuant to Section 13 or 15(d)

Published on May 15, 2000



UNITED STATES SECURITIES
AND EXCHANGE COMMISSION

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended: March 31, 2000

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from ____________________ to __________________

Commission file number: 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 Identification No.)
incorporation or organization)

RENAISSANCE HOUSE
8-12 EAST BROADWAY
PEMBROKE, BERMUDA HM 19
(Address of principal executive offices) (Zip Code)

(441) 295-4513
(Registrant's telephone number, including area code)

NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)

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 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 [ ]

The number of outstanding shares of RenaissanceRe Holding Ltd.'s common stock,
par value US $1.00 per share, as of March 31, 2000 was 19,422,355.

Total number of pages in this report: 21


RenaissanceRe Holdings Ltd.

INDEX TO FORM 10-Q

PART I -- Financial Information

ITEM 1 -- Financial Statements

Consolidated Balance Sheets as of March 31, 2000 3
(Unaudited) and December 31, 1999

Unaudited Consolidated Statements of Operations for 4
the three months ended March 31, 2000 and 1999

Unaudited Consolidated Statements of Changes in Shareholders' 5
Equity for the three months ended March 31, 2000 and 1999

Unaudited Consolidated Statements of Cash Flows 6
for the three months ended March 31, 2000 and 1999

Notes to Unaudited Consolidated Financial Statements 7

ITEM 2. -- Management's Discussion and Analysis of 11
Results of Operations and Financial Condition

ITEM 3. -- Quantitative and Qualitative Disclosures About Market Risk 19

PART II -- Other Information 20

ITEM 1 -- Legal Proceedings
ITEM 2 -- Changes in Securities and Use of Proceeds
ITEM 3 -- Defaults Upon Senior Securities
ITEM 4 -- Submission of Matters to a Vote of Security Holders
ITEM 5 -- Other Information
ITEM 6 -- Exhibits and Reports on Form 8-K

Signature - RenaissanceRe Holdings Ltd. 21

-2-

Part I - Financial Information
Item 1 - Financial Statements

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands of United States Dollars, except per share amounts)



AS AT
----------------------------------
MAR. 31, 2000 DEC. 31, 1999
------------- -------------
Assets (unaudited)

Fixed maturity investments available for sale, at fair value
(Amortized cost $911,404 and $926,176 at Mar. 31, 2000 and
Dec. 31, 1999, respectively) $ 897,691 $ 907,706
Short term investments 14,360 12,759
Other investments 24,589 22,204
Cash and cash equivalents 192,610 132,112
----------- -----------
Total investments and cash 1,129,250 1,074,781
Premiums receivable 150,186 80,455
Ceded reinsurance balances 68,567 50,237
Losses and premiums recoverable 258,500 328,627
Accrued investment income 12,555 13,456
Deferred acquisition costs 16,908 14,221
Other assets 54,792 55,466
----------- -----------
TOTAL ASSETS $ 1,690,758 $ 1,617,243
=========== ===========

LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY
LIABILITIES
Reserve for claims and claim expenses $ 463,615 $ 478,601
Reserve for unearned premiums 167,315 98,386
Bank loans 250,000 250,000
Reinsurance balances payable 68,401 50,157
Other 41,946 50,140
----------- -----------
TOTAL LIABILITIES 991,277 927,284
----------- -----------

Minority Interest - Company obligated mandatorily redeemable
capital securities of a subsidiary trust holding solely junior
subordinated debentures of the Company 89,630 89,630

SHAREHOLDERS' EQUITY
Common shares outstanding 19,423 19,686
Unearned stock grant compensation (12,081) (10,026)
Accumulated other comprehensive income (13,713) (18,470)
Retained earnings 616,222 609,139
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 609,851 600,329
----------- -----------
TOTAL LIABILITIES, MINORITY INTEREST, AND
SHAREHOLDERS' EQUITY $ 1,690,758 $ 1,617,243
=========== ===========
BOOK VALUE PER COMMON SHARE $ 31.40 $ 30.50
=========== ===========
COMMON SHARES OUTSTANDING 19,423 19,686
=========== ===========


The accompanying notes are an integral part of these financial statements.

-3-

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(in thousands of United States dollars, except per share amounts)
(Unaudited)



QUARTERS ENDED
---------------------------------
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------

REVENUES
Gross premiums written $ 160,471 $ 155,095
========= =========
Net premiums written $ 103,364 $ 116,284
Increase in unearned premiums (50,599) (58,296)
--------- ---------
Net premiums earned 52,765 57,988
Net investment income 18,467 13,106
Net foreign exchange losses (137) (666)
Other income (loss) 1,402 (269)
Net realized losses on investments (6,787) (497)
--------- ---------
TOTAL REVENUES 65,710 69,662
--------- ---------
EXPENSES
Claims and claim expenses incurred 17,713 15,695
Acquisition expenses 7,242 6,784
Operational expenses 7,807 9,516
Corporate expenses 2,342 3,961
Interest expense 4,252 1,406
--------- ---------
TOTAL EXPENSES 39,356 37,362
--------- ---------
Income before minority interest and taxes 26,354 32,300
Minority interest - Company obligated mandatorily redeemable
capital securities of a subsidiary trust holding solely
junior subordinated debentures of the Company 1,859 2,111
--------- ---------
Income before taxes 24,495 30,189
Income tax expense 420 171
--------- ---------
NET INCOME $ 24,075 $ 30,018
========= =========

Earnings per Common Share - basic $ 1.25 $ 1.42
Earnings per Common Share - diluted $ 1.24 $ 1.41
Operating earnings per Common Share - diluted $ 1.58 $ 1.43
Average shares outstanding - basic 19,266 21,138
Average shares outstanding - diluted 19,475 21,323

Claims and claim expense ratio 33.6% 27.1%
Expense ratio 28.5% 28.1%
--------- ---------
Combined ratio 62.1% 55.2%
========= =========


The accompanying notes are an integral part of these financial statements.

-4-

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(in thousands of United States Dollars)
(Unaudited)



2000 1999
--------- ---------

Common Stock & additional paid-in capital
Balance -- January 1 19,686 39,035
Exercise of stock options & issuance of unvested restricted stock 85 (210)
Repurchase of shares (348) (17,907)
--------- ---------
Balance -- March 31 19,423 20,918
--------- ---------
Unearned stock grant compensation
Balance -- January 1 (10,026) (8,183)
Stock grants awarded (3,332) 256
Amortization 1,277 790
--------- ---------
Balance -- March 31 (12,081) (7,137)
--------- ---------
Accumulated other comprehensive income
Balance -- January 1 (18,470) (5,144)
Net unrealized gains on securities, net of
adjustment (see disclosure) 4,757 (4,144)
--------- ---------
Balance -- March 31 (13,713) (9,288)
--------- ---------
Retained earnings
Balance -- January 1 $ 609,139 $ 586,524
Net income 24,075 30,018
Dividends declared (7,401) (7,501)
Repurchase of shares (12,717) (7,127)
Exercise of stock options 3,126 -
--------- ---------
Balance -- March 31 616,222 601,914
--------- ---------
Total Shareholders' Equity $ 609,851 $ 606,407
========= =========
COMPREHENSIVE INCOME
Net Income $ 24,075 $ 30,018
Other comprehensive income 4,757 (4,144)
--------- ---------
Comprehensive income $ 28,832 $ 25,874
========= =========
DISCLOSURE REGARDING NET UNREALIZED GAINS (LOSSES)
Net unrealized holding losses arising during period $ (2,030) $ (4,641)
Net realized losses included in net income 6,787 497
--------- ---------
Change in net unrealized gains (losses) on securities $ 4,757 $ (4,144)
========= =========


The accompanying notes are an integral part of these financial statements.

-5-


RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(in thousands of United States Dollars)
(Unaudited)



QUARTERS ENDED
--------------------------------
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------

CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 24,075 $ 30,018

ADJUSTMENTS TO RECONCILE NET INCOME TO
CASH PROVIDED BY OPERATING ACTIVITIES

Amortization and depreciation (432) 1,022
Realized investment losses 6,787 497
Amortization of goodwill 153 3,335
Change in:
Reinsurance balances, net (51,487) (106,023)
Ceded reinsurance balances receivable (18,330) (17,246)
Deferred acquisition costs (2,687) (7,106)
Reserve for claims and claim expenses, net 55,141 33,246
Reserve for unearned premiums 68,929 74,286
Other 2,515 (11,291)
--------- ---------
CASH PROVIDED BY OPERATING ACTIVITIES 84,664 738
--------- ---------
CASH FLOWS PROVIDED BY (APPLIED TO) INVESTING ACTIVITIES
Proceeds from sale of investments 601,540 419,326
Purchase of investments available for sale (605,240) (352,998)
--------- ---------
CASH PROVIDED BY (APPLIED TO) INVESTING ACTIVITIES (3,700) 66,328
--------- ---------
CASH FLOWS APPLIED TO FINANCING ACTIVITIES
Proceeds from bank loan - 25,000
Dividends paid (7,401) (7,501)
Purchase of Common Shares (13,065) (25,034)
--------- ---------
CASH APPLIED TO FINANCING ACTIVITIES (20,466) (7,535)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 60,498 59,531

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 132,112 115,701
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 192,610 $ 175,232
========= =========


The accompanying notes are an integral part of these financial statements.

-6-


RenaissanceRe Holdings Ltd., and Subsidiaries
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)
(Unaudited)

1. The consolidated financial statements have been prepared on the basis of
United States generally accepted accounting principles ("GAAP") for interim
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by GAAP for complete financial statements. The
consolidated financial statements include the accounts of RenaissanceRe
Holdings Ltd. ("RenaissanceRe"), its wholly owned subsidiaries, Renaissance
Reinsurance Ltd. ("Renaissance Reinsurance"), Glencoe Insurance Ltd.
("Glencoe"), Renaissance U.S. Holdings, Inc. ("Renaissance U.S."),
Renaissance Underwriting Managers, Ltd. ("Renaissance Managers") and
RenaissanceRe Capital Trust (the "Trust"). Other consolidated entities
include DeSoto Insurance Company ("DeSoto"), a wholly owned subsidiary of
Glencoe; Nobel Insurance Company ("Nobel"), a wholly owned subsidiary of
Renaissance U.S.; and Renaissance Reinsurance of Europe ("Renaissance
Europe"), a subsidiary of Renaissance Reinsurance. RenaissanceRe and its
subsidiaries are collectively referred to herein as the "Company." All
intercompany transactions and balances have been eliminated on
consolidation. Minority interests represents the interests of external
parties in respect of net income and shareholders' equity of the Trust.
Certain comparative information has been reclassified to conform to current
presentation. Because of the seasonality of the Company's business, the
results of operations for any interim period will not necessarily be
indicative of results of operations for the full fiscal year.

2. Significant Accounting Policies

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure
those instruments at fair value. SFAS No. 133 is effective for all fiscal
years beginning after June 15, 2000. Currently, the Company does not expect
the adoption of SFAS No. 133 to have a material impact on its consolidated
financial statements.

3. The Company utilizes reinsurance to reduce its exposure to large losses.
The Company currently has in place contracts that provide for recovery of a
portion of certain claims and claims expenses from reinsurers in excess of
various retentions and loss warranties. The Company would remain liable to
the extent that any third party reinsurance company fails to meet its
obligations. The earned reinsurance premiums ceded were $38.9 million and
$28.1 million for the first quarters of 2000 and 1999, respectively. Other
than loss recoveries, certain of the Company's ceded reinsurance contracts
provide for recoveries of additional premiums, reinstatement premiums and
coverage for lost no claims bonuses which are

-7-

incurred when losses are ceded to those reinsurance contracts. Total
recoveries netted against premiums and claims and claim expenses incurred
for the quarter ended March 31, 2000 were $0.8 million, compared to
$60.9 million for the quarter ended March 31, 1999.

Included in losses and premiums recoverable are recoverables of $23.5
million which are related to retroactive reinsurance agreements. In
accordance with SFAS No. 113, "Accounting and Reporting for Reinsurance of
Short-Duration and Long-Duration," contracts are required to be included in
claims and claim expenses incurred as they become known. However, the
offsetting recoverable is deferred and reflected in the statement of income
based on the recovery method. As of March 31, 2000, the Company has
deferred $12.9 million of recoveries related to a retroactive reinsurance
contract, a reduction from the $15.1 million deferred as of
December 31, 1999. This has been included in other liabilities on the
consolidated balance sheet. As the amounts are recovered, the recoveries
will offset claims and claim expenses incurred in the consolidated
statement of income.

4. The Company paid interest on its outstanding loans of $6.1 million for
the quarter ended March 31, 2000 and $3.5 million for the same period in
the previous year. On March 1, 2000, the Company paid a semi-annual
dividend on the Company obligated mandatorily redeemable capital securities
of a subsidiary trust holding solely junior subordinated debentures of the
Company ("Capital Securities") of $4.3 million.

5. Basic earnings per share is based on weighted average common shares and
excludes any dilutive effects of options and unvested restricted stock.
Diluted earnings per share assumes the exercise of all dilutive stock
options and restricted stock grants. The following table sets forth the
computation of basic and diluted earnings per share:




- ---------------------------------------------------------------------------------------------------------
Quarter ended March 31,
- ---------------------------------------------------------------------------------------------------------
2000 1999
- ---------------------------------------------------------------------------------------------------------
(in thousands of U.S. dollars except share and per share data)
- ---------------------------------------------------------------------------------------------------------

Numerator:
Net income $ 24,075 $ 30,018
========================================
Denominator:
Denominator for basic earnings per share -
Weighted average shares 19,265,973 21,138,139
Per share equivalents of employee stock
Options and unvested restricted shares 209,504 184,894
----------------------------------------
Denominator for diluted earnings per share -
Adjusted weighted average shares and
Assumed conversions 19,475,477 21,323,033
========================================
Basic earnings per share $1.25 $1.42

Diluted earnings per share $1.24 $1.41


-8-

6. During the quarter ended March 31, 2000, the Board of Directors of the
Company declared, and the Company paid, a dividend of $0.375 per share to
shareholders of record as of February 17, 2000.

7. In November 1999, the Company announced an additional authorization of
$25 million under its share repurchase program. During the first quarter
of 2000 the Company repurchased 348,400 shares under its existing
repurchase program at a cost of $13.1 million.

8. The Company has two reportable segments: reinsurance operations and
primary operations. The reinsurance segment provides property catastrophe
reinsurance as well as other reinsurance to selected insurers and
reinsurers on a worldwide basis. The primary segment provides insurance
both on a direct and on a surplus lines basis for commercial and homeowners
catastrophe-exposed property business. Data for the quarters ended March
31, 2000 and 1999 are as follows:

QUARTER ENDED MARCH 31, 2000 REINSURANCE PRIMARY OTHER TOTAL
-----------------------------------------------
Gross premiums written $ 144,752 $ 15,719 $ - $ 160,471
Total revenues 59,529 3,903 2,278 65,710
Pre-tax profit (loss) 28,179 1,341 (5,025) 24,495

Assets 1,230,469 264,007 196,282 1,690,758
-----------------------------------------------
Claims and claim expense ratio 34.0% 24.0% - 33.6%
Underwriting ratio 28.4% 23.0% - 28.5%
-----------------------------------------------
Combined ratio 62.4% 47.0% - 62.1%
-----------------------------------------------

QUARTER ENDED MARCH 31, 1999 REINSURANCE PRIMARY OTHER TOTAL
-----------------------------------------------
Gross premiums written $ 133,647 $ 21,448 $ - $ 155,095
Total revenues 55,259 13,597 806 69,662
Pre-tax profit (loss) 31,205 2,753 (3,769) 30,189

Assets 991,974 317,839 113,496 1,429,309
-----------------------------------------------
Claims and claim expense ratio 25.1% 35.4% - 27.1%
Underwriting ratio 26.3% 32.9% - 28.1%
-----------------------------------------------
Combined ratio 51.4% 68.3% - 55.2%
-----------------------------------------------

The Company's Bermuda holding company is the primary contributor to the
results reflected in "Other" category. The pre-tax loss of the holding
company primarily consisted of interest expense on bank loans, the minority
interest on the Capital Securities and realized investment losses on the
sales of investments, partially offset by investment income on the assets
of the holding company.

-9-

10. The provision for income taxes is based on income recognized for
financial statement purposes and includes the effects of temporary
differences between financial and tax reporting. Deferred tax assets and
liabilities are determined based on the difference between the financial
statement bases and tax bases of assets and liabilities using enacted tax
rates.

The Company's U.S. subsidiaries are subject to U.S. tax. Included in other
assets is a net deferred tax asset of $23.4 million. These net operating
loss carryforwards and future tax deductions will be available to offset
regular taxable U.S. income during the carryforward period (through 2018),
subject to certain limitations.

11. Subsequent to the quarter ended March 31, 2000, the Company's Board of
Directors authorized the Company to buy back an additional $25.0 million of
common shares under the Company's share repurchase program.

-10-

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

The following is a discussion and analysis of the Company's results of
operations for the three months ended March 31, 2000 and 1999 and financial
condition as of March 31, 2000. This discussion and analysis should be read in
conjunction with the attached unaudited consolidated financial statements and
notes thereto and the audited consolidated financial statements and notes
thereto contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999.

GENERAL

The Company provides reinsurance and insurance where risk of natural catastrophe
represents a significant component of the overall exposure. The Company's
results depend to a large extent on the frequency and severity of catastrophic
events, and the concentration and coverage offered to clients impacted thereby.
In addition, from time to time, the Company may consider opportunistic
diversification into new ventures, either through organic growth or the
acquisition of other companies or books of business. In evaluating such new
ventures, the Company seeks an attractive return on equity, the ability to
develop or capitalize on a competitive advantage and opportunities that will not
detract from its core reinsurance operations. Accordingly, the Company regularly
reviews strategic opportunities and periodically engages in discussions
regarding possible transactions.

RESULTS OF OPERATIONS

For the quarter ended March 31, 2000 compared to the quarter ended March 31,
1999

For the quarter ended March 31, 2000, net operating income was $30.9 million or
$1.58 per share, compared with $30.5 million or $1.43 per share, for the same
period in 1999. After taking into account realized losses on investments of $6.8
million for the quarter, compared with realized losses of $0.5 million for the
first quarter of 1999, net income for the quarter ended March 31, 2000 was $24.1
million or $1.24 per share, compared with $30.0 million or $1.41 per share for
the first quarter of 1999.

Gross premiums written for the first quarter of 2000 were $160.5 million
compared with $155.1 million for the same quarter of 1999. Gross premiums
written for the reinsurance operations were $144.8 million for the quarter ended
March 31, 2000, compared with $133.6 million for the same period of 1999. Net
premiums written for the first quarter of 2000 were $103.4 million compared with
$116.3 million for the same quarter of 1999. The increase in ceded premiums
relates primarily to timing differences on premiums ceded by the reinsurance
operations and the cession of substantially all of the premiums written by the
primary companies.

-11-

Gross premiums written for the first quarters of 2000 and 1999 are as follows:


Quarter ended
31-Mar-00 31-Mar-99
------------------------------
Reinsurance Operations 144,752 133,647
Primary Operators 15,719 21,448
------------------------------
160,471 155,095
==============================


The 8.3 percent increase in written premiums for Renaissance Reinsurance
was primarily the result of a 27.0 percent increase in premiums related to new
business, a 14.7 percent decrease in premiums due to the Company not renewing
coverage and a 4.1 percent decrease related to changes in pricing, participation
level and coverage on renewed business. The decrease in gross written premiums
from the Primary Operations was principally related to the decrease in written
premiums from Nobel, whose business units were either sold or substantially
reinsured during 1999.

During 2000, the Company continued to purchase reinsurance to reduce its
exposure to certain losses. During the first quarter of 2000, ceded premiums
written were $57.1 million, compared with $38.8 million for the same quarter in
1999. Although ceded reinsurance reduces net premiums earned, management
believes that purchases of reinsurance significantly reduce the level of risk to
the Company that would otherwise exist.

The table below sets forth the Company's combined ratio and components thereof,
split by segment for the quarters ended March 31, 2000 and 1999:

-----------------------------------------------------------------
REINSURANCE PRIMARY TOTAL
-----------------------------------------------------------------
QUARTER ENDED 31-MAR-00 31-MAR-99 31-MAR-00 31-MAR-99 31-MAR-00 31-MAR-99
-----------------------------------------------------------------
Loss ratio 34.0% 25.1% 24.0% 35.4% 33.6% 27.1%
Expense ratio 28.4% 26.3% 23.0% 32.9% 28.5% 28.1%
-----------------------------------------------------------------
Combined ratio 62.4% 51.4% 47.0% 68.3% 62.1% 55.2%
-----------------------------------------------------------------

The loss ratio on the reinsurance business increased primarily as a factor of
the initial estimates of first quarter loss events due to winter storms and
tornadoes that occurred during the first quarter of 2000, which were greater
than the estimates related to the events occurring in the first quarter of 1999.
The reduction in the loss ratio on the Primary Operations is primarily related
to reduced loss costs from Nobel's operations due to the reduction and/or
elimination of the majority of its business.

Underwriting expenses are comprised of acquisition expenses and operational
expenses. The increase in the expense ratio for the reinsurance book of business
was primarily related to the increase in reinsurance ceded, which lowered the
net premiums earned without reducing the acquisition costs of the Company. The
decrease in the expense ratio for the primary book of business was primarily
related to the

-12-

reduction of costs related to Nobel, due to the running off and or sale of its
books of business during 1999.

Total acquisition expenses were $7.2 million for the quarter ended March 31,
2000 and $6.8 million for the same period in 1999. Operating expenses for the
first quarter of 2000 decreased to $7.8 million compared with $9.5 million for
the same quarter of 1999. The decrease in operating expenses relates primarily
to the reduction of costs related to Nobel.

Net investment income, excluding realized and unrealized investment gains and
losses, for the first quarter of 2000 was $18.5 million, compared with $13.1
million for the same period in 1999. The increase in investment income relates
to an increase in invested assets from additional drawings under the Company's
line of credit facility of $150 million during 1999 and an increase in
investment yields during the first quarter of 2000 as compared with the first
quarter of 1999.

Corporate expenses decreased to $2.3 million for the quarter ended March 31,
2000, compared with $4.0 million for the same period in 1999. Included in the
first quarter of 1999 was a one time write-off of $3.0 million of goodwill
related to Nobel.

Interest expense and minority interest for the quarter ended March 31, 2000
increased to $6.1 million from $3.5 million for the same period in 1999. The
increase was primarily related to increased borrowings under the Company's
revolving credit facility and higher interest rates.

FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

As a holding company, RenaissanceRe relies on investment income, cash dividends
and permitted payments from its subsidiaries to make principal payments,
interest payments, cash distributions on outstanding obligations and quarterly
dividends payments, if any, to its shareholders. The payment of dividends by the
Company's Bermuda subsidiaries to RenaissanceRe is, under certain circumstances,
limited under Bermuda insurance law. The Bermuda Insurance Act of 1978,
amendments thereto (the "Act") and related regulations of Bermuda requires the
Company's Bermuda subsidiaries to maintain certain measures of solvency and
liquidity. As at March 31, 2000 the statutory capital and surplus of the
Company's Bermuda subsidiaries was $658.6 million, and the amount required to be
maintained was $101.0 million. During the first quarter of 2000, Renaissance
Reinsurance declared dividends of $22.6 million compared to $16.7 for the same
period in 1999.

Glencoe is eligible as an excess and surplus lines insurer in a number of states
in the U.S. There are various capital and surplus requirements in these states,
with the most onerous requiring the Company to maintain a minimum of $15.0
million in capital and surplus. In this regard the declaration of dividends from
retained earnings and distributions from additional paid-in capital are limited
to the extent that the above requirements are met. The Company's U.S. insurance
subsidiaries are subject to various statutory and regulatory restrictions
regarding the payment of dividends. The restrictions are primarily based upon
statutory surplus and statutory net income. The U.S. insurance subsidiaries'
combined statutory surplus amounted to $28.1 million at March 31, 2000 and the
amount required to be maintained was $22.4 million.

-13-

Cash Flows

The Company's operating subsidiaries have historically produced sufficient cash
flows to meet expected claims payments and operational expenses and to provide
dividend payments to RenaissanceRe. RenaissanceRe's subsidiaries also maintain a
concentration of investments in high quality liquid securities, which management
believes will provide sufficient liquidity to meet extraordinary claims payments
should the need arise. Additionally, the Company maintains a $300.0 million
credit facility from which $200.0 million has been borrowed and is available to
the holding company, RenaissanceRe, to meet the liquidity needs of the Company's
subsidiaries should the need arise.

Cash flows from operations in the first quarter of 2000 were $84.7 million,
compared to $0.7 million for the same period in 1999. The significant increase
arose partly due to paid loss recoveries received from the Company's reinsurers.
The Company has produced cash flows from operations for the full years of 1999
and 1998 significantly in excess of its commitments. To the extent that capital
is not utilized in the Company's reinsurance business, the Company will consider
using such capital to invest in new opportunities or will consider returning
such capital to its shareholders.

Because of the potential high severity and low frequency of losses on the
coverages written by the Company, and the seasonality of the Company's business,
it is not possible to accurately predict the Company's future cash flows from
operating activities. As a consequence, cash flows from operating activities may
fluctuate, perhaps significantly, between individual quarters and years.

RESERVES

During the quarter ended March 31, 2000 the Company incurred net claims of $17.7
million and had net cash recoveries of $37.4 million. The Company continues to
utilize reinsurance to reduce its exposure to large losses and the purchase of
such protection continues to have a favorable impact on the Company's net
incurred claims. Due to the high severity and low frequency of losses related to
the property catastrophe insurance and reinsurance business, there can be no
assurance that the Company will continue to experience this reduced level of
losses.

For the Company's reinsurance operations, estimates of claims and claim expenses
and the related recoveries are based in part upon estimation of claims resulting
from catastrophic events. Estimation by the Company of claims resulting from
catastrophic events based upon its own historical claim experience is inherently
difficult because of the Company's short operating history and the potential
severity of property catastrophe claims. Therefore, the Company utilizes both
proprietary and commercially available models, as well as historical reinsurance
industry property catastrophe claims experience, for purposes of evaluating
future trends and providing an estimate of ultimate claims costs.

On both the Company's reinsurance and primary operations, the Company uses
statistical and actuarial methods to reasonably estimate ultimate expected
claims and claim expenses and the related recoveries. The period of time between
the reporting of a loss to the Company and the settlement of the Company's
liability may be several years. During this period, additional facts and

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trends may be revealed. As these factors become apparent, case reserves and loss
recoveries may be adjusted, sometimes requiring an increase in the overall
reserves of the Company, and at other times requiring a reallocation of IBNR
reserves to specific case reserves. These estimates are reviewed regularly and
such adjustments, if any, are reflected in results of operations in the period
in which they become known and are accounted for as changes in estimates.

CAPITAL RESOURCES & SHAREHOLDERS' EQUITY

The total capital resources of the Company as at March 31, 2000 and December 31,
1999 was as follows:



- -------------------------------------------------------------------------------------------------------------
March 31, December 31,
(in thousands) 2000 1999
- -------------------------------------------------------------------------------------------------------------

Term & loan facility $ 50,000 $ 50,000
- -------------------------------------------------------------------------------------------------------------
Revolving Credit Facility-- borrowed 200,000 200,000
- -------------------------------------------------------------------------------------------------------------
Revolving Credit Facility-- unborrowed 100,000 100,000
- -------------------------------------------------------------------------------------------------------------
Minority interest-- Company obligated mandatorily redeemable capital 89,630 89,630
securities of a subsidiary trust
- -------------------------------------------------------------------------------------------------------------
Shareholders' Equity 609,851 600,329
- -------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL RESOURCES $ 1,049,481 $1,039,959
=============================================================================================================



The Company has a $300 million committed revolving credit and term loan
agreement with a syndicate of commercial banks. Interest rates on the facility
are based on a spread above LIBOR, and averaged approximately 6.1 percent during
the first quarter of 2000 (5.5 percent for the first quarter of 1999). The
credit agreement contains certain financial covenants including requirements
that the ratio of consolidated debt to capital does not exceed 0.35:1;
consolidated net worth must exceed the greater of $100.0 million or 125 percent
of consolidated debt; and 80 percent of invested assets must be rated BBB- by
S&P or Baa3 by Moody's Investor Service or better. The Company was in compliance
with all the covenants of this revolving credit and term loan agreement as at
March 31, 2000.

Renaissance U.S. has a $35 million term loan and $15 million revolving loan
facility with a syndicate of commercial banks. Interest rates on the facility
are based upon a spread above LIBOR, and averaged 6.6 percent during the first
quarter of 2000 (6.1 percent for the first quarter of 1999). The Credit
Agreement contains certain financial covenants, the primary one being that
RenaissanceRe, being its principal guarantor, maintain a ratio of liquid assets
to debt service of 4:1. This five year term loan has mandatory repayment
provisions approximating 25 percent in each of years 2000 through 2003, the
first payment being in June 2000. The Company was in compliance with all the
covenants of this term loan and revolving loan facility as at March 31, 2000.

The Capital Securities pay cumulative cash distributions at an annual rate of
8.54 percent, payable semi-annually. The Indenture relating to the Capital
Securities contains certain covenants,

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including a covenant prohibiting the payment of dividends by the Company if the
Company shall be in default under the Indenture. The Company was in compliance
with all of the covenants of the Indenture at March 31, 2000.

During the first quarter of 2000, shareholders' equity increased by $9.5
million, from $600.3 million at December 31, 1999 to $609.9 million at March 31,
2000. The significant components of the increase included net income from
continuing operations of $24.1 million, a decrease in the unrealized
depreciation on investments of $4.8 million, offset by a payment of dividends of
$7.5 million and the repurchase of shares of $13.1 million.

INVESTMENTS

The table below shows the aggregate amounts of investments available for sale,
equity securities and cash and cash equivalents comprising the Company's
portfolio of invested assets:



- -----------------------------------------------------------------------------------------------------
March 31, December 31,
(in thousands) 2000 1999
- -----------------------------------------------------------------------------------------------------

Investments available for sale, at fair value $ 897,691 $ 907,706
- -----------------------------------------------------------------------------------------------------

Short term investments 14,360 12,759
- -----------------------------------------------------------------------------------------------------

Other investments 24,589 22,204
- -----------------------------------------------------------------------------------------------------

Cash and cash equivalents 192,610 132,112
- -----------------------------------------------------------------------------------------------------
TOTAL INVESTED ASSETS $1,129,250 $1,074,781
=====================================================================================================



The Company's current investment guidelines call for the invested asset
portfolio, including cash and cash equivalents, to have at least an average AA
rating as measured by Standard & Poor's Ratings Group. At March 31, 2000, the
invested asset portfolio had a dollar weighted average rating of AA, an average
duration of 2.9 years and an average yield to maturity of 7.2 percent, after
investment expenses.

All fixed income securities in the Company's investment portfolio are classified
as securities available for sale and are carried at fair value. Any unrealized
gains or losses as a result of changes in fair value over the period such
investments are held are not reflected in the Company's statement of operations,
but rather are reflected in accumulated other comprehensive income in the
consolidated statement of shareholders' equity, in accordance with SFAS Nos. 115
and 130.

As at March 31, 2000, the Company held investments and cash totaling $1,129.2
million with a net unrealized depreciation balance of $13.7 million. The
Company's investment portfolio is subject to the risks of declines in realizable
value. The Company attempts to mitigate this risk through the diversification
and active management of its portfolio.

At March 31, 2000, $18.8 million of cash and cash equivalents were invested in
currencies other than the U.S. dollar, which represented approximately 2.0
percent of the Company's invested assets.

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The Company has entered into forward purchase agreements allowing it to acquire
certain foreign currencies to fund the payment of non-dollar losses.

EFFECTS OF INFLATION

The potential exists, after a catastrophe loss, for the development of
inflationary pressures in a local or regional economy. The anticipated effects
on the Company are considered in the Company's catastrophe loss models. The
effects of inflation are also considered in pricing and in estimating reserves
for unpaid claims and claim expenses. The actual effects of this post-event
inflation on the results of the Company cannot be accurately known until claims
are ultimately settled.

CURRENT OUTLOOK

Due to industry losses in 1999, and the related contraction of capacity in
the market, prices in the Company's markets have stabilized, and prices on
certain programs have increased significantly. However, even where prices have
increased, the Company believes that there continue to be numerous transactions
in the market that are under-priced relative to expected losses.

The Company believes that because of its competitive advantages, including its
technological capabilities and its relationships with leading brokers and ceding
companies, it is able to discern those contracts that are adequately priced and
will continue to find opportunities in the property catastrophe reinsurance
markets.

Because of recent loss activity, the Company believes that its aggregate cost
for reinsurance protection may increase during the upcoming year. It is possible
that as the Company's outwards reinsurance programs renew, a portion of
these programs may become uneconomical and that the Company would determine to
purchase less of such reinsurance. Accordingly, it is possible that the Company
will retain a greater level of net risk in the upcoming year as compared with
the previous year.

Nobel has completed the sale and/or reinsurance of its principal operating
units, although Nobel continues to operate a portion of such businesses on a
transitional basis. Accordingly, during the first quarter of 2000, the Company's
results reflected a reduction in gross premiums written, related costs and
investment income from Nobel. The Company believes that its future consolidated
results will also reflect a reduced impact from Nobel and its affiliates. During
the first quarter of 2000, the Company recorded $11.7 million of gross premiums
written, $1.8 million of net premiums earned and net income of $1.0 million
related to Nobel and it's affiliates. During the year ended December 31, 1999
the Company recorded $49.6 million of gross premiums written, $19.9 million of
net premiums earned and net income of $2.9 million related to Nobel and its
affiliates. The Company expects that Nobel and its affiliates will continue to
conduct certain functions on a transitional basis and that the Company will
continue to maintain ownership of Nobel along with its licenses in the 50 U.S.
states, although there can be no assurance that such licenses can be
successfully maintained.

The Company's financial strength has enabled it to pursue opportunities outside
of the property catastrophe reinsurance market into the catastrophe exposed
primary insurance market. The

-17-

Company believes that its financial strength will enable it to continue to
pursue other opportunities in the future. There can be no assurance that the
Company's pursuit of such opportunities will materially impact the Company's
financial condition and results of operations.

SAFE HARBOUR DISCLOSURE
- -----------------------

In connection with, and because it desires to take advantage of, the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995, the
Company cautions readers regarding certain forward-looking statements contained
in this report. Forward-looking statements are necessarily based on estimates
and assumptions that are inherently subject to significant business, economic
and competitive uncertainties and contingencies, many of which, with respect to
future business decisions, are subject to change. These uncertainties and
contingencies can affect actual results and could cause actual results to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company. In particular, statements using verbs such as "expect",
"anticipate", "intends", "believe" or words of similar impact generally involve
forward-looking statements. In light of the risks and uncertainties inherent in
all future projections, the inclusion of forward-looking statements in this
report should not be considered as a representation by the Company or any other
person that the objectives or plans of the Company will be achieved.

Numerous factors could cause the Company's actual results to differ
materially from those in the forward-looking statements, including the
following: (i) the occurrence of catastrophic events with a frequency or
severity exceeding the Company's estimates; (ii) a decrease in the level of
demand for the Company's reinsurance or insurance business, or increased
competition in the industry; (iii) the lowering or loss of one of the financial
or claims-paying ratings of the Company or one or more of its subsidiaries; (iv)
risks associated with implementing business strategies of the Company; (v)
uncertainties in the Company's reserving process; (vi) failure of the Company's
reinsurers to honor their obligations; (vii) actions of competitors including
industry consolidation; (viii) loss of services of any one of the Company's key
executive officers; (ix) the passage of federal or state legislation subjecting
Renaissance Reinsurance to supervision or regulation, including additional tax
regulation, in the United States or other jurisdictions in which the Company
operates; (x) challenges by insurance regulators in the United States to
Renaissance Reinsurance's claim of exemption from insurance regulation under the
current laws; (xi) changes in economic conditions, including currency rate
conditions which could affect the Company's investment portfolio; (xii) a
contention by the United States Internal Revenue Service that Renaissance
Reinsurance is engaged in the conduct of a trade or business within the U.S.; or
(xiii) slower than anticipated growth in the Company's fee-based operations. The
foregoing review of important factors should not be construed as exhaustive; the
Company undertakes no obligation to release publicly the results of any future
revisions it may make to forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

-18-

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET SENSITIVE INSTRUMENTS

In accordance with the Securities and Exchange Commission's Financial Reporting
Release No. 48, the Company's investment portfolio includes investments which
are subject to changes in market values due to changes in interest rates. The
aggregate hypothetical loss generated from an immediate adverse parallel shift
in the treasury yield curve of 100 basis points would cause a decrease in total
return of 2.9 percent, which equates to a decrease in market value of
approximately $27.2 million on a portfolio valued at $939.0 million at March 31,
2000. An immediate time horizon was used, as this presents the worst-case
scenario.

-19-

PART II -- OTHER INFORMATION

Item 1 -- Legal Proceedings

None

Item 2 -- Changes in Securities and Use of Proceeds

None

Item 3 -- Defaults Upon Senior Securities

None

Item 4 -- Submission of Matters to a Vote of Security Holders

None

Item 5 -- Other Information

None

Item 6 -- Exhibits and Reports on Form 8-K

a. Exhibits:

Exhibit 27 - Financial Data Schedule.

b. Current Reports on Form 8-K:

The Registrant did not file any reports on Form 8-K during the
period beginning January 1, 2000 and ending March 31, 2000.

-20-

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.

RENAISSANCERE HOLDINGS LTD.

By: /s/ John M. Lummis
-------------------------
John M. Lummis
Senior Vice President and
Chief Financial Officer


Date: May 15, 2000

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