Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

May 15, 2001

Documents

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

Published on May 15, 2001



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, 2001

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 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 [ ]

The number of outstanding shares of RenaissanceRe Holding Ltd.'s common
stock, par value US $1.00 per share, as of March 31, 2001 was 19,753,857.

Total number of pages in this report: 23


RenaissanceRe Holdings Ltd.

INDEX TO FORM 10-Q

PART I -- FINANCIAL INFORMATION

ITEM 1 -- Financial Statements

Consolidated Balance Sheets as at March 31, 2001 3
(Unaudited) and December 31, 2000

Unaudited Consolidated Statements of Operations for 4
the three month periods ended March 31, 2001 and 2000

Unaudited Consolidated Statements of Changes in Shareholders' 5
Equity for the three month periods ended March 31, 2001 and
2000

Unaudited Consolidated Statements of Cash Flows 6
for the three month periods ended March 31, 2001 and 2000

Notes to Unaudited Consolidated Financial Statements 7

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

ITEM 3 -- Quantitative and Qualitative Disclosures About Market Risk 20

PART II -- Other Information 21

ITEM 1 -- Legal Proceedings
ITEM 2 -- Changes in Securities
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. 22

-2-

Part I - Financial information
Item 1 - Financial statements

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS AT MARCH 31, 2001 AND DECEMBER 31, 2000
(in thousands of United States Dollars, except per share amounts)



AS AT
----------------------------------
MARCH 31, 2001 DECEMBER 31, 2000
-------------- -----------------
ASSETS (Unaudited)

Fixed maturity investments available for sale, at fair value
(Amortized cost $970,793 and $921,750 at March 31, 2001 and
December 31, 2000, respectively) $ 985,768 $ 928,102
Short term investments 12,984 13,760
Other investments 40,080 29,613
Cash and cash equivalents 146,085 110,571
----------- -----------
Total investments and cash 1,184,917 1,082,046

Premiums receivable 125,099 95,423
Ceded reinsurance balances 78,830 37,520
Losses and premiums recoverable 180,770 167,604
Accrued investment income 13,021 15,034
Deferred acquisition costs 14,337 8,599
Other assets 68,762 62,763
----------- -----------
TOTAL ASSETS $ 1,665,736 $ 1,468,989
=========== ===========
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY

LIABILITIES
Reserve for claims and claim expenses $ 437,014 $ 403,611
Reserve for unearned premiums 191,185 112,541
Bank loans 50,000 50,000
Reinsurance balances payable 97,574 50,779
Other 55,250 63,610
----------- -----------
TOTAL LIABILITIES 831,023 680,541
----------- -----------
MINORITY INTEREST
Company obligated mandatorily redeemable Capital
Securities of a subsidiary trust holding solely
junior subordinated debentures of the Company 87,630 87,630

SHAREHOLDERS' EQUITY
Common shares and additional paid-in capital 30,313 22,999
Unearned stock grant compensation (17,961) (11,716)
Accumulated other comprehensive income 14,975 6,831
Retained earnings 719,756 682,704
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 747,083 700,818
----------- -----------
TOTAL LIABILITIES, MINORITY INTEREST, AND
SHAREHOLDERS' EQUITY $ 1,665,736 $ 1,468,989
=========== ===========
BOOK VALUE PER COMMON SHARE $ 37.82 $ 35.72
=========== ===========
COMMON SHARES OUTSTANDING 19,754 19,621
=========== ===========


The accompanying notes are an integral part of these financial statements

-3-

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three month periods ended March 31, 2001 and 2000
(in thousands of United States Dollars, except per share amounts)
(Unaudited)



QUARTERS ENDED
--------------------------------
MARCH 31, 2001 MARCH 31, 2000
-------------- --------------

REVENUES
Gross Premiums Written $ 198,208 $ 160,471
========= =========
Net premiums written $ 121,232 $ 103,364
Decrease in unearned premiums (37,332) (50,599)
--------- ---------
Net premiums earned 83,900 52,765
Net investment income 17,884 18,467
Net foreign exchange losses (296) (137)
Other income 3,868 1,402
Net realized gains (losses) on investments 7,616 (6,787)
--------- ---------
TOTAL REVENUES 112,972 65,710
--------- ---------
EXPENSES
Claims and claim expenses incurred 41,895 17,713
Acquisition expenses 12,545 7,242
Operational expenses 8,512 7,807
Corporate expenses 1,528 2,342
Interest expense 864 4,252
--------- ---------
TOTAL EXPENSES 65,344 39,356
--------- ---------
Income before minority interest and taxes 47,628 26,354
Minority interest - Company obligated mandatorily
redeemable Capital Securities of a subsidiary
trust holding solely junior subordinated
debentures of the Company 1,847 1,859
--------- ---------
Income before taxes 45,781 24,495
Income tax expense 876 420
--------- ---------
NET INCOME $ 44,905 $ 24,075
========= =========
Earnings per Common Share - basic $ 2.34 $ 1.25
Earnings per Common Share - diluted $ 2.22 $ 1.24
Operating earnings per Common Share - diluted $ 1.84 $ 1.58
Average shares outstanding - basic 19,227 19,266
Average shares outstanding - diluted 20,230 19,475
Claims and claim expense ratio 49.9% 33.6%
Expense ratio 25.1% 28.5%
--------- ---------
Combined ratio 75.0% 62.1%
========= =========


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 month periods ended March 31, 2001 and 2000
(in thousands of United States Dollars)
(Unaudited)



YEAR TO DATE
--------------------------------
MARCH 31, 2001 MARCH 31, 2000
-------------- --------------

Common Shares & additional paid-in capital
Balance -- January 1 $ 22,999 $ 19,686
Exercise of options, and issuance of stock and restricted
stock awards 7,314 85
Repurchase of shares -- (348)
--------- ---------
Balance -- March 31 30,313 19,423
--------- ---------
Unearned stock grant compensation
Balance -- January 1 (11,716) (10,026)
Restricted stock grants awarded, net (7,920) (3,332)
Amortization 1,675 1,277
--------- ---------
Balance -- March 31 (17,961) (12,081)
--------- ---------
Accumulated other comprehensive income (1)
Balance -- January 1 6,831 (18,470)
Net unrealized gains (losses) on securities, net of
adjustment (see disclosure) 8,144 4,757
--------- ---------
Balance -- March 31 14,975 (13,713)
--------- ---------
Retained earnings
Balance -- January 1 682,704 609,139
Net income 44,905 24,075
Dividends paid (7,853) (7,401)
Repurchase of shares -- (12,717)
Exercise of options -- 3,126
--------- ---------
Balance -- March 31 719,756 616,222
--------- ---------
Total Shareholders' Equity $ 747,083 $ 609,851
========= =========
COMPREHENSIVE INCOME
Net income $ 44,905 $ 24,075
Other comprehensive income 8,144 4,757
--------- ---------
Comprehensive income $ 53,049 $ 28,832
========= =========
DISCLOSURE REGARDING NET UNREALIZED GAINS (LOSSES)
Net unrealized holding gains (losses) arising during period $ 15,760 $ (2,030)
Net realized (gains) losses included in net income (7,616) 6,787
--------- ---------
Change in net unrealized gains (losses) on securities $ 8,144 $ 4,757
========= =========


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 month periods ended March 31, 2001 and 2000
(in thousands of United States Dollars)
(Unaudited)



YEAR TO DATE
--------------------------------
MARCH 31, 2001 MARCH 31, 2000
-------------- --------------

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net income $ 44,905 $ 24,075

ADJUSTMENTS TO RECONCILE NET INCOME TO
CASH PROVIDED BY OPERATING ACTIVITIES

Amortization and depreciation (91) (279)
Net realized investment losses (gains) (7,616) 6,787
Change in:
Reinsurance balances, net 17,119 (51,487)
Ceded reinsurance balances (41,310) (18,330)
Deferred acquisition costs (5,738) (2,687)
Reserve for claims and claim expenses, net 20,237 55,141
Reserve for unearned premiums 78,644 68,929
Other (31,238) 2,515
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 74,912 84,664
--------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES
Proceeds from sale of investments 854,004 601,540
Purchase of investments available for sale (885,549) (605,240)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (31,545) (3,700)
--------- ---------
CASH FLOWS USED IN FINANCING ACTIVITIES
Dividends paid (7,853) (7,401)
Purchase of Common Shares -- (13,065)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (7,853) (20,466)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 35,514 60,498
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 110,571 132,112
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 146,085 $ 192,610
========= =========


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") and its wholly owned subsidiaries,
including Renaissance Reinsurance Ltd. ("Renaissance Reinsurance"), Glencoe
Insurance Ltd. ("Glencoe"), Renaissance U.S. Holdings, Inc. ("Renaissance
U.S."), RenaissanceRe Capital Trust (the "Trust") and Renaissance
Underwriting Managers, Ltd. ("Renaissance Managers").

RenaissanceRe and its subsidiaries are collectively referred to herein as
the "Company". All intercompany transactions and balances have been
eliminated on consolidation.

The Company acts as underwriting manager and underwrites worldwide property
catastrophe reinsurance programs on behalf of Overseas Partners Cat Ltd.
("OPCat"), a subsidiary of Overseas Partners Ltd., a Bermuda Company.
Renaissance Reinsurance has also entered into a joint venture, Top Layer
Reinsurance Ltd. ("Top Layer Re") with State Farm Automobile Insurance
Company.

Minority interests represent 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 the
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

Effective January 1, 2001, the Company adopted 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. The adoption of SFAS
No. 133 had no impact on the Company's 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 $35.7 million

-7-

and $38.9 million for the three months ended March 31, 2001 and 2000,
respectively. Other than loss recoveries, certain of the Company's ceded
reinsurance contracts provide for recoveries of additional premiums,
reinstatement premiums and for unrecovered no claims bonuses which are
unrecoverable when losses are ceded to those reinsurance contracts. Total
recoveries (reductions) netted against premiums and claims and claim
expenses incurred for the three months ended March 31, 2001 were $43.8
million compared to $0.8 million for the three months ended March 31, 2000.

Included in losses and premiums recoverable are recoverables of $19.0
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," losses related to retroactive
reinsurance agreements are required to be included in claims and claim
expenses incurred as they become known. However, offsetting recoverables,
if any, are deferred and reflected in the statement of operations in future
periods, based on the recovery method. As of March 31, 2001, the Company
has deferred $11.2 million of recoveries related to a retroactive
reinsurance contract. 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 operations.

4. The Company paid interest on its outstanding loans of $0.8 million for the
three month period ended March 31, 2001 and $6.1 million for the same
period in the previous year. The decrease in interest payments is due to
repayment of borrowings of $200.0 million during the fourth quarter of
2000. See "Financial Condition - Capital Resources and Shareholders'
Equity" for further discussion.

On March 1, 2001, the Company paid a semi-annual dividend of $4.3 million
on the Company's obligated mandatorily redeemable capital securities of a
subsidiary trust holding solely junior subordinated debentures of the
Company ("Capital Securities").

5. Basic earnings per share is based on weighted average common shares and
excludes any dilutive effects of options and 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:

-8-



- ----------------------------------------------------------------------------------------------
Quarter ended March 31,
2001 2000
- ----------------------------------------------------------------------------------------------
(in thousands of U.S. dollars except share and per share data)
- ----------------------------------------------------------------------------------------------

Numerator:
Net income $ 44,905 $ 24,075
============================
Denominator:
Denominator for basic earnings per share -
Weighted average shares 19,226,892 19,265,973
Per share equivalents of employee stock
Options and restricted shares 1,002,809 209,504
----------------------------
Denominator for diluted earnings per share -
Adjusted weighted average shares and
Assumed conversions 20,229,701 19,475,477
============================
Basic earnings per share $2.34 $1.25
Diluted earnings per share $2.22 $1.24
- ----------------------------------------------------------------------------------------------


6. The Board of Directors of the Company declared, and the Company paid, a
dividend of $0.40 per share to shareholders of record on February 20, 2001.
On May 4, 2001, the Board of Directors declared a dividend of $0.40 per
share payable on June 1, 2001 to shareholders of record on May 18, 2001.

7. 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 three month periods
ended March 31, 2001 and 2000 are as follows:



QUARTER ENDED MARCH 31, 2001 REINSURANCE PRIMARY OTHER TOTAL
-------------------------------------------------

Gross premiums written $188,313 $ 9,895 $ - $198,208
Total revenues 108,003 4,254 715 112,972
Pre-tax profit (loss) 45,030 3,386 (2,635) 45,781

Assets 1,367,276 242,157 56,303 1,665,736
-------------------------------------------------
Claims and claim expense ratio 53.6% -133.3% - 49.9%
Underwriting expense ratio 23.0% 123.3% - 25.1%
-------------------------------------------------
Combined ratio 76.6% -10.0% - 75.0%
-------------------------------------------------


-9-



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 expense ratio 28.4% 23.0% - 28.5%
-------------------------------------------------
Combined ratio 62.4% 47.0% - 62.1%
-------------------------------------------------


The Company's Bermuda and U.S. holding companies are the primary
contributors to the results reflected in the "Other" category. The pre-tax
loss of the holding companies primarily consisted of interest expense on
bank loans, the minority interest on the Capital Securities, and realized
investment gains (losses) on the sales of investments, partially offset by
investment income on the assets of the holding companies.

8. 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 $17.5 million which is net of a $7.9
million valuation allowance. 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.

-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, 2001 and 2000 and financial
condition as of March 31, 2001. 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, 2000.

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.
The Company's catastrophe reinsurance business includes 1) writing reinsurance
on its own behalf and 2) writing reinsurance on behalf of two joint ventures,
Top Layer Re and OPCat. The Company receives income based on the performance of
these joint ventures which is reflected in other income.

The Company also writes reinsurance with respect to various other lines,
including accident and health, aviation, satellite and finite reinsurance. The
Company may write other lines of reinsurance in the future although there can be
no assurance that any such premiums will be material to the Company. 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, 2001 COMPARED TO THE QUARTER ENDED MARCH 31,
2000

For the quarter ended March 31, 2001, net operating income, excluding realized
investment gains and losses, available to common shareholders was $37.3 million
or $1.84 per share, compared to $30.9 million or $1.58 per share for the same
quarter in 2000. Gross premiums written for the first quarter of 2001 and 2000
were as follows:

-11-



Quarter ended
---------------------
(in thousands) 31-Mar-01 31-Mar-00
--------- ---------

Reinsurance 188,313 144,752
Primary 9,895 15,719
------- -------
198,208 160,471
======= =======


The majority of the increase in reinsurance premiums written by the Company
during the first quarter was due to two items: 1) increase in finite and non-cat
premiums written from $5.0 million in the first quarter of 2000 to $22.2 million
in the first quarter 2001; and 2) a $26.3 million increase in property
catastrophe premiums written due to increased business opportunities.

For the quarter ended March 31, 2001, total managed catastrophe premiums were
$214.7 million, $48.8 million of which was derived from the OPCat and Top Layer
Re joint ventures, compared with $174.8 million and $34.2 million for the same
quarter of 2000. Total managed catastrophe premiums written represents gross
catastrophe premiums written by Renaissance Reinsurance and written on behalf of
the OPCat Ltd. and Top Layer Re Ltd. joint ventures and is used by the Company
to measure the Company's penetration into the catastrophe reinsurance market.

During the first quarter of 2001, ceded premiums written were $77.0 million,
compared with $57.1 million for the same quarter in 2000. The increase in ceded
premiums written was due to an increase in attractive opportunities for the
Company to purchase reinsurance. Ceded reinsurance for the primary companies was
$6.7 million for the quarter ended March 31, 2001 compared with $13.5 million
for the same period of the previous year.

The table below sets forth the Company's combined ratio and components thereof,
by segment for the quarters ended March 31, 2001 and 2000:



--------------------------- ---------------------------- ---------------------------
REINSURANCE PRIMARY TOTAL
--------------------------- ---------------------------- ---------------------------
Quarter ended: 31-Mar-01 31-Mar-00 31-Mar-01 31-Mar-00 31-Mar-01 31-Mar-00
------------- ------------- -------------- ------------- ------------- -------------

Claims and claim expense ratio 53.6% 34.0% -133.3% 24.0% 49.9% 33.6%
Underwriting expense ratio 23.0% 28.4% 123.3% 23.0% 25.1% 28.5%
------------- ------------- -------------- ------------- ------------- -------------
Combined ratio 76.6% 62.4% -10.1% 47.0% 75.0% 62.1%
------------- ------------- -------------- ------------- ------------- -------------


The claims and claim expense ratio of the reinsurance business increased
primarily due to the Company's increase in non-cat and finite premiums which
normally will produce a higher claims and claims expense and combined ratio than
the property catastrophe business written by the reinsurance company. In
addition there was an increase from a higher level of attritional catastrophe
losses in the quarter.

The majority of the premiums written by the primary operations are currently
ceded to other reinsurers and as a result, the net earned premiums from the
primary operations were $1.6 million for the first quarter ended March 31, 2001,
compared with $2.5 million for the quarter ended March 31, 2000. Based on this
reduced level of net earned premiums, relatively modest one time adjustments to
net written premiums, claim and claim expenses incurred, acquisition expenses or
operating expenses can cause, and did cause, unusual fluctuations in the claims
and

-12-

claim expense ratio and the underwriting expense ratio of the primary
operations. Other income increased from $1.4 million for the first quarter ended
March 31, 2000 to $3.9 million for the quarter ended March 31, 2001. The
increase was primarily related to the increased income from the Company's joint
ventures Top Layer Re and OPCat.

Net investment income, excluding realized investment gains and losses, for the
first quarter of 2001 was $17.9 million, compared to $18.5 million for the same
period in 2000. The decrease in investment income primarily relates to a
decrease in investment yields during the first quarter of 2001 as compared with
the first quarter of 2000 and the repayment of $200 million on the revolving
credit facility in the fourth quarter of 2000.

Interest expense and minority interest for the quarter ended March 31, 2001
decreased to $0.9 million from $4.3 million for the same period in 2000. The
decrease was related to the repayment of $200 million on the revolving credit
facility in the fourth quarter of 2000.

FINANCIAL CONDITION

LIQUIDITY AND CAPITAL REQUIREMENTS

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
dividend 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 require the
Company's Bermuda subsidiaries to maintain certain measures of solvency and
liquidity. As at March 31, 2001 the statutory capital and surplus of the
Company's Bermuda subsidiaries was $729.1 million, and the amount required to be
maintained was $101.0 million. During the quarter ended March 31, 2001,
Renaissance Reinsurance declared dividends of $52.5 million compared to $22.6
million for the same period in 2000.

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 $310.0 million
credit facility which is available to the holding company, RenaissanceRe, to
meet the liquidity needs of the Company's subsidiaries should the need arise.
$8.0 million was outstanding under the credit facility as of March 31, 2001.

Cash flows from operations in the first three months of 2001 were $74.9 million,
compared to $84.7 million for the same period in 2000. Cash flows have exceeded
operating income 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 2001 and 2000 in excess of its commitments. To the extent that capital
is not utilized in the Company's reinsurance business, the Company will

-13-

consider using such capital to invest in new opportunities or will consider
returning such capital to its shareholders.

Because of the nature of the coverages the Company provides, which typically can
produce infrequent losses of high severity, 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 three months ended March 31, 2001 the Company incurred net claims of
$41.9 million and paid net losses of $22.6 million. The Company's policy of
purchasing reinsurance coverage continues to have a favorable impact on 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 level of losses
and/or recoveries.

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 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 trends
may be revealed. As these factors become apparent, case reserves 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 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 AND SHAREHOLDERS' EQUITY

The total capital resources of the Company as at March 31, 2001 and December 31,
2000 was as follows:

-14-




March 31, December 31,
(in thousands of U.S. dollars) 2001 2000
- --------------------------------------------------------------------------------

Term loan payable $ 42,000 $ 42,000
Revolving Credit Facility--borrowed 8,000 8,000
Revolving Credit Facility--unborrowed 302,000 302,000
Minority interest--Company obligated mandatorily
redeemable capital securities of a subsidiary trust 87,630 87,630
Shareholders' Equity 747,083 700,818
- --------------------------------------------------------------------------------
TOTAL CAPITAL RESOURCES $1,186,713 $1,140,448
- --------------------------------------------------------------------------------


The Company has a $310.0 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 6.9 percent during
the first three months of 2001 (compared to 6.1 percent for the same period in
2000). The revolving 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, 2001.

Renaissance U.S. has a $27 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 6.7 percent during the first
three months of 2001 (compared to 6.6 percent for the first three months of
2000). The related agreements contain 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. The term loan has mandatory repayment
provisions approximating $9.0 million per year in each of years 2001 through
2003. The Company repaid $8.0 million of the loan in June 2000. The Company was
in compliance with all the covenants of this term loan and revolving loan
facility as at March 31, 2001.

The subsidiary RenaissanceRe Capital Trust has issued capital securities which
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, 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, 2001. From
time to time, the Company may opportunistically repurchase outstanding Capital
Securities. The Company purchased $2.0 million in 2000 and reflected a gain of
$0.5 million in shareholders' equity.

During the first three months of 2001, shareholders' equity increased by $46.3
million, from $700.8 million at December 31, 2000 to $747.1 million at March 31,
2001. The significant

-15-

components of the change included, net income from continuing operations of
$44.9 million plus an increase in comprehensive income of $8.1 million, offset
by the payment of dividends of $7.9 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:



- -----------------------------------------------------------------------------------------
(in thousands of U.S. dollars) March 31, December 31,
2001 2000
- -----------------------------------------------------------------------------------------

Investments available for sale, at fair value $ 985,768 $ 928,102
Other investments 40,080 29,613
Cash, cash equivalents and short term investments 159,069 124,331
- -----------------------------------------------------------------------------------------
TOTAL INVESTED ASSETS $1,184,917 $1,082,046
- -----------------------------------------------------------------------------------------


At March 31, 2001, the invested asset portfolio had a dollar weighted average
rating of AA, an average duration of 2.6 years and an average yield to maturity
of 6.0 percent, net of investment expenses.

At March 31, 2001 the Company held investments and cash totaling $1.2 billion
with a net unrealized appreciation balance of $15.0 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, 2001, $10.1 million of cash and cash equivalents were invested in
currencies other than the U.S. dollar, which represented less than 1.0 percent
of the Company's invested assets.

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 implicitly 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.

-16-

CURRENT OUTLOOK

Due to industry losses in 1999, and the related contraction of capacity in the
market, the Company received price increases on a substantial majority of its
reinsurance policies sold or renewed during the recent renewal season. However,
even after these price increases, the Company believes that there continues to
be numerous transactions in the market that are underpriced relative to expected
losses. While the upward pressure on property catastrophe prices continues,
market conditions are becoming more competitive.

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 identify contracts that are adequately priced and will
continue to find opportunities in the property catastrophe reinsurance markets.

Primarily because of higher than average loss activity in 1999, the Company's
aggregate cost for reinsurance protection increased during 2000 and could
continue to increase during 2001. If prices rise to levels whereby the Company
believes the purchase of reinsurance protection would become uneconomical, then
in certain geographic regions the Company would retain a greater level of net
risk. In order to obtain longer term retrocessional capacity, the Company has
entered into multi-year contracts with respect to a portion of its portfolio. As
of January 1, 2001, approximately 55% of the limits under the Company's
retrocessional coverage were purchased on a multi-year basis.

The Company's financial strength and underwriting expertise have enabled the
Company to pursue opportunities outside the property catastrophe reinsurance
market, including various lines of reinsurance and the catastrophe exposed
primary insurance market. The 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 its financial condition and results of operations.

During recent fiscal years there has been considerable consolidation among
leading brokerage firms and also among the Company's customers. Although
consolidation may continue to occur, the Company believes that its financial
strength, its position as one of the market leaders in the property catastrophe
reinsurance industry and its ability to provide innovative products to the
industry will minimize any adverse effect of such consolidation on its business.

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.

This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934.
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

-17-

contingencies can affect actual results and could cause actual results to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, us.

In particular, statements using words such as "expect", "anticipate", "intends",
"believe" or words of similar import 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
its objectives or plans will be achieved. Numerous factors could cause the
Company's actual results to differ materially from those addressed by the
forward-looking statements, including the following:

(1) the occurrence of catastrophic events with a frequency or severity
exceeding the Company's estimates;

(2) a decrease in the level of demand for the Company's reinsurance or
insurance business, or increased competition in the industry;

(3) the lowering or loss of one of the financial or claims-paying ratings
of the Company or one or more of its subsidiaries;

(4) risks associated with implementing the Company's business strategies;

(5) slower than anticipated growth in the Company's fee-based operations;

(6) changes in economic conditions, including currency rate conditions
which could affect the Company's investment portfolio;

(7) uncertainties in the Company's reserving process;

(8) failure of the Company's reinsurers to honor their obligations;

(9) loss of services of any one of the Company's key executive officers;

(10) 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;

(11) challenges by insurance regulators in the United States to Renaissance
Reinsurance's claim of exemption from insurance regulation under the
current laws;

(12) a contention by the United States Internal Revenue Service that the
Company's Bermuda subsidiaries, including Renaissance Reinsurance, are
subject to U.S. taxation; and

(13) actions of competitors, including industry consolidation and the
development of competing financial products.

-18-

The factors listed above should not be construed as exhaustive. The Company
undertakes no obligation to release publicly the results of any future revisions
the Company may make to forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

-19-

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET SENSITIVE INSTRUMENTS

The Company's investment portfolio includes investments which are available for
trading purposes and which are subject to changes in market values with 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 2.7 percent, which equates to a decrease in
market value of approximately $26.62 million on a portfolio valued at $985.8
million at March 31, 2001. An immediate time horizon was used, as this presents
the worst-case scenario.

-20-

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 10 - Investors' Rights Agreement dated as of April 3, 2001
by and among the Company, PT Investments, Inc. and Kingsway PT
Limited Partnership.


b. Current Reports on Form 8-K:

The Registrant filed reports on Form 8-K on February 20, 2001
and March 5, 2001.

-21-

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, 2001

-22-