10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on August 14, 1998
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: June 30, 1998
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
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The number of outstanding shares of RenaissanceRe Holding Ltd.'s common stock,
par value US $1.00 per share as of June 30, 1998 was 22,264,485.
Total number of pages in this report: 25
RenaissanceRe Holdings Ltd.
INDEX TO FORM 10-Q
Item 1 - Financial Statements
RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Balance Sheets
(United States Dollars)
(in thousands, except per share amounts)
The accompanying notes are an integral part of these financial statements
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RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Statements of Operations
(United States Dollars)
(in thousands, except per share amounts)
(Unaudited)
The accompanying notes are an integral part of these financial statements
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RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity
For the six months ended June 30, 1998 and 1997
(United States Dollars)
(in thousands, except per share amounts)
(Unaudited)
The accompanying notes are an integral part of these financial statements.
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RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
(United States Dollars in thousands)
(Unaudited)
The accompanying notes are an integral part of these financial statements
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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
subsidiaries, which are collectively referred to herein as the
"Company". In the opinion of the Company's management, these financial
statements reflect all the normal recurring adjustments necessary for a
fair presentation of the Company's financial position at June 30, 1998
and December 31, 1997, and its results of operations, changes in
shareholders' equity and cash flows for the six months ended June 30,
1998 and 1997. These consolidated financial statements should be read
in conjunction with the 1997 audited consolidated financial statements
and related notes thereto. 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
a) Earnings per share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, Earnings per Share.
SFAS No. 128 replaced the previously reported primary and fully diluted
earnings per share with basic and diluted earnings per share. All
earnings per share amounts for all periods have been presented, and
where necessary, restated to conform to the requirements of SFAS
No.128.
b) Comprehensive Income
As of January 1, 1998 the Company adopted SFAS No. 130, "Reporting
Comprehensive Income". SFAS No. 130 requires an enterprise to (a)
classify items of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of other
comprehensive income separately in the equity section of a statement of
financial position. SFAS No. 130 requires net unrealized appreciation
(depreciation) on the Company's available for sale investments, which
were previously reported separately in shareholders' equity, to be
included in other comprehensive income. Prior year financial statements
have been reclassified to conform to the 1998 presentation. The
adoption of this accounting statement had no impact on the Company's
net income or shareholders' equity. Currently, other than the net
unrealized gain on the Company's investments available for sale, there
are no other Company balances which are required to be included as a
component of other comprehensive income.
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3. Earnings per share
The following table sets forth the computation of basic and diluted
earnings per share.
4. The Board of Directors of the Company declared, and the Company paid,
dividends of $.30 per share to shareholders of record on each of May 20
and February 18, 1998. On August 5, 1998, the Board of Directors of the
Company declared a dividend of $.30 per share payable on September 2,
1998 to shareholders of record on August 19, 1998.
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5. Interest paid was $1.6 million for the six month period ended June 30,
1998 and $2.5 for the same period in 1997. On March 1, 1998 the Company
paid a semi-annual dividend on the Capital Securities of $4.3 million.
6. In January 1998, the Company began to provide personal lines coverages
through DeSoto Insurance Company ("DeSoto"), a wholly owned subsidiary
of Glencoe. DeSoto is a special purpose Florida homeowners insurance
company that is licensed to assume and renew homeowner policies from
the Florida JUA, a state sponsored insurance company.
7. On June 25, 1998 the Company completed its acquisition of the U.S.
operating subsidiaries of Nobel Insurance Limited, a Bermuda company
("Nobel Limited"), for approximately $54.1 million. The Company also
provided Nobel Limited with a limited recourse loan of $8.9 million to
support Nobel Limited's liquidation. The Company estimates that Nobel
Limited, after liquidating its liabilities, will have the ability to
repay $7.9 million of this loan. The gross assets and gross liabilities
purchased in the transaction were $188.1 million and $155.9 million. In
connection with the transactions the Company recognized approximately
$23.9 million of goodwill, which included approximately $1 million of
loan forgiveness and $1 million in costs associated with the
transaction.
Also, as part of the transaction, the Company's U.S. holding company
borrowed $35 million from a syndicate of banks. This five year term
loan has mandatory repayment provisions in years two through five. The
banks also provided a $15 million revolving credit facility from which
the Company borrowed $4 million on July 13, 1998.
The principal U.S. operating subsidiaries of Nobel Limited, Nobel
Insurance Company and IAS/CatCrew Inc., will continue to conduct
business under their current names as subsidiaries of Renaissance U.S.
Holdings, Inc. The principal businesses of Nobel Insurance Company,
which is admitted in 50 states, are the service and underwriting of
personal lines property coverage for low-value dwellings and commercial
casualty risks for specialized industries. Contemporaneously with the
Nobel acquisition, Nobel Insurance Company entered into a retrospective
reinsurance agreement with respect to its casualty business with
Inter-Ocean Reinsurance Company Ltd. IAS/CatCrew Inc. provides
professional loss adjustment services to property insurance companies.
Effective April 20, 1998, Nobel Insurance Company sold the renewal
rights to its surety business for $3.5 million plus an additional
contingent fee of up to an additional $3.5 million. The Company does
not currently anticipate receiving any portion of this contingent fee.
8. In May 1998 the Company announced a $25 million share repurchase
program. Through June 30, 1998 the Company had repurchased 350,000
shares under this program at total cost of $15.6 million.
9. On June 5, 1998, Glencoe Insurance Ltd. completed the repurchase from
Underwriters Reinsurance Company of its 20 percent interest in Glencoe.
The purchase price was $15.2 million. RenaissanceRe now owns 100% of
the outstanding stock of Glencoe.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
For the quarter ended June 30, 1998 compared to the quarter ended June 30, 1997
For the quarter ended June 30, 1998, net income available to common shareholders
was $28.5 million or $1.26 per share, compared to $37.0 million or $1.59 per
share for the same quarter in 1997.
Gross premiums written for the second quarter of 1998 increased to $45.8 million
compared to gross written premiums of $34.8 million for the same quarter of
1997. The 31.6 percent increase in gross premiums written was the result of a
75.7 percent increase in premiums relating to new business, a 12.9 percent
decrease relating to the Company not renewing certain coverages and a 31.2
percent decrease related to changes in coverage, participation level and pricing
on certain renewed business. The quarterly increase in premiums related to new
business is primarily the result of new business written by Renaissance
Reinsurance.
During 1998, the Company continued to purchase reinsurance to reduce its
exposure to certain losses. During the second quarter of 1998, ceded premiums
written were $40.7 million compared with $14.2 million for the same quarter in
1997. This higher level of ceded reinsurance reduces net premiums earned but
management believes that purchases of reinsurance reduces the Company's level of
risk.
The table below sets forth the Company's combined ratio and components thereof
for the quarters ended June 30, 1998 and 1997.
Claims and claim adjustment expenses incurred for the quarter ended June 30,
1998 were $10.3 million or 21.9 percent of net premiums earned. In comparison,
claims and claim adjustment expenses for the quarter ended June 30, 1997 were
$11.1 million or 21.6 percent of net premiums earned.
Underwriting expenses are comprised of acquisition expenses and operational
expenses. Acquisition expenses were $5.4 million for the quarter ended June 30,
1998 and $5.9 million in the same quarter of 1997. Operating expenses for the
second quarter of 1998 increased to $7.8 million compared with $6.1 million for
the same quarter of 1997. The primary cause for the increase in operating
expenses was the continued development of the Company's primary operations.
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Net investment income, excluding realized investment gains and losses, increased
to $12.6 million for the second quarter of 1998, compared to $12.2 million for
the same period in 1997.
Interest expense and minority interest for the quarters ended June 30, 1998 and
1997 increased to $3.2 million from $3.1 million.
For the six months ended June 30, 1998 compared to the six months ended
June 30, 1997
For the six months ended June 30, 1998, net income available to common
shareholders was $64.2 million or $2.83 per share, compared to $72.4 million or
$3.12 per share for the same six months in 1997.
Gross premiums written for the first six months of 1998 increased 6.3 percent to
$165.0 million compared to gross written premiums of $155.2 million for the same
six months of 1997. The 6.3 percent increase in written premiums was the result
of a 33.8 percent increase in premiums relating to new business, an 18.2 percent
decrease relating to the Company not renewing certain coverages and a 9.3
percent decrease related to changes in coverage, participation level and pricing
on certain renewed business.
During 1998, the Company continued to purchase reinsurance to reduce its
exposure to certain losses. During the first six months of 1998, ceded premiums
written were $47.4 million compared with $16.9 million for the same period in
1997. This higher level of ceded reinsurance reduces net premiums earned but
management believes that purchases of reinsurance significantly reduces the
company's level of risk.
The table below sets forth the Company's combined ratio and components thereof
for the six months ended June 30, 1998 and 1997.
Claims and claim adjustment expenses incurred for the six months ended June 30,
1998 were $18.2 million or 19.6 percent of net premiums earned. In comparison,
claims and claim adjustment expenses for the six months ended June 30, 1997 were
$25.3 million or 23.6 percent of net premiums earned.
Underwriting expenses are comprised of acquisition expenses and operational
expenses. Acquisition expenses were $11.8 million for the six months ended June
30, 1998 and $12.3 million in the same six months of 1997. Operating expenses
for the first six months of 1998 increased to $14.2 million compared with $12.0
million for the same six months of 1997. The primary cause for the increase in
operating expenses was the continued development of the Company's primary
operations.
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Net investment income, excluding realized investment gains and losses, increased
for the first six months of 1998 to $26.3 million, compared to $24.3 million for
the same period in 1997. The
increase in net investment income was largely the result of higher average
invested assets which is primarily related to cash flows from operations.
Interest expense and minority interest for the six months ended June 30, 1998
increased to $6.6 million from $5.7 million for the same period in 1997. The
increase was related to increased minority interest earnings of Glencoe and the
accrual on the $100.0 million of Capital Securities that were issued during the
first quarter of 1997.
FINANCIAL CONDITION
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, the Company writes other lines of insurance and reinsurance on a
limited basis, and is actively exploring new opportunities.
Liquidity and Capital Requirements
As a holding company, RenaissanceRe relies on invested assets, investment
income, cash dividends and permitted payments from its subsidiaries to make
principal payments, interest payments, cash distributions on outstanding
obligations and pay quarterly dividends, if any, to RenaissanceRe's
shareholders. The payment of dividends by its subsidiaries to RenaissanceRe is,
under certain circumstances, limited under Bermuda insurance law. The Bermuda
Insurance Act 1978, amendments thereto and related regulations of Bermuda (the
"Act"), requires the subsidiaries to maintain certain measures of solvency and
liquidity. As at June 30, 1998 the statutory capital and surplus of the
Company's subsidiaries was $640.0 million, and the amount required to be
maintained was $170.5 million.
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. The subsidiaries also maintain a
concentration of their investments in high quality liquid securities, which
management believes will provide sufficient liquidity to meet claims payments
should the need arise.
During the second quarter of 1998, Glencoe purchased the 20 percent minority
interest in Glencoe held by Underwriters Re for approximately $15.2 million. As
a result of the purchase of Glencoe's shares from Underwriters Re, Glencoe is
now wholly-owned by RenaissanceRe.
Under the terms of its agreement to acquire the operating subsidiaries of Nobel
Insurance Limited, the Company paid $54.1 million in cash to consummate the
purchase, and provided approximately $8.9 million of limited recourse financing,
in exchange for a promissory note from Nobel Insurance Limited, to enable Nobel
Insurance Limited to support certain of its obligations in the liquidation of
its remaining operations. As part of the transaction the Company's U.S. holding
company borrowed $35 million from a syndicate of banks. This five year term loan
has
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mandatory repayment provisions in years two through five. The banks also
provided a $15 million revolving credit facility from which the Company borrowed
$4 million on July 13, 1998. Both the loan and the credit facility bear interest
at a spread above LIBOR and are guaranteed by RenaissanceRe.
The Company anticipates that its primary insurance operations, including
Glencoe, DeSoto and Nobel, will become an increasingly important element of the
Company over time. The Company currently believes that internally generated
capital will be sufficient to support its reinsurance and insurance businesses,
however external financing may be utilized to finance significant transactions.
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
transaction opportunities and periodically engages in discussions regarding
possible transactions. However, currently the Company has no definitive
agreements with respect to any material transaction..
Cash flows from operating activities for the first six months of 1998 resulted
principally from premium and investment income, net of paid losses, acquisition
costs and underwriting expenses. Cash flows from operations in the first six
months of 1998 were $69.5 million, compared to $73.2 million for the same period
in 1997. The Company has produced cash flows from operations in the first six
months of 1998, and the full years of 1997 and 1996 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.
The Company has assumed risk through catastrophe and weather linked securities
and derivative instruments. The Company may in the future also utilize other
derivatives. To date the Company has not experienced any losses from such
securities or derivatives.
Reserves
The Company's policy is to establish claim reserves for the settlement costs of
all claims and claim adjustment expenses incurred by the Company when an event
occurs. During the quarter ended June 30, 1998 the Company incurred claims of
$10.3 million and paid losses of $6.6 million. 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.
Claim reserves represent estimates, including actuarial and statistical
projections at a given point in time, of an insurer's or reinsurer's
expectations of the ultimate settlement and administration costs of claims
incurred, and it is possible that the ultimate liability may exceed or be less
than
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such estimates. Such estimates are not precise in that, among other things, they
are based on predictions of future developments and estimates of future trends
in claim severity and frequency and other variable factors such as inflation.
During the claim settlement period, it often becomes necessary to refine and
adjust the estimates of liability on a claim either upward or downward. Even
after such adjustments, ultimate liability may exceed or be less than the
revised estimates.
Reserves for claims and claim expenses may include reserves for unpaid reported
claims and claim expenses and reserves for estimated losses that have been
incurred but not reported to the Company. Such reserves are estimated by
management based upon reports received from ceding companies, as supplemented by
the Company's own estimates of reserves on such reported losses as well as
reserves for losses that are incurred but not reported. The Company's reserve
estimates are continually reviewed and, in accordance with GAAP, as adjustments
to these reserves become necessary, such adjustments are reflected in current
operations.
Capital Resources & Shareholders' Equity
The total capital resources of the Company as at June 30, 1998 and December 31,
1997 was as follows:
During the first six months of 1998, shareholders' equity increased by $41.8
million, from $598.7 million at December 31, 1997 to $640.5 million at June 30,
1998. The significant components of the increase included net income from
continuing operations of $64.2 million, partially offset by the payment of
dividends of $13.5 million and the purchase of common stock of $15.6 million.
In May 1998 the Company announced a $25 million share repurchase program.
Through June 30, 1998 the Company had repurchased 350,000 shares under this
program at total cost of $15.6 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:
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The growth in the Company's portfolio of invested assets for the six months
ended June 30, 1998 primarily resulted from net cash provided by operating
activities of $69.5 million.
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 June 30, 1998, the
fixed income 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, 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 No. 115
and 130.
As at June 30, 1998 the Company held investments and cash totaling $929.8
million with net unrealized depreciation of $5.3 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 June 30, 1998, $7.6 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.
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 adjustment expenses. The actual
effects of this post event inflation on the results of the Company cannot be
accurately known until claims are ultimately settled.
Year 2000
Certain computer programs and/or software may recognize a date using "00" as the
year 1900 rather than the year 2000, which could result in miscalculations or
system failures. The Company has completed an assessment of its business
applications and computer systems, and believes that
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all critical business applications and systems will function properly with
respect to dates in the year 2000 and thereafter.
The Company is in the process of evaluating its potential exposures from the
non-compliance, if any, of its vendors' and customers' systems with the Year
2000. There can be no assurance that the systems of its vendors and customers,
on which the Company relies for supporting information, will be timely converted
and would not have an effect on the Company's business operations.
Currently, none of the Company's reinsurance or insurance policies specifically
provides coverage for Year 2000 losses, and the Company does not intend to
provide coverage for these losses. However, in the future, it is possible that
the Company may elect to provide such coverage, or that certain of the Company's
policies could be held to cover such losses. If so, there can be no assurance
that such losses would not have a material adverse effect on the Company's
future results of operations.
The Company anticipates completing the Year 2000 evaluation prior to December
31, 1998 and it is anticipated that any future costs associated with the Year
2000 project will not be material and accordingly not have an adverse effect on
the future results of operations.
Current Outlook
It is anticipated that the competitive pressures that have existed since 1995
will continue through 1998. The Company anticipates that these pressures will
continue to suppress the growth in premiums from property catastrophe
reinsurance contracts. However, although no assurance can be given, the Company
believes that opportunities in certain select markets will continue to exist
which, because of the Company's competitive advantages, including its
technological capabilities and its relationships with leading brokers and ceding
companies, will enable the Company to find additional opportunities in the
property catastrophe reinsurance business that otherwise would not be available.
The Company has entered the primary insurance business, focusing particularly on
catastrophe exposed business, with a view to leveraging the risk assessment
skills of the core reinsurance business. Through Nobel, the Company's business
activities now also include liability insurance. In addition, the Company from
time to time considers other new business opportunities unrelated to its
business in catastrophe exposed insurance and reinsurance.
Note on Forward-Looking Statements
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act. Forward-looking statements are statements other than historical
information or statements of current condition. Some forward-looking statements
may be identified by use of terms such as "believes," "anticipates," "intends,"
or "expects." These forward-looking statements relate, among other things, to
the plans and objectives of the Company for future operations. 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
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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 property catastrophe reinsurance, or increased
competition owing to increased capacity of property catastrophe reinsurers;
(iii) any lowering or loss of one of the financial or claims-paying ratings of
the Company or one or more of its subsidiaries; (iv) actions of competitors; (v)
loss of services of any one of the Company's key executive officers; (vi) the
passage of federal or state legislation subjecting Renaissance Reinsurance to
supervision or regulation in the United States; (vii) challenges by insurance
regulators in the United States to Renaissance Reinsurance's claim of exemption
from insurance regulation under the current laws; (viii) changes in economic
conditions, including currency rate conditions; or (ix) a contention by the
United States Internal Revenue Service that the Company or Renaissance
Reinsurance is engaged in the conduct of a trade or business within the U.S. 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.
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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:
(a) The registrant's 1998 Annual General Meeting of Shareholders was
held on May 5, 1998.
(b) Proxies were solicited by Registrant's management pursuant to
Regulation 14A under the Securities Exchange Act of 1934; there was no
solicitation in opposition to management's nominees as listed in the proxy
statement. Each of the Directors was re-elected to the Board.
(c) The following matters were voted upon and approved at the Annual
General Meeting with the voting results as indicated:
1. To elect eleven directors of the Company to serve for the terms
indicated and until their successors are duly elected and
qualified, as follows: (x) four of the eleven directors to serve
until the Company's 1999 annual general meeting of shareholders;
(y) three of the eleven directors to serve until the Company's
2000 annual general meeting of shareholders; and (z) four of the
eleven directors to serve until the Company's 2001 annual
general meeting of shareholders.
2. To amend the Company's Bye-Laws to provide for a classified
Board of Directors.
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3. To amend the Company's Bye-Laws to provide that Directors may be
removed only for cause upon the affirmative vote of the holders
of not less than 66-2/3% of the voting rights attached to all
issued and outstanding capital shares of the Company entitled to
vote thereon.
4. To amend the Company's Bye-Laws to fix the size of the Board at
eleven directors and to authorize the Board, at its discretion,
to expand the size of the Board to twelve directors and to fill
any additional position so created.
5. To amend the Company's Bye-Laws to provide that shareholders of
record may nominate persons for election as director at an
annual or special general meeting of shareholders only if prior
written notice signed by no less than 20 shareholders holding in
the aggregate not less than 10% of the outstanding paid up share
capital of the Company stating such shareholders' intent to make
such nomination has been given to the Secretary of the Company:
(a) in the case of an annual general meeting, not less than 60
days nor more than 90 days prior to the anniversary date of the
immediately preceding annual general meeting of shareholders;
and (b) in the case of a special general meeting called for the
purpose of electing directors, not later than the close of
business on the tenth day following the day on which notice of
the date of the special general meeting was mailed or public
disclosure of the date of the special general meeting was made,
whichever first occurs.
6. To amend the Company's Bye-Laws to provide that business may be
properly introduced by the shareholders at an annual general
meeting where such business is not brought by or at the
direction of the Board, in addition to any other applicable
requirements, only if written notice thereof containing certain
prescribed information concerning such proposal is deposited
with the Secretary of the Company by shareholders representing
at least one-twentieth of the Company's outstanding voting
rights or constituting not less than 100 persons at least six
weeks prior to the date of the annual general meeting whichever
first occurs.
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7. To amend the Company's Bye-Laws to provide that not less than 60
nor more than 90 days notice shall be given of a special general
meeting properly requisitioned by shareholders holding at least
10% of the outstanding paid up share capital of the Company.
8. To amend the Company's Bye-Laws to prohibit holders of the
Company's capital shares, other than certain exempted persons,
from obtaining or exercising more than 9.9% of the voting rights
attached to all issued and outstanding capital shares of the
Company.
9. To amend the Company's Bye-Laws to require the affirmative vote
of at least 66-2/3% of the outstanding voting rights attached to
all issued and outstanding capital shares of the Company
entitled to vote thereon to amend, repeal or adopt any provision
inconsistent with any of Proposals 2, 3, 4, 5, 6, 7 or 8 and the
amendment contemplated by this Proposal.
10. To amend the Company's Memorandum of Association to increase the
Company's authorized capital to an aggregate of 325,000,000
shares, consisting of 225,000,000 Common Shares and 100,000,000
Preference Shares, in order to facilitate the potential adoption
by the Board in the future of a shareholder rights plan.
11. To amend the RenaissanceRe Holdings Ltd. Amended and Restated
Non-Employee Directors Stock Plan (the "Directors Plan") which
would (i) increase the number of authorized shares available for
issuance thereunder from 100,000 Common Shares to 200,000 Common
Shares, and (ii) provide that any shares which are tendered to
or withheld by the Company under the Directors Plan in
connection with the exercise of options granted thereunder or
the payment of related withholding taxes shall again become
available for grant thereunder.
12. To appoint independent auditors of the Company for the 1998
fiscal year to serve until the Company's 1999 annual general
meeting of shareholders and to refer to the Board the
determination of the auditors' remuneration.
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13. In accordance with the Company's Bye-Laws, to vote on a proposal
as the holder of all outstanding capital shares of Renaissance
Reinsurance Ltd. ("Reinsurance"), to elect eleven directors of
Reinsurance to serve for the terms indicated and until their
successors are duly elected and qualified, as follows: (x) four
of the eleven directors to serve until the Reinsurance 1999
annual general meeting of shareholders; (y) three of the eleven
directors to serve until the Reinsurance 2000 annual general
meeting of shareholders; and (z) four of the eleven directors to
serve until the Reinsurance 2001 annual general meeting of
shareholders.
14. In accordance with the Company's Bye-Laws, to vote on a proposal
as the holder of all outstanding capital shares of Reinsurance,
to amend the Reinsurance Bye-Laws to provide for a classified
board of directors of Reinsurance (the "Reinsurance Board").
15. In accordance with the Company's Bye-Laws, as the holder of all
outstanding capital shares of Reinsurance, to amend the
Reinsurance Bye-Laws to fix the size of the Reinsurance Board at
eleven directors and to authorize the Reinsurance Board, at its
discretion, to expand its size to twelve directors and to fill
any additional position so created.
16. In accordance with the Company's Bye-Laws, as the holder of all
outstanding capital shares of Reinsurance, to appoint
independent auditors of Reinsurance for the 1998 fiscal year to
serve until the 1999 annual general meeting of shareholders of
Reinsurance and to refer to the Reinsurance Board the
determination of the auditors' remuneration.
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17. RESOLVED, in accordance with the Company's Bye-Laws, to vote on
a proposal to amend the Memorandum of Association of Reinsurance
to increase the minimum issued and fully paid share capital of
Reinsurance to $1 million.
Item 5. Other Information
Pursuant to recent amendments to the rules relating to proxy statements
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), shareholders of the Company are hereby notified that any
shareholder proposal not included in the Company's proxy materials for
its 1999 Annual Meeting of Shareholders (the "Annual Meeting") in
accordance with Rule 14a-8 under the Exchange Act but subsequently or
otherwise proposed for presentment at the Annual Meeting will be
considered untimely for the purposes of Rules 14a-4 and 14a-5 under the
Exchange Act if notice thereof is received by the Company (i) with
respect to the election of directors, after March 6, 1999 and (ii) with
respect to any other matter, after March 21, 1999. Management proxies
will be authorized to exercise discretionary voting authority with
respect to any shareholder proposal not included in the Company's proxy
materials for the Annual Meeting unless (a) the Company receives notice
of such proposal by March 21, 1999, and (b) the conditions set forth in
Rule 14a-4(c)(2)(i)-(iii) under the Exchange Act are met.
The Company's Bye-laws provide that, in addition to any other
applicable requirements, in order for a resolution to be properly moved
by shareholders in accordance with the Bermuda Companies Act and the
Bye-laws at an annual general meeting of shareholders where such
business is not brought by or at the direction of the Board, such
resolution may be introduced by such shareholders at such meeting only
if prior written notice thereof is given by such shareholders to the
Secretary of the Company at the Company's registered office setting
forth as to each matter such shareholders propose to bring before the
annual meeting: (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such
business at the annual meeting; (ii) the name and record address of
such shareholder; (iii) the class or series and number of shares of
capital stock of the Company which are owned beneficially or of record
by such shareholder; (iv) a description of all arrangements or
understandings between such shareholder and any other person (including
his or her name and address) in connection with the proposal of such
business by such shareholder and any material interest of such
shareholder in such business; and (v) a representation that such
shareholder intends to appear in person or by proxy at the annual
meeting to bring such business before the meeting. The Chairman of an
annual general meeting may, if the facts warrant, determine and declare
that any business was not properly brought before the meeting and such
business will not be transacted.
With respect to the election of directors, the Company's Bye-laws
provide that the only persons who shall be eligible for appointment or
election as a director of the Company at any general meeting of the
Company other than persons nominated by the Board shall be persons for
whom a written notice of nomination signed by not less than twenty
shareholders of the Company holding in the aggregate not less than 10%
of the outstanding paid up share capital of the Company at that time
has been delivered to the
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registered office of the Company for the attention of the Secretary not
less than sixty days prior to the scheduled date of such general
meeting or any adjournment thereof. A shareholder's notice proposing a
director for nomination must set forth (x) as to each person whom the
shareholder proposes to nominate for election as a director: (i) the
name, age, business address and residence address of the person; (ii)
the principal occupation or employment of the person; (iii) the class
or series and number of shares of capital stock of the Company which
are owned beneficially or of record by the person; and (iv) any other
information relating to the person that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the
"Proxy Filings"); and (y) as to the shareholder giving the notice: (i)
the name and record address of such shareholder; (ii) the class or
series and number of shares of capital stock of the Company which are
owned beneficially or of record by such shareholder; (iii) a
description of all arrangements or understandings between such
shareholder and each proposed nominee and any other person (including
his name and address) pursuant to which the nomination(s) are to be
made by such shareholder; (iv) a representation that such shareholder
intends to appear in person or by proxy at the meeting to nominate the
persons named in its notice; and (v) any other information relating to
such shareholder that would be required to be disclosed in a Proxy
Filing. Such notice must be accompanied by a written consent of each
proposed nominee to being named as a nominee and to serve as a director
if elected. The Chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing
procedure.
Item 6 -- Exhibits and Reports on Form 8-K
a. Exhibits:
5.1 Amended and Restated Bye-laws of the Company
10.1 Credit Agreement, dated as of June 24, 1998, among
Renaissance U.S. Holdings, Inc., as Borrower,
Various Financial Institutions, as Lenders, Bank of
America National Trust and Savings Association, as
Administrative Agent, and BancAmerica Robertson
Stephens, as Arranger.
10.2 Guaranty, dated as of June 24, 1998, among
RenaissanceRe Holdings, Ltd., as Guarantor, and
Bank of America National Trust & Savings
Association.
10.3 Second Amendment Agreement, dated as of June 15,
1998, among RenaissanceRe Holdings Ltd., the
Lenders identified therein and Bank of America
National Trust and Savings Association, as
Administrative Agent for the Lenders.
10.4 Third Amended and Restated Employment Agreement,
dated as of June 3, 1998, between Renaissance
Reinsurance Ltd. and James N. Stanard.
21.1 List of Subsidiaries of RenaissanceRe Holdings Ltd.
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27 Financial Data Schedule
b. Current Reports on Form 8-K:
None.
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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.
Date: August 14, 1998
By: /s/ John M. Lummis
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John M. Lummis
Senior Vice President and
Chief Financial Officer
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