COPY OF THE COMPANY'S PRESS RELEASE, ISSUED JULY 29, 2008
Published on July 30, 2008
Exhibit 99.1
RenaissanceRe Reports Operating Income of $159.9 Million for the Second Quarter of 2008 or $2.50 Per Common Share
Net Income of $135.7 Million for the Second Quarter of 2008 or $2.13 Per Common Share
Annualized Operating Return on Equity of 23.4% and Annualized Return on Equity of 19.9%
Pembroke, Bermuda, July 29, 2008 RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $159.9 million in second quarter operating income available to common shareholders compared to $194.7 million in the second quarter of 2007. Operating income excludes net realized investment losses of $24.2 million and $11.6 million in the second quarters of 2008 and 2007, respectively. Operating income per diluted common share was $2.50 in the second quarter of 2008, compared to $2.69 in the second quarter of 2007. Net income available to common shareholders was $135.7 million or $2.13 per diluted common share in the quarter, compared to net income available to common shareholders of $183.2 million or $2.53 per diluted common share for the same quarter of 2007.
The Company reported an annualized operating return on average common equity of 23.4% and an annualized return on average common equity of 19.9% in the second quarter of 2008, compared to 28.5% and 26.8%, respectively, in the second quarter of 2007. Tangible book value per common share increased to $42.14 at June 30, 2008, a 0.2% increase in the second quarter of 2008, compared to a 6.0% increase in the second quarter of 2007. Book value per common share increased to $43.32 at June 30, 2008, a 2.8% increase in the second quarter of 2008, compared to a 5.9% increase in the second quarter of 2007.
Neill A. Currie, CEO, commented: I am pleased to report another solid quarter with an annualized operating ROE of over 23%. We generated strong underwriting profits and had a successful June 1st renewal season. We are pleased with our portfolio of risks, despite softening market conditions and a challenging investment environment.
Mr. Currie added: Our ability to produce an attractive portfolio of business in this market is a testament to our position as a market leader with strong client and broker relationships. We continue to strengthen our franchise by investing in our people, risk management capabilities and underwriting tools. During the quarter we added to our business capabilities, with the addition of Agro National LLC, a managing general underwriter of multi-peril crop insurance, and Claims Management Services, Inc., a third party claims administrator. As we maintain our strong underwriting discipline in a difficult market, we continue to lay the groundwork for future opportunities.
SECOND QUARTER 2008 RESULTS
Underwriting Results
Gross premiums written for the second quarter of 2008 were $807.6 million, a $38.3 million decrease from the second quarter of 2007. The decrease in gross premiums written in the second quarter of 2008, compared to the second quarter of 2007, was primarily due to a $118.4 million decrease in gross premiums written in the Companys Reinsurance segment and partially offset by a $76.5 million increase in gross premiums written within the Companys Individual Risk segment, as described in more detail below. The Company generated $175.2 million of underwriting income and had a combined ratio of 53.5% in the second quarter of 2008, compared to $133.6 million of underwriting income and a 62.7% combined ratio in the second quarter of 2007. The Companys underwriting results for the second quarter of 2008 were driven by a combination of higher net premiums earned and lower net claims and claim expenses incurred. The Company experienced $49.6 million of favorable development on prior year reserves in the second quarter of 2008, compared to $59.1 million of favorable development in the second quarter of 2007. The favorable development is primarily due to lower than expected claims emergence in both the Companys Reinsurance and Individual Risk segments.
1
Reinsurance Segment
Gross premiums written for the Companys Reinsurance segment decreased $118.4 million, or 19.5%, to $487.8 million in the second quarter of 2008, compared to the second quarter of 2007. The Companys managed catastrophe premiums decreased $47.3 million, or 8.7%, from the second quarter of 2007 and the Companys specialty reinsurance premiums decreased $70.3 million, or 75.2%, from the second quarter of 2007. The decrease in the Companys managed catastrophe premiums was primarily due to softening market conditions which resulted in lower premium rates on business written during the quarter. The decrease in the Companys specialty reinsurance premiums was principally driven by the impact of one large catastrophe exposed personal lines quota share contract which generated $2.6 million in gross premiums written in the second quarter of 2008 compared to $75.4 million in the second quarter of 2007, a decrease of $72.8 million. The second quarter of 2007 benefited from the assumed portfolio transfer in of this contract for the 2007 underwriting year which increased gross premiums written in that quarter while the second quarter of 2008 was impacted by the portfolio transfer out of the 2007 contract, followed by an assumed portfolio transfer in of the 2008 contract on a lower premium base.
The Reinsurance segment generated $157.9 million of underwriting income and had a combined ratio of 30.2% in the second quarter of 2008, compared to $121.1 million of underwriting income and a combined ratio of 46.5% in the second quarter of 2007. The increase in underwriting income in the second quarter of 2008 was primarily due to a comparably low level of insured catastrophe events occurring compared to the second quarter of 2007 where the Company experienced $53.0 million of net claims and claim expenses associated with the flooding that occurred in the United Kingdom. The Reinsurance segment experienced $37.7 million of favorable development on prior year reserves in the second quarter of 2008, compared to $49.7 million of favorable development in the second quarter of 2007. The favorable development in the second quarters of 2008 and 2007 was the result of lower than expected claims emergence in the Companys catastrophe and specialty reinsurance units.
Individual Risk
Gross premiums written for the Companys Individual Risk segment increased $76.5 million, or 32.1%, to $314.8 million in the second quarter of 2008, compared to $238.4 million in the second quarter of 2007. The increase in gross premiums written was primarily due to the Companys multi-peril crop insurance line of business which increased $86.4 million in the second quarter of 2008, principally due to higher agricultural commodity prices in the second quarter of 2008 compared to the second quarter of 2007, which resulted in higher premiums written for this business. The increase in the Companys multi-peril crop insurance business was partially offset by decreases in the Companys commercial multi-line and commercial property business, respectively, as a result of the Company maintaining its underwriting discipline due to the overall softening of market conditions with respect to premium rates.
The Individual Risk segment generated $17.4 million of underwriting income in the second quarter of 2008, compared to $12.5 million in the second quarter of 2007, an increase of $4.9 million. In the second quarter of 2008, the Individual Risk segment generated a net claims and claim expenses ratio of 62.6%, an underwriting expense ratio of 25.9% and a combined ratio of 88.5%, compared to 57.7%, 33.0% and 90.7%, respectively, in the second quarter of 2007. The improved underwriting performance was primarily due to an increase in net premiums earned, principally due to the Companys multi-peril crop insurance business, and a decrease in underwriting expenses, offset by an increase in net claims and claim expenses incurred. The decrease in the underwriting expense ratio and increase in the net claims and claim expense ratio was principally driven by an increase in the proportion of net premiums earned from the Companys multi-peril crop insurance, compared to the Companys other lines of business, as the multi-peril crop insurance line of business currently has a lower net acquisition expense ratio and higher net claims and claim expense ratio than the other lines of business within Individual Risk. The 5.7 percentage point increase in the current accident year net claims and claim expenses ratio also reflects a modest increase in the ultimate loss ratio for the multi-peril crop insurance business, compared to the same period of 2007, due to weather-related crop losses during the quarter such as flooding and hail storms in the Midwest portion of the U.S. and drought conditions in portions of Texas. Our Individual Risk prior year reserves experienced $11.8 million of favorable development in the second quarter of 2008 compared to $9.5 million of favorable development in the second quarter of 2007, primarily as a result of lower than expected reported claims on prior year reserves.
2
Other Items
| | Net investment income for the second quarter of 2008 was $38.7 million, compared to $118.1 million for the same quarter in 2007, a decrease of $79.5 million, as a result of lower returns in the Companys investment portfolio. Net investment income from fixed maturity investments available for sale remained relatively stable at $46.3 million in the second quarter of 2008 compared to $47.7 million in the second quarter of 2007. Net investment income from the Companys other investments generated a net investment loss of $17.5 million in the second quarter of 2008 compared with $41.6 million of net investment income in the second quarter of 2007, a decrease of $59.1 million. Included in the net investment loss from other investments is a $29.4 million loss from hedge funds and private equity investments in the second quarter of 2008 compared to $35.2 million of net investment income in the second quarter of 2007, a decrease of $64.6 million. Net investment income from short term investments decreased $16.3 million in the second quarter of 2008 to $12.1 million from $28.3 million in the second quarter of 2007, principally due to a decrease in the average balances of short term investments and a decrease in short term interest rates. |
| | Net realized losses on investments totaled $24.2 million in the second quarter of 2008 and includes $26.6 million of other than temporary impairment charges on the Companys fixed maturity investments available for sale, compared to net realized investment losses and other than temporary impairment charges of $11.6 million and $12.1 million, respectively, in the second quarter of 2007. None of the other than temporary impairment charges were credit-related and the Company had no fixed maturity investments available for sale in an unrealized loss position at June 30, 2008. |
| | The Companys cash flows from operations were $100.1 million for the second quarter of 2008, compared to $190.7 million for the second quarter of 2007. |
| | During the second quarter of 2008, the Company repurchased approximately 2.2 million common shares in open market transactions at an aggregate cost of $113.0 million and at an average share price of $52.12. |
| | During the second quarter of 2008, goodwill and other intangible assets increased by $68.6 million to $74.2 million at June 30, 2008 due to the acquisition of substantially all the net assets of Agro National LLC, a managing general underwriter of multi-peril crop insurance, and Claims Management Services, Inc., a third party claims administrator. |
3
This press release includes certain non-GAAP financial measures including operating income, operating income per common share diluted, operating return on average common equity annualized, managed catastrophe premium and tangible book value per common share plus accumulated dividends. A reconciliation of such measures to the most comparable GAAP figures in accordance with Regulation G is presented in the attached supplemental financial data.
Please refer to the Investor Information Financial Reports Financial Supplements section of the Companys website at www.renre.com for a copy of the Financial Supplement which includes additional information on the Companys financial performance.
RenaissanceRe Holdings Ltd. will host a conference call on Wednesday, July 30, 2008 at 9:30 a.m. (ET) to discuss this release. Live broadcast of the conference call will be available through the Investor Section of RenaissanceRes website at www.renre.com.
RenaissanceRe Holdings Ltd. is a global provider of reinsurance and insurance. The Companys business consists of two segments: (1) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain joint ventures and other investments managed by the Companys subsidiary RenaissanceRe Ventures Ltd., and (2) Individual Risk, which includes primary insurance and quota share reinsurance.
Cautionary Statement under Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995: Statements made in this news release contain information about the Companys future business prospects. These statements may be considered forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. For further information regarding cautionary statements and factors affecting future results, please refer to RenaissanceRe Holdings Ltd.s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, as amended, for the year ended December 31, 2007 and its quarterly report on Form 10-Q for the quarter ending March 31, 2008.
| INVESTOR CONTACT: | MEDIA CONTACT: | |
| Fred R. Donner | David Lilly or Dawn Dover | |
| Chief Financial Officer and Executive Vice President | Kekst and Company | |
| RenaissanceRe Holdings Ltd. | (212) 521-4800 | |
| (441) 295-4513 |
4
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Statements of Operations
For the three and six months ended June 30, 2008 and 2007
(in thousands of United States Dollars, except per share amounts)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2008 |
June 30, 2007 |
June 30, 2008 |
June 30, 2007 |
|||||||||||||
| Revenues |
||||||||||||||||
| Gross premiums written |
$ | 807,575 | $ | 845,860 | $ | 1,334,613 | $ | 1,478,589 | ||||||||
| Net premiums written |
$ | 614,022 | $ | 609,842 | $ | 1,017,138 | $ | 1,180,869 | ||||||||
| Increase in unearned premiums |
(237,449 | ) | (251,388 | ) | (331,651 | ) | (459,797 | ) | ||||||||
| Net premiums earned |
376,573 | 358,454 | 685,487 | 721,072 | ||||||||||||
| Net investment income |
38,685 | 118,140 | 91,188 | 226,155 | ||||||||||||
| Net foreign exchange (losses) gains |
(231 | ) | (373 | ) | 4,705 | 4,794 | ||||||||||
| Equity in earnings of other ventures |
4,872 | 9,675 | 11,122 | 20,376 | ||||||||||||
| Other (loss) income |
(24 | ) | (5,498 | ) | 7,988 | (7,701 | ) | |||||||||
| Net realized losses on investments |
(24,161 | ) | (11,566 | ) | (34,831 | ) | (7,481 | ) | ||||||||
| Total revenues |
395,714 | 468,832 | 765,659 | 957,215 | ||||||||||||
| Expenses |
||||||||||||||||
| Net claims and claim expenses incurred |
114,217 | 138,854 | 196,373 | 284,846 | ||||||||||||
| Acquisition expenses |
53,613 | 59,509 | 100,041 | 123,238 | ||||||||||||
| Operational expenses |
33,494 | 26,527 | 63,607 | 55,051 | ||||||||||||
| Corporate expenses |
7,111 | 4,927 | 15,814 | 11,931 | ||||||||||||
| Interest expense |
5,937 | 7,195 | 12,741 | 19,174 | ||||||||||||
| Total expenses |
214,372 | 237,012 | 388,576 | 494,240 | ||||||||||||
| Income before minority interest and taxes |
181,342 | 231,820 | 377,083 | 462,975 | ||||||||||||
| Minority interestDaVinciRe |
(41,341 | ) | (37,399 | ) | (81,656 | ) | (66,506 | ) | ||||||||
| Income before taxes |
140,001 | 194,421 | 295,427 | 396,469 | ||||||||||||
| Income tax benefit (expense) |
6,295 | (680 | ) | (1,391 | ) | (787 | ) | |||||||||
| Net income |
146,296 | 193,741 | 294,036 | 395,682 | ||||||||||||
| Dividends on preference shares |
(10,575 | ) | (10,575 | ) | (21,150 | ) | (21,711 | ) | ||||||||
| Net income available to common shareholders |
$ | 135,721 | $ | 183,166 | $ | 272,886 | $ | 373,971 | ||||||||
| Operating income available to common shareholders per Common Sharediluted (1) |
$ | 2.50 | $ | 2.69 | $ | 4.71 | $ | 5.26 | ||||||||
| Net income available to common shareholders per Common Sharebasic |
$ | 2.16 | $ | 2.57 | $ | 4.25 | $ | 5.25 | ||||||||
| Net income available to common shareholders per Common Sharediluted |
$ | 2.13 | $ | 2.53 | $ | 4.18 | $ | 5.16 | ||||||||
| Average shares outstandingbasic |
62,921 | 71,259 | 64,224 | 71,270 | ||||||||||||
| Average shares outstandingdiluted |
63,878 | 72,430 | 65,340 | 72,472 | ||||||||||||
| Net claims and claim expense ratio |
30.3 | % | 38.7 | % | 28.6 | % | 39.5 | % | ||||||||
| Underwriting expense ratio |
23.2 | % | 24.0 | % | 23.9 | % | 24.7 | % | ||||||||
| Combined ratio |
53.5 | % | 62.7 | % | 52.5 | % | 64.2 | % | ||||||||
| Operating return on average common equityannualized (1) |
23.4 | % | 28.5 | % | 22.3 | % | 28.8 | % | ||||||||
| (1) | See Comments on Regulation G for a reconciliation of non-GAAP financial measures. |
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Balance Sheets
(in thousands of United States Dollars, except per share amounts)
| At | ||||||
|
June 30, 2008 |
December 31, 2007 |
|||||
| (Unaudited) | (Audited) | |||||
| Assets |
||||||
| Fixed maturity investments available for sale, at fair value |
$ | 3,775,345 | $ | 3,914,363 | ||
| Short term investments, at fair value |
1,400,884 | 1,821,549 | ||||
| Other investments, at fair value |
927,247 | 807,864 | ||||
| Investments in other ventures, under equity method |
104,438 | 90,572 | ||||
| Total investments |
6,207,914 | 6,634,348 | ||||
| Cash and cash equivalents |
262,951 | 330,226 | ||||
| Premiums receivable |
965,955 | 475,075 | ||||
| Ceded reinsurance balances |
206,888 | 107,916 | ||||
| Losses recoverable |
191,789 | 183,275 | ||||
| Accrued investment income |
32,976 | 39,084 | ||||
| Deferred acquisition costs |
134,319 | 104,212 | ||||
| Receivable for investments sold |
209,320 | 144,037 | ||||
| Other secured assets |
107,025 | 90,488 | ||||
| Other assets |
156,970 | 171,457 | ||||
| Goodwill and other intangibles |
74,169 | 6,237 | ||||
| Total assets |
$ | 8,550,276 | $ | 8,286,355 | ||
| Liabilities, Minority Interest and Shareholders Equity |
||||||
| Liabilities |
||||||
| Reserve for claims and claim expenses |
$ | 2,009,803 | $ | 2,028,496 | ||
| Reserve for unearned premiums |
993,959 | 563,336 | ||||
| Debt |
450,000 | 451,951 | ||||
| Reinsurance balances payable |
408,775 | 275,430 | ||||
| Payable for investments purchased |
247,482 | 422,974 | ||||
| Other secured liabilities |
106,420 | 88,920 | ||||
| Other liabilities |
165,905 | 162,294 | ||||
| Total liabilities |
4,382,344 | 3,993,401 | ||||
| Minority interestDaVinciRe |
794,499 | 815,451 | ||||
| Shareholders Equity |
||||||
| Preference shares |
650,000 | 650,000 | ||||
| Common shares |
62,862 | 68,920 | ||||
| Additional paid-in capital |
| 107,867 | ||||
| Accumulated other comprehensive income |
35,562 | 44,719 | ||||
| Retained earnings |
2,625,009 | 2,605,997 | ||||
| Total shareholders equity |
3,373,433 | 3,477,503 | ||||
| Total liabilities, minority interest and shareholders equity |
$ | 8,550,276 | $ | 8,286,355 | ||
| Book value per common share (unaudited) |
$ | 43.32 | $ | 41.03 | ||
| Common shares outstanding |
62,862 | 68,920 | ||||
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars)
(Unaudited)
| Three months ended June 30, 2008 | |||||||||||||||||||
| Reinsurance | Individual Risk |
Eliminations (1) | Other | Total | |||||||||||||||
| Gross premiums written |
$ | 487,793 | $ | 314,845 | $ | 4,937 | $ | | $ | 807,575 | |||||||||
| Net premiums written |
$ | 353,187 | $ | 260,835 | | $ | 614,022 | ||||||||||||
| Net premiums earned |
$ | 226,286 | $ | 150,287 | | $ | 376,573 | ||||||||||||
| Net claims and claim expenses incurred |
20,120 | 94,097 | | 114,217 | |||||||||||||||
| Acquisition expenses |
25,511 | 28,102 | | 53,613 | |||||||||||||||
| Operational expenses |
22,756 | 10,738 | | 33,494 | |||||||||||||||
| Underwriting income |
$ | 157,899 | $ | 17,350 | | 175,249 | |||||||||||||
| Net investment income |
38,685 | 38,685 | |||||||||||||||||
| Equity in earnings of other ventures |
4,872 | 4,872 | |||||||||||||||||
| Other loss |
(24 | ) | (24 | ) | |||||||||||||||
| Interest and preference share dividends |
(16,512 | ) | (16,512 | ) | |||||||||||||||
| Minority interest - DaVinciRe |
(41,341 | ) | (41,341 | ) | |||||||||||||||
| Other items, net |
(1,047 | ) | (1,047 | ) | |||||||||||||||
| Net realized losses on investments |
(24,161 | ) | (24,161 | ) | |||||||||||||||
| Net income available to common shareholders |
$(39,528) | $ | 135,721 | ||||||||||||||||
| Net claims and claim expenses incurred - current accident year |
$ | 57,861 | $ | 105,926 | $ | 163,787 | |||||||||||||
| Net claims and claim expenses incurred - prior accident years |
(37,741 | ) | (11,829 | ) | (49,570 | ) | |||||||||||||
| Net claims and claim expenses incurred - total |
$ | 20,120 | $ | 94,097 | $ | 114,217 | |||||||||||||
| Net claims and claim expense ratio - current accident year |
25.6 | % | 70.5 | % | 43.5 | % | |||||||||||||
| Net claims and claim expense ratio - prior accident years |
(16.7% | ) | (7.9% | ) | (13.2% | ) | |||||||||||||
| Net claims and claim expense ratio - calendar year |
8.9 | % | 62.6 | % | 30.3 | % | |||||||||||||
| Underwriting expense ratio |
21.3 | % | 25.9 | % | 23.2 | % | |||||||||||||
| Combined ratio |
30.2 | % | 88.5 | % | 53.5 | % | |||||||||||||
| (1) Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. |
|
||||||||||||||||||
| Three months ended June 30, 2007 | |||||||||||||||||||
| Reinsurance | Individual Risk |
Eliminations (1) | Other | Total | |||||||||||||||
| Gross premiums written |
$ | 606,215 | $ | 238,391 | $ | 1,254 | $ | | $ | 845,860 | |||||||||
| Net premiums written |
$ | 428,355 | $ | 181,487 | | $ | 609,842 | ||||||||||||
| Net premiums earned |
$ | 225,987 | $ | 132,467 | | $ | 358,454 | ||||||||||||
| Net claims and claim expenses incurred |
62,528 | 76,326 | | 138,854 | |||||||||||||||
| Acquisition expenses |
25,927 | 33,582 | | 59,509 | |||||||||||||||
| Operational expenses |
16,451 | 10,076 | | 26,527 | |||||||||||||||
| Underwriting income |
$ | 121,081 | $ | 12,483 | | 133,564 | |||||||||||||
| Net investment income |
118,140 | 118,140 | |||||||||||||||||
| Equity in earnings of other ventures |
9,675 | 9,675 | |||||||||||||||||
| Other loss |
(5,498 | ) | (5,498 | ) | |||||||||||||||
| Interest and preference share dividends |
(17,770 | ) | (17,770 | ) | |||||||||||||||
| Minority interest - DaVinciRe |
(37,399 | ) | (37,399 | ) | |||||||||||||||
| Other items, net |
(5,980 | ) | (5,980 | ) | |||||||||||||||
| Net realized losses on investments |
(11,566 | ) | (11,566 | ) | |||||||||||||||
| Net income available to common shareholders |
$ | 49,602 | $ | 183,166 | |||||||||||||||
| Net claims and claim expenses incurred - current accident year |
$ | 112,208 | $ | 85,793 | $ | 198,001 | |||||||||||||
| Net claims and claim expenses incurred - prior accident years |
(49,680 | ) | (9,467 | ) | (59,147 | ) | |||||||||||||
| Net claims and claim expenses incurred - total |
$ | 62,528 | $ | 76,326 | $ | 138,854 | |||||||||||||
| Net claims and claim expense ratio - current accident year |
49.7 | % | 64.8 | % | 55.2 | % | |||||||||||||
| Net claims and claim expense ratio - prior accident years |
(22.0% | ) | (7.1% | ) | (16.5% | ) | |||||||||||||
| Net claims and claim expense ratio - calendar year |
27.7 | % | 57.7 | % | 38.7 | % | |||||||||||||
| Underwriting expense ratio |
18.8 | % | 33.0 | % | 24.0 | % | |||||||||||||
| Combined ratio |
46.5 | % | 90.7 | % | 62.7 | % | |||||||||||||
| (1) | Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. |
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial DataSegment Information (contd.)
(in thousands of United States Dollars)
(Unaudited)
| Six months ended June 30, 2008 | ||||||||||||||||||||
| Reinsurance | Individual Risk | Eliminations (1) | Other | Total | ||||||||||||||||
| Gross premiums written |
$ | 931,521 | $ | 395,666 | $ | 7,426 | $ | | $ | 1,334,613 | ||||||||||
| Net premiums written |
$ | 696,107 | $ | 321,031 | | $ | 1,017,138 | |||||||||||||
| Net premiums earned |
$ | 458,513 | $ | 226,974 | | $ | 685,487 | |||||||||||||
| Net claims and claim expenses incurred |
67,189 | 129,184 | | 196,373 | ||||||||||||||||
| Acquisition expenses |
44,026 | 56,015 | | 100,041 | ||||||||||||||||
| Operational expenses |
43,895 | 19,712 | | 63,607 | ||||||||||||||||
| Underwriting income |
$ | 303,403 | $ | 22,063 | | 325,466 | ||||||||||||||
| Net investment income |
91,188 | 91,188 | ||||||||||||||||||
| Equity in earnings of other ventures |
11,122 | 11,122 | ||||||||||||||||||
| Other income |
7,988 | 7,988 | ||||||||||||||||||
| Interest and preference share dividends |
(33,891 | ) | (33,891 | ) | ||||||||||||||||
| Minority interestDaVinciRe |
(81,656 | ) | (81,656 | ) | ||||||||||||||||
| Other items, net |
(12,500 | ) | (12,500 | ) | ||||||||||||||||
| Net realized losses on investments |
(34,831 | ) | (34,831 | ) | ||||||||||||||||
| Net income available to common shareholders |
$ | (52,580 | ) | $ | 272,886 | |||||||||||||||
| Net claims and claim expenses incurredcurrent accident year |
$ | 128,437 | $ | 162,591 | $ | 291,028 | ||||||||||||||
| Net claims and claim expenses incurredprior accident years |
(61,248 | ) | (33,407 | ) | (94,655 | ) | ||||||||||||||
| Net claims and claim expenses incurredtotal |
$ | 67,189 | $ | 129,184 | $ | 196,373 | ||||||||||||||
| Net claims and claim expense ratiocurrent accident year |
28.0 | % | 71.6 | % | 42.5 | % | ||||||||||||||
| Net claims and claim expense ratioprior accident years |
(13.3 | )% | (14.7 | )% | (13.9 | )% | ||||||||||||||
| Net claims and claim expense ratiocalendar year |
14.7 | % | 56.9 | % | 28.6 | % | ||||||||||||||
| Underwriting expense ratio |
19.1 | % | 33.4 | % | 23.9 | % | ||||||||||||||
| Combined ratio |
33.8 | % | 90.3 | % | 52.5 | % | ||||||||||||||
|
(1) Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. |
|
|||||||||||||||||||
| Six months ended June 30, 2007 | ||||||||||||||||||||
| Reinsurance | Individual Risk | Eliminations (1) | Other | Total | ||||||||||||||||
| Gross premiums written |
$ | 1,122,182 | $ | 361,707 | $ | (5,300 | ) | $ | | $ | 1,478,589 | |||||||||
| Net premiums written |
$ | 904,574 | $ | 276,295 | | $ | 1,180,869 | |||||||||||||
| Net premiums earned |
$ | 480,766 | $ | 240,306 | | $ | 721,072 | |||||||||||||
| Net claims and claim expenses incurred |
154,655 | 130,191 | | 284,846 | ||||||||||||||||
| Acquisition expenses |
54,289 | 68,949 | | 123,238 | ||||||||||||||||
| Operational expenses |
34,642 | 20,409 | | 55,051 | ||||||||||||||||
| Underwriting income |
$ | 237,180 | $ | 20,757 | | 257,937 | ||||||||||||||
| Net investment income |
226,155 | 226,155 | ||||||||||||||||||
| Equity in earnings of other ventures |
20,376 | 20,376 | ||||||||||||||||||
| Other loss |
(7,701 | ) | (7,701 | ) | ||||||||||||||||
| Interest and preference share dividends |
(40,885 | ) | (40,885 | ) | ||||||||||||||||
| Minority interestDaVinciRe |
(66,506 | ) | (66,506 | ) | ||||||||||||||||
| Other items, net |
(7,924 | ) | (7,924 | ) | ||||||||||||||||
| Net realized losses on investments |
(7,481 | ) | (7,481 | ) | ||||||||||||||||
| Net income available to common shareholders |
$ | 116,034 | $ | 373,971 | ||||||||||||||||
| Net claims and claim expenses incurredcurrent accident year |
$ | 234,614 | $ | 156,452 | $ | 391,066 | ||||||||||||||
| Net claims and claim expenses incurredprior accident years |
(79,959 | ) | (26,261 | ) | (106,220 | ) | ||||||||||||||
| Net claims and claim expenses incurredtotal |
$ | 154,655 | $ | 130,191 | $ | 284,846 | ||||||||||||||
| Net claims and claim expense ratiocurrent accident year |
48.8 | % | 65.1 | % | 54.2 | % | ||||||||||||||
| Net claims and claim expense ratioprior accident years |
(16.6 | )% | (10.9 | )% | (14.7 | )% | ||||||||||||||
| Net claims and claim expense ratiocalendar year |
32.2 | % | 54.2 | % | 39.5 | % | ||||||||||||||
| Underwriting expense ratio |
18.5 | % | 37.2 | % | 24.7 | % | ||||||||||||||
| Combined ratio |
50.7 | % | 91.4 | % | 64.2 | % | ||||||||||||||
|
(1) Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. |
|
|||||||||||||||||||
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial DataGross Premiums Written Analysis
(in thousands of United States Dollars)
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||
| Reinsurance Segment |
June 30, 2008 |
June 30, 2007 |
June 30, 2008 |
June 30, 2007 |
||||||||||||
| Renaissance catastrophe premiums |
$ | 291,317 | $ | 340,913 | $ | 516,285 | $ | 580,940 | ||||||||
| Renaissance specialty premiums |
22,955 | 93,258 | 98,418 | 200,848 | ||||||||||||
| Total Renaissance premiums |
314,272 | 434,171 | 614,703 | 781,788 | ||||||||||||
| DaVinci catastrophe premiums |
173,349 | 171,915 | 312,527 | 330,852 | ||||||||||||
| DaVinci specialty premiums |
172 | 129 | 4,291 | 9,542 | ||||||||||||
| Total DaVinci premiums |
173,521 | 172,044 | 316,818 | 340,394 | ||||||||||||
| Total Reinsurance premiums |
$ | 487,793 | $ | 606,215 | $ | 931,521 | $ | 1,122,182 | ||||||||
| Total specialty premiums |
$ | 23,127 | $ | 93,387 | $ | 102,709 | $ | 210,390 | ||||||||
| Total catastrophe premiums |
$ | 464,666 | $ | 512,828 | $ | 828,812 | $ | 911,792 | ||||||||
| Catastrophe premiums written on behalf of our joint venture, Top Layer Re (1) |
24,042 | 26,822 | 55,663 | 63,725 | ||||||||||||
| Catastrophe premiums assumed from the Individual Risk segment |
4,937 | 1,254 | 7,426 | (5,300 | ) | |||||||||||
| Total managed catastrophe premiums (2) |
493,645 | 540,904 | 891,901 | 970,217 | ||||||||||||
| Managed premiums assumed for fully-collateralized joint ventures |
(2,286 | ) | (65,798 | ) | (2,286 | ) | (59,363 | ) | ||||||||
| Total managed catastrophe premiums, net of fully-collateralized joint ventures (2) |
$ | 491,359 | $ | 475,106 | $ | 889,615 | $ | 910,854 | ||||||||
|
(1) Top Layer Re is accounted for under the equity method of accounting. (2) See Comments on Regulation G for a reconciliation of non-GAAP financial measures. |
|
|||||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| Individual Risk Segment |
June 30, 2008 |
June 30, 2007 |
June 30, 2008 |
June 30, 2007 |
||||||||||||
| Multi-peril crop |
$ | 203,077 | $ | 116,690 | $ | 208,449 | $ | 127,941 | ||||||||
| Commercial multi-line |
31,699 | 44,435 | 63,083 | 92,325 | ||||||||||||
| Commercial property |
60,830 | 75,013 | 91,683 | 117,518 | ||||||||||||
| Personal lines property |
19,239 | 2,253 | 32,451 | 23,923 | ||||||||||||
| Total Individual Risk premiums |
$ | 314,845 | $ | 238,391 | $ | 395,666 | $ | 361,707 | ||||||||
Comments on Regulation G
In addition to the GAAP financial measures set forth in this Press Release, the Company has included certain non-GAAP financial measures in this Press Release within the meaning of Regulation G. The Company has provided these financial measurements in previous investor communications and the Companys management believes that these measurements are important to investors and other interested persons, and that investors and such other persons benefit from having a consistent basis for comparison between quarters and for the comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP measures in assessing the Companys overall financial performance.
The Company uses operating income as a measure to evaluate the underlying fundamentals of its operations and believes it to be a useful measure of its corporate performance. Operating income as used herein differs from net income available to common shareholders, which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized gains and losses on the Companys investments. The Companys management believes that operating income is useful to investors because it more accurately measures and predicts the Companys results of operations by removing the variability arising from fluctuations in the Companys investment portfolio, which is not considered by management to be a relevant indicator of business operations. The Company also uses operating income to calculate operating income per common share diluted and operating return on average common equity annualized. The following is a reconciliation of: 1) net income available to common shareholders to operating income available to common shareholders; 2) net income available to common shareholders per common share diluted to operating income available to common shareholders per common share diluted; and 3) return on average common equity annualized to operating return on average common equity annualized:
| Three months ended | Six months ended | |||||||||||||||
| (in thousands of United States dollars, except for per share amounts) | June 30, 2008 |
June 30, 2007 |
June 30, 2008 |
June 30, 2007 |
||||||||||||
| Net income available to common shareholders |
$ | 135,721 | $ | 183,166 | $ | 272,886 | $ | 373,971 | ||||||||
| Adjustment for net realized losses on investments |
24,161 | 11,566 | 34,831 | 7,481 | ||||||||||||
| Operating income available to common shareholders |
$ | 159,882 | $ | 194,732 | $ | 307,717 | $ | 381,452 | ||||||||
| Net income available to common shareholders per common sharediluted |
$ | 2.13 | $ | 2.53 | $ | 4.18 | $ | 5.16 | ||||||||
| Adjustment for net realized losses on investments |
0.37 | 0.16 | 0.53 | 0.10 | ||||||||||||
| Operating income available to common shareholders per common sharediluted |
$ | 2.50 | $ | 2.69 | $ | 4.71 | $ | 5.26 | ||||||||
| Return on average common equityannualized |
19.9 | % | 26.8 | % | 19.8 | % | 28.2 | % | ||||||||
| Adjustment for net realized losses on investments |
3.5 | % | 1.7 | % | 2.5 | % | 0.6 | % | ||||||||
| Operating return on average common equityannualized |
23.4 | % | 28.5 | % | 22.3 | % | 28.8 | % | ||||||||
The Company has also included in this Press Release managed catastrophe premiums and managed catastrophe premiums, net of fully-collateralized joint ventures. Managed catastrophe premiums is defined as gross catastrophe premiums written by Renaissance Reinsurance and its related joint ventures. Managed catastrophe premiums differ from total catastrophe premiums, which the Company believes is the most directly comparable GAAP measure, due to the inclusion of catastrophe premiums written on behalf of the Companys joint venture Top Layer Re, which is accounted for under the equity method of accounting. Managed catastrophe premiums, net of fully-collateralized joint ventures differ from total catastrophe premiums, which the Company believes is the most directly comparable GAAP measure, due to: 1) the inclusion of catastrophe premiums written on behalf of the Companys joint venture Top Layer Re, which is accounted for under the equity method of accounting; and 2) the deduction of catastrophe premiums that are written by the Company and ceded directly to the Companys fully-collateralized joint ventures which include Starbound Reinsurance Ltd., Starbound Reinsurance II Ltd. and Timicuan Reinsurance Ltd. The Companys management believes managed catastrophe premiums is useful to investors and other interested parties because it provides a measure of total catastrophe reinsurance premiums assumed by the Company through its consolidated subsidiaries and related joint ventures. The Company believes managed catastrophe premiums, net of fully-collateralized joint ventures is also a useful measure to investors and other
10
interested parties because it provides a measure of total catastrophe reinsurance premiums assumed by the Company through its consolidated subsidiaries and related joint ventures, net of catastrophe premiums written directly on behalf of the Companys fully-collateralized joint ventures.
The Company has also included in this Press Release tangible book value per common share plus accumulated dividends. This is defined as book value per common share excluding goodwill and other intangibles, plus accumulated dividends. Tangible book value per common share plus accumulated dividends differs from book value per common share, which the Company believes is the most directly comparable GAAP measure, due to the exclusion of goodwill and other intangibles and the inclusion of accumulated dividends. The following is a reconciliation of book value per common share to tangible book value per common share plus accumulated dividends:
| At | ||||||||||||||||||||
| June 30, 2008 |
March 31, 2008 |
Dec. 31, 2007 |
Sept. 30, 2007 |
June 30, 2007 |
||||||||||||||||
| Book value per common share |
$ | 43.32 | $ | 42.14 | $ | 41.03 | $ | 40.53 | $ | 38.88 | ||||||||||
| Adjustment for goodwill and intangible assets |
(1.18 | ) | (0.09 | ) | (0.09 | ) | (0.09 | ) | (0.09 | ) | ||||||||||
| Tangible book value per common share |
$ | 42.14 | $ | 42.05 | $ | 40.94 | $ | 40.44 | $ | 38.79 | ||||||||||
| Adjustment for accumulated dividends |
7.46 | 7.23 | 7.00 | 6.78 | 6.56 | |||||||||||||||
| Tangible book value per common share plus accumulated dividends |
$ | 49.60 | $ | 49.28 | $ | 47.94 | $ | 47.22 | $ | 45.35 | ||||||||||
11