COPY OF THE COMPANY'S PRESS RELEASE, ISSUED OCTOBER 28, 2008
Published on October 29, 2008
Exhibit 99.1
RenaissanceRe Reports Operating Loss of $143.4 Million for the Third Quarter of 2008 or $2.35 Operating Loss Per
Common Share
Net Loss of $231.0 Million for the Third Quarter of 2008 or $3.79 Loss Per Common Share
Pembroke, Bermuda, October 28, 2008 RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported an operating loss attributable to common shareholders of $143.4 million for the third quarter of 2008, compared to operating income available to common shareholders of $167.8 million in the third quarter of 2007. Operating (loss) income excludes net realized investment losses of $87.6 million and net realized investment gains of $1.6 million in the third quarters of 2008 and 2007, respectively, and net unrealized losses on credit derivatives issued by entities included in investments in other ventures, under equity method of $nil and $36.0 million in the third quarters of 2008 and 2007, respectively. Operating loss per diluted common share was $2.35 in the third quarter of 2008, compared to operating income per diluted common share of $2.33 in the third quarter of 2007. Net loss attributable to common shareholders was $231.0 million or $3.79 per diluted common share in the third quarter of 2008, compared to net income available to common shareholders of $133.4 million or $1.85 per diluted common share for the third quarter of 2007.
Tangible book value per common share was $37.02 at September 30, 2008, a 12.2% decrease in the third quarter of 2008, compared to a 4.3% increase in the third quarter of 2007. Book value per common share was $38.94 at September 30, 2008, a 10.1% decrease in the third quarter of 2008, compared to a 4.2% increase in the third quarter of 2007. As described in more detail below, the Companys book value per share for the third quarter of 2008 was negatively impacted by $276.0 million of net negative impact from hurricanes Gustav and Ike and negative investment results of $93.3 million. Tangible book value per share was also impacted by the addition of $46.4 million of goodwill and other intangibles during the third quarter of 2008.
Neill A. Currie, CEO, commented: The combination of the U.S. hurricanes and turmoil in the financial markets resulted in a decrease in our tangible book value per share this quarter, but also served to reinforce our position as a market leader. Our brokers and clients value our financial strength and proven willingness to pay claims quickly as well as our ability to provide substantial reinsurance capacity in these turbulent times.
Mr. Currie added: We anticipate that additional opportunities will emerge with the expected decline in industry capital and continued stress in the financial markets. As we look ahead to 2009 and the upcoming January 1st renewal season, our strong ratings, solid balance sheet and experienced underwriting team, coupled with our proven risk management systems, position us well to capture these opportunities.
THIRD QUARTER 2008 RESULTS
Net Impact of Hurricanes Gustav and Ike
The Company recorded $276.0 million of net negative impact from hurricanes Gustav and Ike in the third quarter of 2008. Net negative impact includes the sum of estimates of net claims and claim expenses incurred, earned reinstatement premiums assumed and ceded, lost profit commissions and minority interest. These amounts are based on managements estimates following a review of the Companys potential exposures and discussions with certain clients and brokers. Given the magnitude and recent occurrence of these events, and other uncertainties inherent in loss estimation, meaningful uncertainty remains regarding losses from these events and the Companys actual ultimate net losses from these events may vary materially from these estimates.
See the supplemental financial data below for additional information detailing the net negative impact from hurricanes Gustav and Ike on the Companys consolidated financial statements and its Reinsurance and Individual Risk segment results.
1
Underwriting Results
Gross premiums written for the third quarter of 2008 were $239.8 million, a $31.0 million increase from the third quarter of 2007. As described in more detail below, the increase in gross premiums written was driven by a $27.9 million increase in gross premiums written in the Companys Reinsurance segment combined with a $20.9 million decrease in gross premiums ceded from the Individual Risk segment to the Reinsurance segment, and partially offset by a $17.8 million decrease in gross premiums written in the Companys Individual Risk segment. The Company incurred an underwriting loss of $240.5 million and had a combined ratio of 163.4% in the third quarter of 2008, compared to $144.5 million of underwriting income and a combined ratio of 60.6% in the third quarter of 2007. The $385.0 million decrease in underwriting income and 102.8 percentage point increase in the combined ratio was driven by hurricanes Gustav and Ike which occurred in the third quarter of 2008 and resulted in an underwriting loss of $419.6 million and increased the Companys combined ratio by 116.8 percentage points. The impact of these hurricanes on the Companys Reinsurance and Individual Risk segments was $379.9 million and $39.7 million of underwriting losses, respectively. The Company experienced $36.0 million of favorable development on prior year reserves in the third quarter of 2008, compared to $20.2 million of favorable development in the third quarter of 2007. The favorable development is primarily due to lower than expected claims emergence in the Companys Reinsurance segment.
Following is supplemental financial data regarding the net financial statement impact on the Companys third quarter 2008 results due to hurricanes Gustav and Ike:
| Three months ended September 30, 2008 | ||||||||||||
| (in thousands of United States dollars)
|
Gustav | Ike | Total | |||||||||
| Net claims and claim expenses incurred |
$ | (80.3 | ) | $ | (378.5 | ) | $ | (458.8 | ) | |||
| Net reinstatement premiums earned |
12.3 | 31.6 | 43.9 | |||||||||
| Lost profit commissions |
(1.9 | ) | (2.8 | ) | (4.7 | ) | ||||||
| Net impact on underwriting result |
(69.9 | ) | (349.7 | ) | (419.6 | ) | ||||||
| Minority interest - DaVinciRe |
25.3 | 118.3 | 143.6 | |||||||||
| Net negative impact |
$ | (44.6 | ) | $ | (231.4 | ) | $ | (276.0 | ) | |||
| Impact on combined ratio |
16.9 | % | 94.8 | % | 116.8 | % | ||||||
| Following is supplemental financial data regarding the underwriting impact by segment on the Companys third quarter 2008 results due to hurricanes Gustav and Ike: | ||||||||||||
| Three months ended September 30, 2008 | ||||||||||||
| (in thousands of United States dollars)
|
Reinsurance | Individual Risk | Total | |||||||||
| Net claims and claim expenses incurred |
$ | (424.2 | ) | $ | (34.6 | ) | $ | (458.8 | ) | |||
| Net reinstatement premiums earned |
49.0 | (5.1 | ) | 43.9 | ||||||||
| Lost profit commissions |
(4.7 | ) | | (4.7 | ) | |||||||
| Net impact on underwriting result |
$ | (379.9 | ) | $ | (39.7 | ) | $ | (419.6 | ) | |||
| Impact on combined ratio |
166.0 | % | 30.2 | % | 116.8 | % | ||||||
2
Reinsurance Segment
Gross premiums written for the Companys Reinsurance segment increased $27.9 million to $169.5 million in the third quarter of 2008, compared to $141.5 million in the third quarter of 2007. As detailed in the table above, the increase in gross premiums written in the quarter relative to the third quarter of 2007 was primarily due to $49.0 million of reinstatement premiums written and earned as a result of hurricanes Gustav and Ike. Excluding the impact of reinstatement premiums, gross premiums written would have been down due to softening market conditions which resulted in lower premium rates on business written during the third quarter of 2008. Net premiums earned increased to $251.1 million in the third quarter of 2008, compared to $242.5 million in the third quarter of 2007.
The Reinsurance segment incurred an underwriting loss of $227.6 million in the third quarter of 2008, compared to $126.8 million of underwriting income in the third quarter of 2007. In the third quarter of 2008, the Reinsurance segment generated a net claims and claim expense ratio of 168.7%, an underwriting expense ratio of 21.9% and a combined ratio of 190.6%, compared to 27.8%, 20.0% and 47.8%, respectively, in the third quarter of 2007. The $354.3 million decrease in underwriting income and 142.8 percentage point increase in the combined ratio in the third quarter of 2008 compared to the third quarter of 2007 was principally driven by the impact of hurricanes Gustav and Ike. As noted in the table above, hurricanes Gustav and Ike resulted in an underwriting loss of $379.9 million and added 166.0 percentage points to the Reinsurance segments combined ratio in the third quarter of 2008. The Reinsurance segment experienced $30.6 million of favorable loss reserve development in the third quarter of 2008, compared to $15.8 million in the third quarter of 2007, primarily due to lower than expected claims emergence in the Companys catastrophe unit in the third quarter of 2008 and lower than expected claims emergence in the Companys catastrophe and specialty reinsurance units during the third quarter of 2007.
Individual Risk Segment
Gross premiums written for the Companys Individual Risk segment decreased $17.8 million to $83.7 million in the third quarter of 2008, compared to $101.5 million in the third quarter of 2007. For the first nine months of 2008, gross premium written in the Companys Individual Risk segment increased $16.1 million, or 3.5%, to $479.4 million, compared to $463.2 million for the same period in 2007. The increase in gross premiums written for the first nine months of 2008 compared to the first nine months of 2007 was principally driven by a $70.2 million, or 46.8% increase, in the Companys multi-peril crop insurance premium and partially offset by decreases in the segments other lines of business. Net premiums earned increased $3.7 million to $128.3 million in the third quarter of 2008, compared to $124.5 million in the third quarter of 2007.
The Individual Risk segment incurred an underwriting loss of $13.0 million in the third quarter of 2008, compared to $17.8 million of underwriting income in the third quarter of 2007. In the third quarter of 2008, the Individual Risk segment generated a net claims and claim expense ratio of 87.1%, an underwriting expense ratio of 23.0% and a combined ratio of 110.1%, compared to 51.7%, 34.1% and 85.8%, respectively, in the third quarter of 2007. The $30.7 million decrease in underwriting income and 24.3 percentage point increase in the combined ratio in the third quarter of 2008 compared to the third quarter of 2007 was principally driven by the impact of hurricanes Gustav and Ike. As noted in the table above, hurricanes Gustav and Ike resulted in $39.7 million in underwriting losses and added 30.2 percentage points to the Individual Risk segments combined ratio in the third quarter of 2008. The decrease in underwriting income was partially offset by a decrease in acquisition expenses which was principally driven by an increase in the proportion of net premiums earned from the Companys multi-peril crop insurance, which when compared to the Individual Risk segments other lines of business, has lower acquisition costs than the other lines. The Individual Risk segment experienced $5.4 million of favorable development in the third quarter of 2008 compared to $4.4 million of favorable development in the third quarter of 2007.
Investments
The return on the Companys investment portfolio was down significantly in the third quarter of 2008 compared to the third quarter of 2007. The lower returns were principally due to widening credit spreads as a result of the turmoil in the financial markets which resulted in realized and unrealized losses within the Companys fixed maturity investments available for sale combined with lower returns within the Companys other investments. The Companys total investment result, which includes the sum of net investment income, net realized (losses) gains on investments and the net change in unrealized holding gains on fixed maturity investments available for sale, was negative $93.3 million in the third quarter of 2008, a $212.9 million decrease from $119.6 million in the third quarter of 2007.
3
Net investment income was $15.8 million in the third quarter of 2008 compared to $95.6 million in the third quarter of 2007, a decrease of $79.8 million. The decrease was principally driven by a $32.1 million decrease in net investment income from the Companys hedge fund and private equity investments and a $33.1 million decrease in the Companys other investments, principally senior secured bank loan funds and non-U.S. fixed income funds. The Companys other investments are accounted for at fair value with the change in fair value recorded in net investment income.
Net realized investment losses were $87.6 million in the third quarter of 2008 compared to net realized investment gains of $1.6 million in the third quarter of 2007, a decrease of $89.2 million. The decrease was driven by a $94.5 million increase in other than temporary impairments which totaled $98.8 million in the third quarter of 2008 compared to $4.3 million in the third quarter of 2007, principally due to a widening of credit spreads. Included in other than temporary impairment charges are credit-related charges of $7.2 million and $nil for the third quarters of 2008 and 2007, respectively, with the third quarter 2008 credit related impairments due to the Companys direct holdings of fixed maturity securities issued by Lehman Brothers Holdings Inc. and its subsidiaries (Lehman Brothers). The Company had no fixed maturity investments available for sale in an unrealized loss position at September 30, 2008.
Other Items
| | During the third quarter of 2008, the Company repurchased 1.6 million shares at an aggregate cost of $75.8 million. At September 30, 2008, $382.4 million remained available under the Companys share repurchase program. |
| | The Companys cash flows from operations were $177.5 million for the third quarter of 2008, compared to $284.9 million for the third quarter of 2007. |
This press release includes certain non-GAAP financial measures including operating (loss) income, operating (loss) income per common share diluted, operating return on average common equity annualized, managed catastrophe premium and tangible book value per common share. 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, October 29, 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 reports on Form 10-Q for the quarters ending March 31, 2008 and June 30, 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 nine months ended September 30, 2008 and 2007
(in thousands of United States Dollars, except per share amounts)
(Unaudited)
| Three months ended | Nine months ended | |||||||||||||||
| September 30, 2008 |
September 30, 2007 |
September 30, 2008 |
September 30, 2007 |
|||||||||||||
| Revenues |
||||||||||||||||
| Gross premiums written |
$ | 239,806 | $ | 208,821 | $ | 1,574,419 | $ | 1,687,410 | ||||||||
| Net premiums written |
$ | 194,408 | $ | 149,163 | $ | 1,211,546 | $ | 1,330,032 | ||||||||
| Decrease (increase) in unearned premiums |
184,934 | 217,894 | (146,717 | ) | (241,903 | ) | ||||||||||
| Net premiums earned |
379,342 | 367,057 | 1,064,829 | 1,088,129 | ||||||||||||
| Net investment income |
15,767 | 95,594 | 106,955 | 321,749 | ||||||||||||
| Net foreign exchange gains (losses) |
3,448 | (5,424 | ) | 8,153 | (630 | ) | ||||||||||
| Equity in earnings (losses) of other ventures |
2,333 | (23,986 | ) | 13,455 | (3,610 | ) | ||||||||||
| Other income (loss) |
2,258 | (10,008 | ) | 10,246 | (17,709 | ) | ||||||||||
| Net realized (losses) gains on investments |
(87,610 | ) | 1,592 | (122,441 | ) | (5,889 | ) | |||||||||
| Total revenues |
315,538 | 424,825 | 1,081,197 | 1,382,040 | ||||||||||||
| Expenses |
||||||||||||||||
| Net claims and claim expenses incurred |
535,347 | 131,700 | 731,720 | 416,546 | ||||||||||||
| Acquisition expenses |
54,231 | 63,719 | 154,272 | 186,957 | ||||||||||||
| Operational expenses |
30,296 | 27,126 | 93,903 | 82,177 | ||||||||||||
| Corporate expenses |
3,116 | 7,158 | 18,930 | 19,089 | ||||||||||||
| Interest expense |
5,379 | 7,226 | 18,120 | 26,400 | ||||||||||||
| Total expenses |
628,369 | 236,929 | 1,016,945 | 731,169 | ||||||||||||
| (Loss) income before minority interest and taxes |
(312,831 | ) | 187,896 | 64,252 | 650,871 | |||||||||||
| Minority interest - DaVinciRe |
91,977 | (43,820 | ) | 10,321 | (110,326 | ) | ||||||||||
| (Loss) income before taxes |
(220,854 | ) | 144,076 | 74,573 | 540,545 | |||||||||||
| Income tax benefit (expense) |
455 | (101 | ) | (936 | ) | (888 | ) | |||||||||
| Net (loss) income |
(220,399 | ) | 143,975 | 73,637 | 539,657 | |||||||||||
| Dividends on preference shares |
(10,575 | ) | (10,575 | ) | (31,725 | ) | (32,286 | ) | ||||||||
| Net (loss) income (attributable) available to common shareholders |
$ | (230,974 | ) | $ | 133,400 | $ | 41,912 | $ | 507,371 | |||||||
| Operating (loss) income (attributable) available to common shareholders per Common Share - diluted (1) (2) |
$ | (2.35 | ) | $ | 2.33 | $ | 2.56 | $ | 7.60 | |||||||
| Net (loss) income (attributable) available to common shareholders per Common Share - basic |
$ | (3.79 | ) | $ | 1.89 | $ | 0.66 | $ | 7.14 | |||||||
| Net (loss) income (attributable) available to common shareholders per Common Share - diluted (2) |
$ | (3.79 | ) | $ | 1.85 | $ | 0.65 | $ | 7.02 | |||||||
| Average shares outstanding - basic |
60,943 | 70,575 | 63,131 | 71,038 | ||||||||||||
| Average shares outstanding - diluted (2) |
61,694 | 71,945 | 64,125 | 72,296 | ||||||||||||
| Net claims and claim expense ratio |
141.1 | % | 35.9 | % | 68.7 | % | 38.3 | % | ||||||||
| Underwriting expense ratio |
22.3 | % | 24.7 | % | 23.3 | % | 24.7 | % | ||||||||
| Combined ratio |
163.4 | % | 60.6 | % | 92.0 | % | 63.0 | % | ||||||||
| Operating return on average common equity - annualized (1) |
(22.4 | )% | 23.6 | % | 8.2 | % | 27.1 | % | ||||||||
| (1) | See Comments on Regulation G for a reconciliation of non-GAAP financial measures. |
| (2) | In accordance with FAS 128, diluted earnings per share calculations use average common shares outstanding - basic, when in a net loss position. |
5
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Balance Sheets
(in thousands of United States Dollars, except per share amounts)
| At | ||||||
| September 30, 2008 |
December 31, 2007 |
|||||
| (Unaudited) | (Audited) | |||||
| Assets |
||||||
| Fixed maturity investments available for sale, at fair value |
$ | 3,645,294 | $ | 3,914,363 | ||
| Short term investments, at fair value |
1,438,201 | 1,821,549 | ||||
| Other investments, at fair value |
902,328 | 807,864 | ||||
| Investments in other ventures, under equity method |
117,789 | 90,572 | ||||
| Total investments |
6,103,612 | 6,634,348 | ||||
| Cash and cash equivalents |
427,176 | 330,226 | ||||
| Premiums receivable |
728,046 | 475,075 | ||||
| Ceded reinsurance balances |
155,487 | 107,916 | ||||
| Losses recoverable |
300,076 | 183,275 | ||||
| Accrued investment income |
35,134 | 39,084 | ||||
| Deferred acquisition costs |
114,038 | 104,212 | ||||
| Receivable for investments sold |
368,313 | 144,037 | ||||
| Other secured assets |
107,252 | 90,488 | ||||
| Other assets |
178,163 | 171,457 | ||||
| Goodwill and other intangibles |
71,942 | 6,237 | ||||
| Total assets |
$ | 8,589,239 | $ | 8,286,355 | ||
| Liabilities, Minority Interest and Shareholders Equity |
||||||
| Liabilities |
||||||
| Reserve for claims and claim expenses |
$ | 2,433,420 | $ | 2,028,496 | ||
| Reserve for unearned premiums |
757,624 | 563,336 | ||||
| Debt |
450,000 | 451,951 | ||||
| Reinsurance balances payable |
360,829 | 275,430 | ||||
| Payable for investments purchased |
545,100 | 422,974 | ||||
| Other secured liabilities |
106,420 | 88,920 | ||||
| Other liabilities |
195,071 | 162,294 | ||||
| Total liabilities |
4,848,464 | 3,993,401 | ||||
| Minority interest - DaVinciRe |
699,534 | 815,451 | ||||
| Shareholders Equity |
||||||
| Preference shares |
650,000 | 650,000 | ||||
| Common shares |
61,401 | 68,920 | ||||
| Additional paid-in capital |
| 107,867 | ||||
| Accumulated other comprehensive income |
16,544 | 44,719 | ||||
| Retained earnings |
2,313,296 | 2,605,997 | ||||
| Total shareholders equity |
3,041,241 | 3,477,503 | ||||
| Total liabilities, minority interest and shareholders equity |
$ | 8,589,239 | $ | 8,286,355 | ||
| Book value per common share (unaudited) |
$ | 38.94 | $ | 41.03 | ||
| Common shares outstanding |
61,401 | 68,920 | ||||
6
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars)
(Unaudited)
| Three months ended September 30, 2008 | ||||||||||||||||||||
| Reinsurance | Individual Risk | Eliminations (1) | Other | Total | ||||||||||||||||
| Gross premiums written |
$ | 169,463 | $ | 83,685 | $ | (13,342 | ) | $ | | $ | 239,806 | |||||||||
| Net premiums written |
$ | 129,229 | $ | 65,179 | | $ | 194,408 | |||||||||||||
| Net premiums earned |
$ | 251,058 | $ | 128,284 | | $ | 379,342 | |||||||||||||
| Net claims and claim expenses incurred |
423,568 | 111,779 | | 535,347 | ||||||||||||||||
| Acquisition expenses |
34,469 | 19,762 | | 54,231 | ||||||||||||||||
| Operational expenses |
20,602 | 9,694 | | 30,296 | ||||||||||||||||
| Underwriting loss |
$ | (227,581 | ) | $ | (12,951 | ) | | (240,532 | ) | |||||||||||
| Net investment income |
15,767 | 15,767 | ||||||||||||||||||
| Equity in earnings of other ventures |
2,333 | 2,333 | ||||||||||||||||||
| Other income |
2,258 | 2,258 | ||||||||||||||||||
| Interest and preference share dividends |
(15,954 | ) | (15,954 | ) | ||||||||||||||||
| Minority interest - DaVinciRe |
91,977 | 91,977 | ||||||||||||||||||
| Other items, net |
787 | 787 | ||||||||||||||||||
| Net realized losses on investments |
(87,610 | ) | (87,610 | ) | ||||||||||||||||
| Net loss attributable to common shareholders |
$ | 9,558 | $ | (230,974 | ) | |||||||||||||||
| Net claims and claim expenses incurred - current accident year |
$ | 454,187 | $ | 117,157 | $ | 571,344 | ||||||||||||||
| Net claims and claim expenses incurred - prior accident years |
(30,619 | ) | (5,378 | ) | (35,997 | ) | ||||||||||||||
| Net claims and claim expenses incurred - total |
$ | 423,568 | $ | 111,779 | $ | 535,347 | ||||||||||||||
| Net claims and claim expense ratio - current accident year |
180.9 | % | 91.3 | % | 150.6 | % | ||||||||||||||
| Net claims and claim expense ratio - prior accident years |
(12.2 | )% | (4.2 | )% | (9.5 | )% | ||||||||||||||
| Net claims and claim expense ratio - calendar year |
168.7 | % | 87.1 | % | 141.1 | % | ||||||||||||||
| Underwriting expense ratio |
21.9 | % | 23.0 | % | 22.3 | % | ||||||||||||||
| Combined ratio |
190.6 | % | 110.1 | % | 163.4 | % | ||||||||||||||
|
(1) Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. |
|
|||||||||||||||||||
| Three months ended September 30, 2007 | ||||||||||||||||||||
| Reinsurance | Individual Risk | Eliminations (1) | Other | Total | ||||||||||||||||
| Gross premiums written |
$ | 141,545 | $ | 101,534 | $ | (34,258 | ) | $ | | $ | 208,821 | |||||||||
| Net premiums written |
$ | 91,112 | $ | 58,051 | | $ | 149,163 | |||||||||||||
| Net premiums earned |
$ | 242,520 | $ | 124,537 | | $ | 367,057 | |||||||||||||
| Net claims and claim expenses incurred |
67,335 | 64,365 | | 131,700 | ||||||||||||||||
| Acquisition expenses |
32,122 | 31,597 | | 63,719 | ||||||||||||||||
| Operational expenses |
16,301 | 10,825 | | 27,126 | ||||||||||||||||
| Underwriting income |
$ | 126,762 | $ | 17,750 | | 144,512 | ||||||||||||||
| Net investment income |
95,594 | 95,594 | ||||||||||||||||||
| Equity in losses of other ventures |
(23,986 | ) | (23,986 | ) | ||||||||||||||||
| Other loss |
(10,008 | ) | (10,008 | ) | ||||||||||||||||
| Interest and preference share dividends |
(17,801 | ) | (17,801 | ) | ||||||||||||||||
| Minority interest - DaVinciRe |
(43,820 | ) | (43,820 | ) | ||||||||||||||||
| Other items, net |
(12,683 | ) | (12,683 | ) | ||||||||||||||||
| Net realized gains on investments |
1,592 | 1,592 | ||||||||||||||||||
| Net income available to common shareholders |
$ | (11,112 | ) | $ | 133,400 | |||||||||||||||
| Net claims and claim expenses incurred - current accident year |
$ | 83,104 | $ | 68,755 | $ | 151,859 | ||||||||||||||
| Net claims and claim expenses incurred - prior accident years |
(15,769 | ) | (4,390 | ) | (20,159 | ) | ||||||||||||||
| Net claims and claim expenses incurred - total |
$ | 67,335 | $ | 64,365 | $ | 131,700 | ||||||||||||||
| Net claims and claim expense ratio - current accident year |
34.3 | % | 55.2 | % | 41.4 | % | ||||||||||||||
| Net claims and claim expense ratio - prior accident years |
(6.5 | )% | (3.5 | )% | (5.5 | )% | ||||||||||||||
| Net claims and claim expense ratio - calendar year |
27.8 | % | 51.7 | % | 35.9 | % | ||||||||||||||
| Underwriting expense ratio |
20.0 | % | 34.1 | % | 24.7 | % | ||||||||||||||
| Combined ratio |
47.8 | % | 85.8 | % | 60.6 | % | ||||||||||||||
| (1) | Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. |
7
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information (contd.)
(in thousands of United States Dollars)
(Unaudited)
| Nine months ended September 30, 2008 | ||||||||||||||||||||
| Reinsurance | Individual Risk | Eliminations (1) | Other | Total | ||||||||||||||||
| Gross premiums written |
$ | 1,100,984 | $ | 479,351 | $ | (5,916 | ) | $ | | $ | 1,574,419 | |||||||||
| Net premiums written |
$ | 825,336 | $ | 386,210 | | $ | 1,211,546 | |||||||||||||
| Net premiums earned |
$ | 709,571 | $ | 355,258 | | $ | 1,064,829 | |||||||||||||
| Net claims and claim expenses incurred |
490,757 | 240,963 | | 731,720 | ||||||||||||||||
| Acquisition expenses |
78,495 | 75,777 | | 154,272 | ||||||||||||||||
| Operational expenses |
64,497 | 29,406 | | 93,903 | ||||||||||||||||
| Underwriting income |
$ | 75,822 | $ | 9,112 | | 84,934 | ||||||||||||||
| Net investment income |
106,955 | 106,955 | ||||||||||||||||||
| Equity in earnings of other ventures |
13,455 | 13,455 | ||||||||||||||||||
| Other income |
10,246 | 10,246 | ||||||||||||||||||
| Interest and preference share dividends |
(49,845 | ) | (49,845 | ) | ||||||||||||||||
| Minority interest - DaVinciRe |
10,321 | 10,321 | ||||||||||||||||||
| Other items, net |
(11,713 | ) | (11,713 | ) | ||||||||||||||||
| Net realized losses on investments |
(122,441 | ) | (122,441 | ) | ||||||||||||||||
| Net income available to common shareholders |
$ | (43,022 | ) | $ | 41,912 | |||||||||||||||
| Net claims and claim expenses incurred - current accident year |
$ | 582,624 | $ | 279,748 | $ | 862,372 | ||||||||||||||
| Net claims and claim expenses incurred - prior accident years |
(91,867 | ) | (38,785 | ) | (130,652 | ) | ||||||||||||||
| Net claims and claim expenses incurred - total |
$ | 490,757 | $ | 240,963 | $ | 731,720 | ||||||||||||||
| Net claims and claim expense ratio - current accident year |
82.1 | % | 78.7 | % | 81.0 | % | ||||||||||||||
| Net claims and claim expense ratio - prior accident years |
(12.9 | )% | (10.9 | )% | (12.3 | )% | ||||||||||||||
| Net claims and claim expense ratio - calendar year |
69.2 | % | 67.8 | % | 68.7 | % | ||||||||||||||
| Underwriting expense ratio |
20.1 | % | 29.6 | % | 23.3 | % | ||||||||||||||
| Combined ratio |
89.3 | % | 97.4 | % | 92.0 | % | ||||||||||||||
|
(1) Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. |
|
|||||||||||||||||||
| Nine months ended September 30, 2007 | ||||||||||||||||||||
| Reinsurance | Individual Risk | Eliminations (1) | Other | Total | ||||||||||||||||
| Gross premiums written |
$ | 1,263,727 | $ | 463,241 | $ | (39,558 | ) | $ | | $ | 1,687,410 | |||||||||
| Net premiums written |
$ | 995,686 | $ | 334,346 | | $ | 1,330,032 | |||||||||||||
| Net premiums earned |
$ | 723,286 | $ | 364,843 | | $ | 1,088,129 | |||||||||||||
| Net claims and claim expenses incurred |
221,990 | 194,556 | | 416,546 | ||||||||||||||||
| Acquisition expenses |
86,411 | 100,546 | | 186,957 | ||||||||||||||||
| Operational expenses |
50,943 | 31,234 | | 82,177 | ||||||||||||||||
| Underwriting income |
$ | 363,942 | $ | 38,507 | | 402,449 | ||||||||||||||
| Net investment income |
321,749 | 321,749 | ||||||||||||||||||
| Equity in losses of other ventures |
(3,610 | ) | (3,610 | ) | ||||||||||||||||
| Other loss |
(17,709 | ) | (17,709 | ) | ||||||||||||||||
| Interest and preference share dividends |
(58,686 | ) | (58,686 | ) | ||||||||||||||||
| Minority interest - DaVinciRe |
(110,326 | ) | (110,326 | ) | ||||||||||||||||
| Other items, net |
(20,607 | ) | (20,607 | ) | ||||||||||||||||
| Net realized losses on investments |
(5,889 | ) | (5,889 | ) | ||||||||||||||||
| Net income available to common shareholders |
$ | 104,922 | $ | 507,371 | ||||||||||||||||
| Net claims and claim expenses incurred - current accident year |
$ | 317,718 | $ | 225,207 | $ | 542,925 | ||||||||||||||
| Net claims and claim expenses incurred - prior accident years |
(95,728 | ) | (30,651 | ) | (126,379 | ) | ||||||||||||||
| Net claims and claim expenses incurred - total |
$ | 221,990 | $ | 194,556 | $ | 416,546 | ||||||||||||||
| Net claims and claim expense ratio - current accident year |
43.9 | % | 61.7 | % | 49.9 | % | ||||||||||||||
| Net claims and claim expense ratio - prior accident years |
(13.2 | )% | (8.4 | )% | (11.6 | )% | ||||||||||||||
| Net claims and claim expense ratio - calendar year |
30.7 | % | 53.3 | % | 38.3 | % | ||||||||||||||
| Underwriting expense ratio |
19.0 | % | 36.1 | % | 24.7 | % | ||||||||||||||
| Combined ratio |
49.7 | % | 89.4 | % | 63.0 | % | ||||||||||||||
| (1) | Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. |
8
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Gross Premiums Written Analysis
(in thousands of United States Dollars)
(Unaudited)
| Three months ended | Nine months ended | |||||||||||||||
| Reinsurance Segment |
September 30, 2008 |
September 30, 2007 |
September 30, 2008 |
September 30, 2007 |
||||||||||||
| Renaissance catastrophe premiums |
$ | 97,839 | $ | 84,271 | $ | 614,124 | $ | 665,211 | ||||||||
| Renaissance specialty premiums |
28,408 | 39,536 | 126,826 | 240,384 | ||||||||||||
| Total Renaissance premiums |
126,247 | 123,807 | 740,950 | 905,595 | ||||||||||||
| DaVinci catastrophe premiums |
43,413 | 17,856 | 355,940 | 348,708 | ||||||||||||
| DaVinci specialty premiums |
(197 | ) | (118 | ) | 4,094 | 9,424 | ||||||||||
| Total DaVinci premiums |
43,216 | 17,738 | 360,034 | 358,132 | ||||||||||||
| Total Reinsurance premiums |
$ | 169,463 | $ | 141,545 | $ | 1,100,984 | $ | 1,263,727 | ||||||||
| Total specialty premiums |
$ | 28,211 | $ | 39,418 | $ | 130,920 | $ | 249,808 | ||||||||
| Total catastrophe premiums |
$ | 141,252 | $ | 102,127 | $ | 970,064 | $ | 1,013,919 | ||||||||
| Catastrophe premiums written on behalf of our joint venture, Top Layer Re (1) |
(293 | ) | | 55,370 | 63,725 | |||||||||||
| Catastrophe premiums assumed from the Individual Risk segment |
(13,342 | ) | (34,258 | ) | (5,916 | ) | (39,558 | ) | ||||||||
| Total managed catastrophe premiums (2) |
127,617 | 67,869 | 1,019,518 | 1,038,086 | ||||||||||||
| Managed premiums assumed for fully-collateralized joint ventures |
(20 | ) | (938 | ) | (2,306 | ) | (60,301 | ) | ||||||||
| Total managed catastrophe premiums, net of fully-collateralized joint ventures (2) |
$ | 127,597 | $ | 66,931 | $ | 1,017,212 | $ | 977,785 | ||||||||
| (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 | Nine months ended | |||||||||||
| Individual Risk Segment |
September 30, 2008 |
September 30, 2007 |
September 30, 2008 |
September 30, 2007 |
||||||||
| Multi-peril crop |
$ | 11,881 | $ | 22,171 | $ | 220,330 | $ | 150,112 | ||||
| Commercial property |
24,863 | 26,361 | 116,546 | 143,879 | ||||||||
| Commercial multi-line |
29,773 | 38,257 | 92,856 | 130,582 | ||||||||
| Personal lines property |
17,168 | 14,745 | 49,619 | 38,668 | ||||||||
| Total Individual Risk premiums |
$ | 83,685 | $ | 101,534 | $ | 479,351 | $ | 463,241 | ||||
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Total Investment Result
(in thousands of United States Dollars)
(Unaudited)
| Three months ended | Nine months ended | |||||||||||||||
| September 30, 2008 |
September 30, 2007 |
September 30, 2008 |
September 30, 2007 |
|||||||||||||
| Fixed maturity investments available for sale |
$ | 52,087 | $ | 42,429 | $ | 147,930 | $ | 132,446 | ||||||||
| Short term investments |
9,990 | 33,108 | 41,124 | 90,426 | ||||||||||||
| Other investments |
||||||||||||||||
| Hedge funds and private equity investments |
(15,080 | ) | 16,978 | (46,415 | ) | 80,642 | ||||||||||
| Other |
(30,306 | ) | 2,775 | (32,884 | ) | 17,726 | ||||||||||
| Cash and cash equivalents |
1,956 | 2,919 | 5,900 | 7,506 | ||||||||||||
| 18,647 | 98,209 | 115,655 | 328,746 | |||||||||||||
| Investment expenses |
(2,880 | ) | (2,615 | ) | (8,700 | ) | (6,997 | ) | ||||||||
| Net investment income |
15,767 | 95,594 | 106,955 | 321,749 | ||||||||||||
| Gross realized gains |
20,007 | 7,527 | 58,885 | 17,938 | ||||||||||||
| Gross realized losses |
(8,809 | ) | (1,613 | ) | (30,563 | ) | (5,835 | ) | ||||||||
| Other than temporary impairments |
(98,808 | ) | (4,322 | ) | (150,763 | ) | (17,992 | ) | ||||||||
| Net realized (losses) gains on investments |
(87,610 | ) | 1,592 | (122,441 | ) | (5,889 | ) | |||||||||
| Net change in unrealized holding gains on fixed maturity investments available for sale |
(21,411 | ) | 22,433 | (32,930 | ) | 6,890 | ||||||||||
| Total investment result |
$ | (93,254 | ) | $ | 119,619 | $ | (48,416 | ) | $ | 322,750 | ||||||
9
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Investment Portfolio - Yield to Maturity and Credit Rating
(in thousands of United States Dollars)
(Unaudited)
| At September 30, 2008 |
Amortized Cost |
Fair Value |
% of Total Managed Investment Portfolio |
Yield to Maturity |
Credit Rating (1) | ||||||||||||||||||||||||||||||||
| AAA | AA | A | BBB | Non- Investment Grade |
Not Rated |
||||||||||||||||||||||||||||||||
| Short term investments |
$ | 1,438,201 | $ | 1,438,201 | 24.0 | % | 3.6 | % | $ | 1,313,234 | $ | 120,281 | $ | 3,998 | $ | 408 | $ | 280 | $ | | |||||||||||||||||
| 100.0 | % | 91.3 | % | 8.4 | % | 0.3 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||||||||||||||||||
| Fixed maturity investments available for sale |
|||||||||||||||||||||||||||||||||||||
| U.S. treasuries and agencies |
|||||||||||||||||||||||||||||||||||||
| U.S. treasuries |
685,787 | 690,265 | 11.5 | % | 2.4 | % | 690,265 | | | | | | |||||||||||||||||||||||||
| Agency debt |
|||||||||||||||||||||||||||||||||||||
| Fannie Mae & Freddie Mac |
388,600 | 390,796 | 6.5 | % | 4.0 | % | 390,796 | | | | | | |||||||||||||||||||||||||
| Other agencies |
27,803 | 28,256 | 0.5 | % | 3.7 | % | 28,256 | | | | | | |||||||||||||||||||||||||
| Total agency debt |
416,403 | 419,052 | 7.0 | % | 4.0 | % | 419,052 | | | | | | |||||||||||||||||||||||||
| Total U.S. treasuries and agencies |
1,102,190 | 1,109,317 | 18.5 | % | 3.0 | % | 1,109,317 | | | | | | |||||||||||||||||||||||||
| Non U.S. government |
82,785 | 83,556 | 1.4 | % | 5.9 | % | 27,355 | 30,465 | 1,095 | 10,777 | 13,864 | | |||||||||||||||||||||||||
| Corporate |
738,023 | 740,013 | 12.4 | % | 7.1 | % | 79,597 | 346,956 | 171,802 | 82,729 | 58,929 | | |||||||||||||||||||||||||
| Mortgage-backed securities |
|||||||||||||||||||||||||||||||||||||
| Residential mortgage-backed securities |
|||||||||||||||||||||||||||||||||||||
| Agency securities |
702,139 | 708,269 | 11.8 | % | 5.4 | % | 708,269 | | | | | | |||||||||||||||||||||||||
| Non-agency securities |
159,431 | 160,289 | 2.7 | % | 9.7 | % | 160,289 | | | | | | |||||||||||||||||||||||||
| Non-agency securities - Alt A |
59,789 | 60,189 | 1.0 | % | 12.8 | % | 60,189 | | | | | | |||||||||||||||||||||||||
| Non-agency securities - Sub-prime |
| | 0.0 | % | 0.0 | % | | | | | | | |||||||||||||||||||||||||
| Total residential mortgage-backed securities |
921,359 | 928,747 | 15.5 | % | 6.6 | % | 928,747 | | | | | | |||||||||||||||||||||||||
| Commercial Mortgage Backed Securities |
435,000 | 435,000 | 7.3 | % | 6.9 | % | 435,000 | | | | | | |||||||||||||||||||||||||
| Total mortgage-backed securities |
1,356,359 | 1,363,747 | 22.8 | % | 6.7 | % | 1,363,747 | | | | | | |||||||||||||||||||||||||
| Asset-backed securities |
|||||||||||||||||||||||||||||||||||||
| Auto |
132,072 | 132,185 | 2.2 | % | 6.0 | % | 132,185 | | | | | | |||||||||||||||||||||||||
| Credit cards |
96,207 | 96,226 | 1.6 | % | 5.6 | % | 96,226 | | | | | | |||||||||||||||||||||||||
| Other - Stranded cost |
44,838 | 44,841 | 0.7 | % | 5.8 | % | 44,841 | | | | | | |||||||||||||||||||||||||
| Other |
75,289 | 75,409 | 1.3 | % | 5.3 | % | 75,409 | | | | | | |||||||||||||||||||||||||
| Total asset-backed securities |
348,406 | 348,661 | 5.8 | % | 5.7 | % | 348,661 | | | | | | |||||||||||||||||||||||||
| Total securitized assets |
1,704,765 | 1,712,408 | 28.6 | % | 6.5 | % | 1,712,408 | | | | | | |||||||||||||||||||||||||
| Total fixed maturity investments available for sale |
3,627,763 | 3,645,294 | 60.9 | % | 5.6 | % | 2,928,677 | 377,421 | 172,897 | 93,506 | 72,793 | | |||||||||||||||||||||||||
| 100.0 | % | 80.3 | % | 10.4 | % | 4.7 | % | 2.6 | % | 2.0 | % | 0.0 | % | ||||||||||||||||||||||||
| Other investments |
|||||||||||||||||||||||||||||||||||||
| Private equity partnerships |
297,167 | 5.0 | % | | | | | | 297,167 | ||||||||||||||||||||||||||||
| Senior secured bank loan funds |
272,752 | 4.6 | % | | | | | 272,752 | | ||||||||||||||||||||||||||||
| Hedge funds |
115,345 | 1.9 | % | | | | | | 115,345 | ||||||||||||||||||||||||||||
| Non-U.S. fixed income funds |
104,196 | 1.7 | % | | | | 69,991 | 34,205 | | ||||||||||||||||||||||||||||
| Catastrophe bonds |
83,434 | 1.4 | % | | 23,905 | | | 59,529 | | ||||||||||||||||||||||||||||
| Miscellaneous other investments |
29,434 | 0.5 | % | | | | 20,476 | | 8,958 | ||||||||||||||||||||||||||||
| Total other investments |
902,328 | 15.1 | % | | 23,905 | | 90,467 | 366,486 | 421,470 | ||||||||||||||||||||||||||||
| Total managed investment portfolio |
$ | 5,985,823 | 100.0 | % | $ | 4,241,911 | $ | 521,607 | $ | 176,895 | $ | 184,381 | $ | 439,559 | $ | 421,470 | |||||||||||||||||||||
| 100.0 | % | 70.9 | % | 8.7 | % | 3.0 | % | 3.1 | % | 7.3 | % | 7.0 | % | ||||||||||||||||||||||||
| (1) | The credit ratings included in this table are those assigned by Standard & Poors Corporation. The Company has grouped short term investments with an A-1+ and A-1 short-term issue credit rating as AAA, short term investments with A-2 short-term issue credit rating as AA and short term investments with an A-3 short-term issue credit rating as A. |
10
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Fixed Maturity Investments Available for Sale - Securitized Assets
(in thousands of United States Dollars)
(Unaudited)
| At September 30, 2008 |
Fair Value | % of Total Managed Investment Portfolio |
% of Total Managed Investment Portfolio |
% of Total Securitized Assets |
Average Duration |
||||||||||||||||||||||||
| Vintage | |||||||||||||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | 2003 & Prior |
||||||||||||||||||||||||
| Total managed investment portfolio |
$ | 5,985,823 | 100.0 | % | |||||||||||||||||||||||||
| Mortgage-backed securities |
|||||||||||||||||||||||||||||
| Residential mortgage-backed securities |
|||||||||||||||||||||||||||||
| Agency securities |
708,269 | 11.8 | % | 8.0 | % | 1.6 | % | 1.0 | % | 0.6 | % | 0.3 | % | 0.4 | % | 41.4 | % | 4.6 | |||||||||||
| Non-agency securities |
160,289 | 2.7 | % | 0.0 | % | 0.5 | % | 1.0 | % | 0.4 | % | 0.5 | % | 0.2 | % | 9.4 | % | 2.9 | |||||||||||
| Non-agency securities - Alt A |
60,189 | 1.0 | % | 0.0 | % | 0.2 | % | 0.1 | % | 0.4 | % | 0.2 | % | 0.1 | % | 3.5 | % | 2.3 | |||||||||||
| Non-agency securities - Sub-prime |
| 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | | |||||||||||
| Total non-agency securities |
220,478 | 3.7 | % | 0.0 | % | 0.7 | % | 1.1 | % | 0.8 | % | 0.7 | % | 0.3 | % | 12.9 | % | 2.8 | |||||||||||
| Total residential mortgage-backed securities |
928,747 | 15.5 | % | 8.0 | % | 2.3 | % | 2.1 | % | 1.4 | % | 1.0 | % | 0.7 | % | 54.2 | % | 4.1 | |||||||||||
| Commercial mortgage-backed securities |
435,000 | 7.3 | % | 0.1 | % | 1.5 | % | 0.9 | % | 1.5 | % | 0.6 | % | 2.6 | % | 25.4 | % | 2.8 | |||||||||||
| Total mortgage-backed securities |
1,363,747 | 22.8 | % | 8.1 | % | 3.8 | % | 3.0 | % | 2.9 | % | 1.6 | % | 3.3 | % | 79.6 | % | 3.7 | |||||||||||
| Asset-backed securities |
|||||||||||||||||||||||||||||
| Auto |
132,185 | 2.2 | % | 0.3 | % | 0.1 | % | 1.1 | % | 0.7 | % | 0.0 | % | 0.0 | % | 7.7 | % | 0.8 | |||||||||||
| Credit cards |
96,226 | 1.6 | % | 0.0 | % | 0.4 | % | 0.3 | % | 0.3 | % | 0.0 | % | 0.5 | % | 5.6 | % | 1.6 | |||||||||||
| Other - Stranded cost |
44,841 | 0.7 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.3 | % | 0.0 | % | 0.4 | % | 2.6 | % | 1.6 | |||||||||||
| Other |
75,409 | 1.3 | % | 0.7 | % | 0.2 | % | 0.0 | % | 0.2 | % | 0.1 | % | 0.1 | % | 4.4 | % | 0.7 | |||||||||||
| Total asset-backed securities |
348,661 | 5.8 | % | 1.0 | % | 0.7 | % | 1.4 | % | 1.5 | % | 0.1 | % | 1.0 | % | 20.4 | % | 1.1 | |||||||||||
| Total securitized assets |
$ | 1,712,408 | 28.6 | % | 9.1 | % | 4.5 | % | 4.4 | % | 4.4 | % | 1.7 | % | 4.3 | % | 100.0 | % | 3.2 | ||||||||||
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Investment Portfolio - Fixed Maturity Investments Available for Sale - Corporate
(in thousands of United States Dollars)
(Unaudited)
| At September 30, 2008 | ||||||||||||||||||
| Sector |
Total | AAA | AA | A | BBB |
Non-Investment Grade |
||||||||||||
| Financials |
$ | 495,477 | $ | 77,531 | $ | 324,632 | $ | 72,756 | $ | 9,645 | $ | 10,913 | ||||||
| Industrial, utilities and energy |
90,036 | 2,066 | 2,436 | 41,938 | 25,599 | 17,997 | ||||||||||||
| Consumer |
74,770 | | 19,888 | 23,060 | 15,786 | 16,036 | ||||||||||||
| Communications and technology |
66,641 | | | 30,115 | 26,657 | 9,869 | ||||||||||||
| Basic materials |
13,089 | | | 3,933 | 5,042 | 4,114 | ||||||||||||
| Total corporate fixed maturity investments available for sale |
$ | 740,013 | $ | 79,597 | $ | 346,956 | $ | 171,802 | $ | 82,729 | $ | 58,929 | ||||||
11
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Investment Portfolio
Short Term Investments and Fixed Maturity Investments Available for Sale - Top 10 Corporate Issuers by Fair Value
(in thousands of United States Dollars)
(Unaudited)
| At September 30, 2008 | |||||||||
| Issuer |
Total | Short term investments |
Fixed maturity investments available for sale |
||||||
| Bank of America Corporation |
$ | 71,836 | $ | 2,299 | $ | 69,537 | |||
| General Electric Co. |
65,136 | 10,997 | 54,139 | ||||||
| Citigroup, Inc. |
61,741 | 1,993 | 59,748 | ||||||
| Goldman Sachs Group, Inc. |
48,268 | | 48,268 | ||||||
| JP Morgan Chase & Co. |
49,733 | 11,180 | 38,553 | ||||||
| US Bancorp |
29,231 | 8,300 | 20,931 | ||||||
| PNC Financial Services Group Inc. |
21,025 | 19,771 | 1,254 | ||||||
| Royal Bank of Canada |
17,798 | 11,962 | 5,836 | ||||||
| Barclays Bank PLC |
17,726 | 14,160 | 3,566 | ||||||
| Wells Fargo & Company |
17,531 | | 17,531 | ||||||
| Total |
$ | 400,025 | $ | 80,662 | $ | 319,363 | |||
12
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 (loss) 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 (loss) income as used herein differs from net (loss) income (attributable) 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 and, in the third and fourth quarters of 2007, net unrealized gains and losses on credit derivatives issued by entities included in investments in other ventures, under equity method. Prior to the third quarter of 2007, the Company had no net unrealized gains and losses on credit derivatives issued by entities included in investments in other ventures, under equity method. In the presentation below, the only adjustments in respect of unrealized gains and losses reflect unrealized mark-to-market losses on credit derivatives and other credit-related products issued by ChannelRe Holdings Ltd. (ChannelRe), a financial guarantee reinsurer whose investment is accounted for by the Company under the equity method. The Company believes that the prevailing convention among financial guarantee insurers, reinsurers and other market participants, such as ChannelRe, is to exclude from operating (loss) income such unrealized gains and losses attributable to credit derivatives and other credit-related products. The Companys management believes that operating (loss) 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 and credit derivatives issued by entities included in investments in other ventures, under equity method, which are not considered by management to be relevant indicators of business operations. The Company also uses operating (loss) income to calculate operating (loss) income per common share diluted and operating return on average common equity annualized. The following is a reconciliation of: 1) net (loss) income (attributable) available to common shareholders to operating (loss) income (attributable) available to common shareholders; 2) net (loss) income (attributable) available to common shareholders per common share diluted to operating (loss) income (attributable) 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 | Nine months ended | |||||||||||||||
| (in thousands of United States dollars, except for per share amounts)
|
September 30, 2008 |
September 30, 2007 |
September 30, 2008 |
September 30, 2007 |
||||||||||||
| Net (loss) income (attributable) available to common shareholders |
$ | (230,974 | ) | $ | 133,400 | $ | 41,912 | $ | 507,371 | |||||||
| Adjustment for net realized losses (gains) on investments |
87,610 | (1,592 | ) | 122,441 | 5,889 | |||||||||||
| Adjustment for net unrealized losses on credit derivatives issued by entities included in investments in other ventures, under equity method |
| 35,970 | | 35,970 | ||||||||||||
| Operating (loss) income (attributable) available to common shareholders |
$ | (143,364 | ) | $ | 167,778 | $ | 164,353 | $ | 549,230 | |||||||
| Net (loss) income (attributable) available to common shareholders per common share - diluted (1) |
$ | (3.79 | ) | $ | 1.85 | $ | 0.65 | $ | 7.02 | |||||||
| Adjustment for net realized losses (gains) on investments |
1.44 | (0.02 | ) | 1.91 | 0.08 | |||||||||||
| Adjustment for net unrealized losses on credit derivatives issued by entities included in investments in other ventures, under equity method |
| 0.50 | | 0.50 | ||||||||||||
| Operating (loss) income (attributable) available to common shareholders per common share - diluted (1) |
$ | (2.35 | ) | $ | 2.33 | $ | 2.56 | $ | 7.60 | |||||||
| Return on average common equity - annualized |
(36.1 | )% | 18.8 | % | 2.1 | % | 25.0 | % | ||||||||
| Adjustment for net realized losses (gains) on investments |
13.7 | % | (0.2 | )% | 6.1 | % | 0.3 | % | ||||||||
| Adjustment for net unrealized losses on credit derivatives issued by entities included in investments in other ventures, under equity method |
| 5.0 | % | | 1.8 | % | ||||||||||
| Operating return on average common equity - annualized |
(22.4 | )% | 23.6 | % | 8.2 | % | 27.1 | % | ||||||||
| (1) | In accordance with FAS 128, diluted earnings per share calculations use average common shares outstanding - basic, when in a net loss position. |
13
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 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 | ||||||||||||||||||||
| Sept. 30, 2008 | June 30, 2008 | March 31, 2008 | Dec. 31, 2007 | Sept. 30, 2007 | ||||||||||||||||
| Book value per common share |
$ | 38.94 | $ | 43.32 | $ | 42.14 | $ | 41.03 | $ | 40.53 | ||||||||||
| Adjustment for goodwill and other intangibles (1) |
(1.92 | ) | (1.18 | ) | (0.09 | ) | (0.09 | ) | (0.09 | ) | ||||||||||
| Tangible book value per common share |
$ | 37.02 | $ | 42.14 | $ | 42.05 | $ | 40.94 | $ | 40.44 | ||||||||||
| Adjustment for accumulated dividends |
7.69 | 7.46 | 7.23 | 7.00 | 6.78 | |||||||||||||||
| Tangible book value per common share plus accumulated dividends |
$ | 44.71 | $ | 49.60 | $ | 49.28 | $ | 47.94 | $ | 47.22 | ||||||||||
| (1) | At September 30, 2008, goodwill and other intangibles includes $46.4 million of goodwill and other intangibles related to the Companys third quarter of 2008 investment in the Tower Hill Companies which is recorded in investments in other ventures, under equity method. |
14