COPY OF THE COMPANY'S PRESS RELEASE
Published on April 30, 2009
Exhibit 99.1
RenaissanceRe Reports Operating Income of $94.2 Million for the First Quarter of 2009 or $1.52 Per Common Share.
Net Income of $97.3 Million for the First Quarter of 2009 or $1.57 Per Common Share.
Pembroke, Bermuda, April 29, 2009 RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $94.2 million in first quarter operating income available to common shareholders compared to $147.8 million in the first quarter of 2008. Operating income excludes net realized gains on investments of $3.1 million and net realized losses on investments of $10.7 million in the first quarters of 2009 and 2008, respectively. Operating income available to common shareholders per diluted common share was $1.52 in the first quarter of 2009, compared to $2.21 in the first quarter of 2008. Net income available to common shareholders was $97.3 million or $1.57 per diluted common share in the quarter, compared to net income available to common shareholders of $137.2 million or $2.05 per diluted common share for the same quarter of 2008. The Company reported an annualized operating return on average common equity of 15.5% and an annualized return on average common equity of 16.0% in the first quarter of 2009, compared to 21.3% and 19.7%, respectively, in the first quarter of 2008. Book value per common share increased to $39.65 at March 31, 2009, a 2.3% increase in the first quarter of 2009, compared to a 2.7% increase in the first quarter of 2008.
Neill A. Currie, CEO, commented: We generated an annualized operating ROE of over 15% and 2.3% growth in book value per share in the quarter. Although below our expectations in a light catastrophe quarter, our results also reflect over 20% growth in our managed catastrophe premiums due to a successful January 1st renewal season, fueled by improving market conditions and increasing demand for property catastrophe reinsurance.
Mr. Currie added: We are seeing an increasing flow of new business opportunities, particularly within our specialty reinsurance unit and Individual Risk segment. Our strong financial resources, excellent ratings, reputation for superior underwriting and client service along with our ongoing efforts to build out our business capabilities, position us well to capture these opportunities.
FIRST QUARTER 2009 RESULTS
Underwriting Results
Gross premiums written for the first quarter of 2009 increased 13.5% to $598.3 million, compared to $527.0 million for the first quarter of 2008. The increase in gross premiums written was primarily driven by an increase in gross premiums written in the Companys catastrophe unit, and partially offset by decreases in both the Companys specialty unit and Individual Risk segment as discussed in more detail below. The Company generated $131.2 million of underwriting income and had a combined ratio of 56.5% in the first quarter of 2009, compared to $150.2 million of underwriting income and a 51.4% combined ratio in the first quarter of 2008, principally driven by an increase in net claims and claim expenses incurred during the quarter as a result of unfavorable development on prior years reserves within the Companys Individual Risk segment. The Companys unfavorable development on prior years reserves totaled $7.3 million in the first quarter of 2009, compared to $45.1 million of favorable development in the first quarter of 2008, and was principally due to higher than expected claims emergence on the 2008 crop year for the Companys multi-peril crop business in its Individual Risk segment and partially offset by favorable development in the Companys Reinsurance segment.
1
Reinsurance Segment
Gross premiums written for the Companys Reinsurance segment increased $89.2 million, or 20.1%, to $532.9 million in the first quarter of 2009, compared to $443.7 million in the first quarter of 2008, due to growth in gross premiums written in the Companys catastrophe unit which benefited from the impact of improving market conditions and the inception of several new programs in the quarter. The Companys catastrophe premiums increased $97.3 million, or 26.7%, to $461.4 million in the first quarter of 2009, compared to $364.1 million in the first quarter of 2008. The Companys specialty reinsurance premiums decreased $8.1 million, or 10.2%, to $71.5 million in the first quarter of 2009, compared to $79.6 million in the first quarter of 2008. The Companys specialty reinsurance premiums are prone to significant volatility due to the timing of contract inception and also due to the business being characterized by a relatively small number of relatively large transactions.
The Companys Reinsurance segment generated $161.3 million of underwriting income and had a combined ratio of 28.6% in the first quarter of 2009, compared to $145.5 million of underwriting income and a 37.3% combined ratio in the first quarter of 2008. The increase in underwriting income in the first quarter of 2009 was primarily due to the comparably low level of insured catastrophe events in the quarter. The Reinsurance segment experienced $24.7 million of favorable development on prior year reserves in the first quarter of 2009, compared to $23.5 million of favorable development in the first quarter of 2008. The favorable development in the first quarter of 2009 was principally attributable to reduced estimated ultimate losses on certain small catastrophes within the Companys catastrophe unit and lower than expected claims emergence in the Companys specialty reinsurance unit.
Individual Risk Segment
Gross premiums written for the Companys Individual Risk segment decreased $15.7 million, or 19.4%, to $65.1 million in the first quarter of 2009, compared to $80.8 million in the first quarter of 2008. The decrease was primarily due to the Companys prior decisions to terminate several program manager relationships and a commercial property quota share contract as a result of the then softening market conditions, resulting in reduced commercial property and commercial multi-line gross premiums written. Gross premiums written in the Companys Individual Risk segment can fluctuate, perhaps significantly between quarters and between years based on several factors, including, without limitation, the timing of the inception or cessation of new program managers and quota share reinsurance contracts, including whether or not the Company has portfolio transfers in, or portfolio transfers out, of quota share reinsurance contracts of in-force books of business.
The Individual Risk segment incurred an underwriting loss of $30.1 million and had a combined ratio of 139.7% in the first quarter of 2009, compared to $4.7 million of underwriting income and a 93.9% combined ratio in the first quarter of 2008. The decrease in underwriting income and increase in the combined ratio in the first quarter of 2009 compared to the first quarter of 2008 were primarily due to an increase in net claims and claim expenses as a result of unfavorable development on prior years reserves of $32.0 million, compared to favorable development of $21.6 million on prior year reserves in the first quarter of 2008, and partially offset by a decrease in current accident year net claims and claim expenses of $19.0 million. The unfavorable loss reserve development in the first quarter of 2009 was primarily due to a $27.3 million increase in prior year losses in the Companys multi-peril crop insurance line of business related to the 2008 crop year due to an increase in the severity of reported losses incurred during 2008 and reported during the first quarter of 2009. The net impact of this unfavorable development, after considering corresponding changes in net earned premium and related acquisition costs for the 2008 crop year, was a reduction in underwriting income of $25.8 million and an increase in the Companys combined ratio of 33.7 percentage points. Current accident year losses were $37.6 million during the first quarter of 2009, compared to $56.7 million in the first quarter of 2008, primarily due to a decrease in net claims and claim expenses in the Companys commercial property line of business.
2
Investments
Returns on the Companys investment portfolio were lower in the first quarter of 2009 compared to the first quarter of 2008, principally due to lower average invested assets in the Companys fixed maturity investments available for sale portfolio combined with lower total returns on the Companys fixed maturity investments available for sale and short term investments. The Companys total investment result, which includes the sum of net investment income, net realized gains and losses on investments and the net change in unrealized holding gains on fixed maturity investments available for sale, was $39.8 million in the first quarter of 2009, compared to $65.6 million in the first quarter of 2008, a decrease of $25.7 million.
Net investment income was $42.1 million in the first quarter of 2009, compared to net investment income of $52.5 million in the first quarter of 2008. The $10.4 million decrease was principally driven by $16.0 million and $10.4 million decreases in net investment income from the Companys short term investments and fixed maturity investments available for sale, respectively, as discussed above, combined with a $17.8 million decrease in net investment income from hedge funds and private equity investments, and partially offset by a $36.3 million increase in net investment income from the Companys other investments, principally senior secured bank loan funds and non-U.S. fixed income funds. The Companys hedge fund, private equity and other investments are accounted for at fair value with the change in fair value recorded in net investment income which included net unrealized losses of $17.0 million in the first quarter of 2009, compared to $25.3 million of net unrealized losses in the first quarter of 2008.
Net realized gains on investments were $3.1 million in the first quarter of 2009 compared to net realized losses on investments of $10.7 million in the first quarter of 2008, an improvement of $13.8 million. Included in net realized gains for the first quarter of 2009 is $19.0 million of other than temporary impairments, compared to $25.4 million in the first quarter of 2008. Included in other than temporary impairment charges are impairment charges for which the Company believes it will not be able to recover the full principal amount if the impaired security is held to maturity, of $nil and $0.4 million for the first quarters of 2009 and 2008, respectively. The Company had essentially no fixed maturity investments available for sale in an unrealized loss position at March 31, 2009.
Other Items
| The Companys cash flows from operations were $140.1 million for the first quarter of 2009, compared to $276.8 million for the first quarter of 2008. |
| The Companys other loss of $14.8 million incurred during the first quarter of 2009 is primarily the result of a negative mark-to-market on the Companys Platinum warrant of $13.7 million. In addition, other loss in the first quarter of 2009 reflected $4.8 million of other income related to the Companys weather and energy derivatives trading activities compared to $15.3 million in the first quarter of 2008. |
| During the first quarter of 2009, the Company incurred $10.2 million in net foreign exchange losses, compared to net foreign exchange gains of $4.9 million in the first quarter of 2008. The $15.1 million decrease in net foreign exchange (losses) gains is a result of changes to the U.S. dollar during the quarter against other major currencies with which the Company does business resulting in unfavorable foreign exchange translations on the Companys net non-U.S. dollar denominated monetary assets and liabilities. |
3
This press release includes certain non-GAAP financial measures including operating income, operating income available to RenaissanceRe common shareholders per common share diluted, operating return on average common equity annualized and managed catastrophe premiums. 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 Thursday, April 30, 2009 at 9:30 a.m. (ET) to discuss this release. Live broadcast of the conference call will be available through the Investor Information Company Webcasts section of the Companys 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 for the year ended December 31, 2008 and its quarterly reports on Form 10-Q.
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
(in thousands of United States Dollars, except per share amounts)
(Unaudited)
Three months ended | ||||||||
March 31, 2009 |
March 31, 2008 |
|||||||
Revenues |
||||||||
Gross premiums written |
$ | 598,301 | $ | 527,038 | ||||
Net premiums written |
$ | 446,836 | $ | 403,116 | ||||
Increase in unearned premiums |
(145,088 | ) | (94,202 | ) | ||||
Net premiums earned |
301,748 | 308,914 | ||||||
Net investment income |
42,126 | 52,503 | ||||||
Net foreign exchange (losses) gains |
(10,155 | ) | 4,936 | |||||
Equity in earnings of other ventures |
1,736 | 6,250 | ||||||
Other (loss) income |
(14,795 | ) | 8,012 | |||||
Net realized gains (losses) on investments |
3,104 | (10,670 | ) | |||||
Total revenues |
323,764 | 369,945 | ||||||
Expenses |
||||||||
Net claims and claim expenses incurred |
86,197 | 82,156 | ||||||
Acquisition expenses |
44,604 | 46,428 | ||||||
Operational expenses |
39,757 | 30,113 | ||||||
Corporate expenses |
6,588 | 8,703 | ||||||
Interest expense |
4,136 | 6,804 | ||||||
Total expenses |
181,282 | 174,204 | ||||||
Income before taxes |
142,482 | 195,741 | ||||||
Income tax benefit (expense) |
852 | (7,686 | ) | |||||
Net income |
143,334 | 188,055 | ||||||
Net income attributable to redeemable noncontrolling interest - DaVinciRe |
(35,475 | ) | (40,315 | ) | ||||
Net income available to RenaissanceRe |
107,859 | 147,740 | ||||||
Dividends on preference shares |
(10,575 | ) | (10,575 | ) | ||||
Net income available to RenaissanceRe common shareholders |
$ | 97,284 | $ | 137,165 | ||||
Operating income available to RenaissanceRe common shareholders per common share - diluted (1) |
$ | 1.52 | $ | 2.21 | ||||
Net income available to RenaissanceRe common shareholders per common share - basic |
$ | 1.57 | $ | 2.09 | ||||
Net income available to RenaissanceRe common shareholders per common share - diluted |
$ | 1.57 | $ | 2.05 | ||||
Net claims and claim expense ratio |
28.6 | % | 26.6 | % | ||||
Underwriting expense ratio |
27.9 | % | 24.8 | % | ||||
Combined ratio |
56.5 | % | 51.4 | % | ||||
Operating return on average common equity - annualized (1) |
15.5 | % | 21.3 | % | ||||
(1) | See Comments on Regulation G for a reconciliation of non-GAAP financial measures. |
5
RenaissanceRe Holdings Ltd. and Subsidiaries
Summary Consolidated Balance Sheets
(in thousands of United States Dollars, except per share amounts)
At | ||||||
March 31, 2009 |
December 31, 2008 |
|||||
(Unaudited) | (Audited) | |||||
Assets |
||||||
Fixed maturity investments available for sale, at fair value |
$ | 3,164,848 | $ | 2,996,885 | ||
Short term investments, at fair value |
2,136,336 | 2,172,343 | ||||
Other investments, at fair value |
733,023 | 773,475 | ||||
Investments in other ventures, under equity method |
88,159 | 99,879 | ||||
Total investments |
6,122,366 | 6,042,582 | ||||
Cash and cash equivalents |
249,340 | 274,692 | ||||
Premiums receivable |
593,199 | 565,630 | ||||
Ceded reinsurance balances |
149,309 | 88,019 | ||||
Losses recoverable |
201,215 | 299,534 | ||||
Accrued investment income |
23,927 | 26,614 | ||||
Deferred acquisition costs |
97,710 | 81,904 | ||||
Receivable for investments sold |
308,483 | 236,485 | ||||
Other secured assets |
76,331 | 76,424 | ||||
Other assets |
165,492 | 217,986 | ||||
Goodwill and other intangibles |
72,537 | 74,181 | ||||
Total assets |
$ | 8,059,909 | $ | 7,984,051 | ||
Liabilities, Redeemable Noncontrolling Interest and Shareholders Equity |
||||||
Liabilities |
||||||
Reserve for claims and claim expenses |
$ | 1,992,049 | $ | 2,160,612 | ||
Reserve for unearned premiums |
716,613 | 510,235 | ||||
Debt |
450,000 | 450,000 | ||||
Reinsurance balances payable |
289,522 | 315,401 | ||||
Payable for investments purchased |
590,401 | 378,111 | ||||
Other secured liabilities |
77,420 | 77,420 | ||||
Other liabilities |
171,738 | 290,998 | ||||
Total liabilities |
4,287,743 | 4,182,777 | ||||
Redeemable noncontrolling interest - DaVinciRe |
650,763 | 768,531 | ||||
Shareholders Equity |
||||||
Preference shares |
650,000 | 650,000 | ||||
Common shares |
62,324 | 61,503 | ||||
Additional paid-in capital |
11,373 | | ||||
Accumulated other comprehensive income |
69,530 | 75,387 | ||||
Retained earnings |
2,328,176 | 2,245,853 | ||||
Total shareholders equity |
3,121,403 | 3,032,743 | ||||
Total liabilities, redeemable noncontrolling interest and shareholders equity |
$ | 8,059,909 | $ | 7,984,051 | ||
Book value per common share |
$ | 39.65 | $ | 38.74 | ||
Common shares outstanding |
62,324 | 61,503 | ||||
6
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars)
(Unaudited)
Three months ended March 31, 2009 | |||||||||||||||||||
Reinsurance | Individual Risk | Eliminations (1) | Other | Total | |||||||||||||||
Gross premiums written |
$ | 532,916 | $ | 65,149 | $ | 236 | $ | | $ | 598,301 | |||||||||
Net premiums written |
$ | 414,787 | $ | 32,049 | | $ | 446,836 | ||||||||||||
Net premiums earned |
$ | 225,971 | $ | 75,777 | | $ | 301,748 | ||||||||||||
Net claims and claim expenses incurred |
16,571 | 69,626 | | 86,197 | |||||||||||||||
Acquisition expenses |
19,021 | 25,583 | | 44,604 | |||||||||||||||
Operational expenses |
29,115 | 10,642 | | 39,757 | |||||||||||||||
Underwriting income (loss) |
$ | 161,264 | $ | (30,074 | ) | | 131,190 | ||||||||||||
Net investment income |
42,126 | 42,126 | |||||||||||||||||
Equity in earnings of other ventures |
1,736 | 1,736 | |||||||||||||||||
Other loss |
(14,795 | ) | (14,795 | ) | |||||||||||||||
Interest and preference share dividends |
(14,711 | ) | (14,711 | ) | |||||||||||||||
Redeemable noncontrolling interest - DaVinciRe |
(35,475 | ) | (35,475 | ) | |||||||||||||||
Other items, net |
(15,891 | ) | (15,891 | ) | |||||||||||||||
Net realized gains on investments |
3,104 | 3,104 | |||||||||||||||||
Net income available to RenaissanceRe common shareholders |
$ | (33,906 | ) | $ | 97,284 | ||||||||||||||
Net claims and claim expenses incurred - current accident year |
$ | 41,306 | $ | 37,629 | $ | 78,935 | |||||||||||||
Net claims and claim expenses incurred - prior accident years |
(24,735 | ) | 31,997 | 7,262 | |||||||||||||||
Net claims and claim expenses incurred - total |
$ | 16,571 | $ | 69,626 | $ | 86,197 | |||||||||||||
Net claims and claim expense ratio - current accident year |
18.3 | % | 49.7 | % | 26.2 | % | |||||||||||||
Net claims and claim expense ratio - prior accident years |
(11.0 | %) | 42.2 | % | 2.4 | % | |||||||||||||
Net claims and claim expense ratio - calendar year |
7.3 | % | 91.9 | % | 28.6 | % | |||||||||||||
Underwriting expense ratio |
21.3 | % | 47.8 | % | 27.9 | % | |||||||||||||
Combined ratio |
28.6 | % | 139.7 | % | 56.5 | % | |||||||||||||
(1) | Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. |
Three months ended March 31, 2008 | |||||||||||||||||||
Reinsurance | Individual Risk | Eliminations (1) | Other | Total | |||||||||||||||
Gross premiums written |
$ | 443,728 | $ | 80,821 | $ | 2,489 | $ | | $ | 527,038 | |||||||||
Net premiums written |
$ | 342,920 | $ | 60,196 | | $ | 403,116 | ||||||||||||
Net premiums earned |
$ | 232,227 | $ | 76,687 | | $ | 308,914 | ||||||||||||
Net claims and claim expenses incurred |
47,069 | 35,087 | | 82,156 | |||||||||||||||
Acquisition expenses |
18,515 | 27,913 | | 46,428 | |||||||||||||||
Operational expenses |
21,139 | 8,974 | | 30,113 | |||||||||||||||
Underwriting income |
$ | 145,504 | $ | 4,713 | | 150,217 | |||||||||||||
Net investment income |
52,503 | 52,503 | |||||||||||||||||
Equity in earnings of other ventures |
6,250 | 6,250 | |||||||||||||||||
Other income |
8,012 | 8,012 | |||||||||||||||||
Interest and preference share dividends |
(17,379 | ) | (17,379 | ) | |||||||||||||||
Redeemable noncontrolling interest - DaVinciRe |
(40,315 | ) | (40,315 | ) | |||||||||||||||
Other items, net |
(11,453 | ) | (11,453 | ) | |||||||||||||||
Net realized losses on investments |
(10,670 | ) | (10,670 | ) | |||||||||||||||
Net income available to RenaissanceRe common shareholders |
$ | (13,052 | ) | $ | 137,165 | ||||||||||||||
Net claims and claim expenses incurred - current accident year |
$ | 70,576 | $ | 56,665 | $ | 127,241 | |||||||||||||
Net claims and claim expenses incurred - prior accident years |
(23,507 | ) | (21,578 | ) | (45,085 | ) | |||||||||||||
Net claims and claim expenses incurred - total |
$ | 47,069 | $ | 35,087 | $ | 82,156 | |||||||||||||
Net claims and claim expense ratio - current accident year |
30.4 | % | 73.9 | % | 41.2 | % | |||||||||||||
Net claims and claim expense ratio - prior accident years |
(10.1 | %) | (28.1 | %) | (14.6 | %) | |||||||||||||
Net claims and claim expense ratio - calendar year |
20.3 | % | 45.8 | % | 26.6 | % | |||||||||||||
Underwriting expense ratio |
17.0 | % | 48.1 | % | 24.8 | % | |||||||||||||
Combined ratio |
37.3 | % | 93.9 | % | 51.4 | % | |||||||||||||
(1) | Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. |
7
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Gross Premiums Written Analysis
(in thousands of United States Dollars) (Unaudited)
Reinsurance Segment |
Three months ended | |||||
March 31, 2009 | March 31, 2008 | |||||
Renaissance catastrophe premiums |
$ | 289,630 | $ | 224,968 | ||
Renaissance specialty premiums |
68,973 | 75,463 | ||||
Total Renaissance premiums |
358,603 | 300,431 | ||||
DaVinci catastrophe premiums |
171,786 | 139,178 | ||||
DaVinci specialty premiums |
2,527 | 4,119 | ||||
Total DaVinci premiums |
174,313 | 143,297 | ||||
Total Reinsurance premiums |
$ | 532,916 | $ | 443,728 | ||
Total specialty premiums |
$ | 71,500 | $ | 79,582 | ||
Total catastrophe premiums |
$ | 461,416 | $ | 364,146 | ||
Catastrophe premiums written on behalf of our joint venture, Top Layer Re (1) |
23,792 | 31,621 | ||||
Catastrophe premiums assumed from the Individual Risk segment |
236 | 2,489 | ||||
Total managed catastrophe premiums (2) |
$ | 485,444 | $ | 398,256 | ||
(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. |
Individual Risk Segment |
Three months ended | |||||
March 31, 2009 | March 31, 2008 | |||||
Commercial multi-line |
$ | 24,642 | $ | 31,384 | ||
Personal lines property |
16,234 | 13,212 | ||||
Commercial property |
16,121 | 30,853 | ||||
Multi-peril crop |
8,152 | 5,372 | ||||
Total Individual Risk premiums |
$ | 65,149 | $ | 80,821 | ||
8
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Total Investment Result
(in thousands of United States Dollars) (Unaudited)
Three months ended | ||||||||
March 31, 2009 |
March 31, 2008 |
|||||||
Fixed maturity investments available for sale |
$ | 39,127 | $ | 49,535 | ||||
Short term investments |
3,071 | 19,080 | ||||||
Other investments |
||||||||
Hedge funds and private equity investments |
(19,741 | ) | (1,940 | ) | ||||
Other |
21,821 | (14,441 | ) | |||||
Cash and cash equivalents |
373 | 2,902 | ||||||
44,651 | 55,136 | |||||||
Investment expenses |
(2,525 | ) | (2,633 | ) | ||||
Net investment income |
42,126 | 52,503 | ||||||
Gross realized gains |
31,423 | 20,272 | ||||||
Gross realized losses |
(9,297 | ) | (5,560 | ) | ||||
Other than temporary impairments |
(19,022 | ) | (25,382 | ) | ||||
Net realized gains (losses) on investments |
3,104 | (10,670 | ) | |||||
Net change in unrealized holding gains on fixed maturity investments available for sale |
(5,407 | ) | 23,729 | |||||
Total investment result |
$ | 39,823 | $ | 65,562 | ||||
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 March 31, 2009 |
Amortized Cost |
Fair Value |
% of Total Managed Investment Portfolio |
Credit Rating (1) | |||||||||||||||||||||||||||||||||
Yield to Maturity |
AAA | AA | A | BBB | Non- Investment Grade |
Not Rated |
|||||||||||||||||||||||||||||||
Short term investments | $ | 2,136,336 | $ | 2,136,336 | 35.4 | % | 0.3 | % | $ | 2,113,433 | $ | 16,206 | $ | 5,469 | $ | 120 | $ | 1,108 | $ | | |||||||||||||||||
100.0 | % | 98.9 | % | 0.7 | % | 0.3 | % | 0.0 | % | 0.1 | % | 0.0 | % | ||||||||||||||||||||||||
Fixed maturity investments available for sale | |||||||||||||||||||||||||||||||||||||
U.S. treasuries |
223,224 | 227,594 | 3.8 | % | 1.5 | % | 227,594 | | | | | | |||||||||||||||||||||||||
Agencies |
|||||||||||||||||||||||||||||||||||||
Fannie Mae & Freddie Mac |
373,351 | 380,955 | 6.3 | % | 1.6 | % | 376,288 | | 4,667 | | | | |||||||||||||||||||||||||
Other agencies |
21,931 | 23,169 | 0.4 | % | 2.1 | % | 23,169 | | | | | | |||||||||||||||||||||||||
Total agencies |
395,282 | 404,124 | 6.7 | % | 1.6 | % | 399,457 | | 4,667 | | | | |||||||||||||||||||||||||
Non U.S. government |
78,035 | 80,921 | 1.3 | % | 5.3 | % | 46,694 | 11,462 | 373 | 10,317 | 12,075 | | |||||||||||||||||||||||||
FDIC guaranteed corporate |
509,782 | 516,115 | 8.6 | % | 1.8 | % | 516,115 | | | | | | |||||||||||||||||||||||||
Corporate |
501,458 | 518,400 | 8.6 | % | 6.2 | % | 18,715 | 198,711 | 195,272 | 54,734 | 50,968 | | |||||||||||||||||||||||||
Mortgage-backed securities |
|||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities |
|||||||||||||||||||||||||||||||||||||
Agency securities |
967,757 | 990,126 | 16.4 | % | 3.0 | % | 990,126 | | | | | | |||||||||||||||||||||||||
Non-agency securities |
39,343 | 39,887 | 0.7 | % | 13.9 | % | 39,387 | | | 500 | | | |||||||||||||||||||||||||
Non-agency securities - Alt A |
21,423 | 22,172 | 0.4 | % | 16.6 | % | 21,663 | | | 175 | 334 | | |||||||||||||||||||||||||
Non-agency securities - Sub-prime |
| | 0.0 | % | 0.0 | % | | | | | | | |||||||||||||||||||||||||
Total residential mortgage-backed securities |
1,028,523 | 1,052,185 | 17.5 | % | 3.8 | % | 1,051,176 | | | 675 | 334 | | |||||||||||||||||||||||||
Commercial mortgage-backed securities |
209,562 | 213,943 | 3.5 | % | 9.2 | % | 213,943 | | | | | | |||||||||||||||||||||||||
Total mortgage-backed securities |
1,238,085 | 1,266,128 | 21.0 | % | 4.7 | % | 1,265,119 | | | 675 | 334 | | |||||||||||||||||||||||||
Asset-backed securities |
|||||||||||||||||||||||||||||||||||||
Credit cards |
51,316 | 53,647 | 0.9 | % | 3.9 | % | 53,647 | | | | | | |||||||||||||||||||||||||
Auto |
45,553 | 48,008 | 0.8 | % | 5.1 | % | 48,008 | | | | | | |||||||||||||||||||||||||
Other - Stranded cost |
7,292 | 7,670 | 0.1 | % | 3.2 | % | 7,670 | | | | | | |||||||||||||||||||||||||
Other |
40,334 | 42,241 | 0.7 | % | 7.8 | % | 42,241 | | | | | | |||||||||||||||||||||||||
Total asset-backed securities |
144,495 | 151,566 | 2.5 | % | 5.3 | % | 151,566 | | | | | | |||||||||||||||||||||||||
Total securitized assets |
1,382,580 | 1,417,694 | 23.5 | % | 4.8 | % | 1,416,685 | | | 675 | 334 | | |||||||||||||||||||||||||
Total fixed maturity investments available for sale |
3,090,361 | 3,164,848 | 52.5 | % | 3.9 | % | 2,625,260 | 210,173 | 200,312 | 65,726 | 63,377 | | |||||||||||||||||||||||||
100.0 | % | 83.0 | % | 6.6 | % | 6.3 | % | 2.1 | % | 2.0 | % | 0.0 | % | ||||||||||||||||||||||||
Other investments | |||||||||||||||||||||||||||||||||||||
Private equity partnerships |
247,559 | 4.1 | % | | | | | | 247,559 | ||||||||||||||||||||||||||||
Senior secured bank loan funds |
220,202 | 3.6 | % | | | | | 220,202 | | ||||||||||||||||||||||||||||
Catastrophe bonds |
93,798 | 1.6 | % | | 23,905 | | | 69,893 | | ||||||||||||||||||||||||||||
Non-U.S. fixed income funds |
81,757 | 1.4 | % | | | | 58,734 | 23,023 | | ||||||||||||||||||||||||||||
Hedge funds |
72,428 | 1.2 | % | | | | | | 72,428 | ||||||||||||||||||||||||||||
Miscellaneous other investments |
17,279 | 0.2 | % | | | | 8,880 | | 8,399 | ||||||||||||||||||||||||||||
Total other investments |
733,023 | 12.1 | % | | 23,905 | | 67,614 | 313,118 | 328,386 | ||||||||||||||||||||||||||||
Total managed investment portfolio |
$ | 6,034,207 | 100.0 | % | $ | 4,738,693 | $ | 250,284 | $ | 205,781 | $ | 133,460 | $ | 377,603 | $ | 328,386 | |||||||||||||||||||||
100.0 | % | 78.6 | % | 4.1 | % | 3.4 | % | 2.2 | % | 6.3 | % | 5.4 | % |
(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 - Investment Portfolio
(in thousands of United States Dollars)
(Unaudited)
At March 31, 2009 | At December 31, 2008 | Change | |||||||||||||||||
Fair Value | % of Total Managed Investment Portfolio |
Fair Value | % of Total Managed Investment Portfolio |
$ | % | ||||||||||||||
Short term investments | $ | 2,136,336 | 35.4 | % | $ | 2,172,343 | 36.6 | % | $ | (36,007 | ) | (1.7 | %) | ||||||
Fixed maturity investments available for sale | |||||||||||||||||||
U.S. treasuries |
227,594 | 3.8 | % | 467,480 | 7.9 | % | (239,886 | ) | (51.3 | %) | |||||||||
Agencies |
|||||||||||||||||||
Fannie Mae & Freddie Mac |
380,955 | 6.3 | % | 385,229 | 6.4 | % | (4,274 | ) | (1.1 | %) | |||||||||
Other agencies |
23,169 | 0.4 | % | 63,292 | 1.1 | % | (40,123 | ) | (63.4 | %) | |||||||||
Total agencies |
404,124 | 6.7 | % | 448,521 | 7.5 | % | (44,397 | ) | (9.9 | %) | |||||||||
Non U.S. government |
80,921 | 1.3 | % | 57,058 | 1.0 | % | 23,863 | 41.8 | % | ||||||||||
FDIC guaranteed corporate |
516,115 | 8.6 | % | 207,393 | 3.5 | % | 308,722 | 148.9 | % | ||||||||||
Corporate |
518,400 | 8.6 | % | 539,817 | 9.1 | % | (21,417 | ) | (4.0 | %) | |||||||||
Mortgage-backed securities |
|||||||||||||||||||
Residential mortgage-backed securities |
|||||||||||||||||||
Agency securities |
990,126 | 16.4 | % | 756,902 | 12.7 | % | 233,224 | 30.8 | % | ||||||||||
Non-agency securities |
39,887 | 0.7 | % | 70,916 | 1.2 | % | (31,029 | ) | (43.8 | %) | |||||||||
Non-agency securities - Alt A |
22,172 | 0.4 | % | 27,756 | 0.5 | % | (5,584 | ) | (20.1 | %) | |||||||||
Non-agency securities - Sub-prime |
| 0.0 | % | | 0.0 | % | | 0.0 | % | ||||||||||
Total residential mortgage-backed securities |
1,052,185 | 17.5 | % | 855,574 | 14.4 | % | 196,611 | 23.0 | % | ||||||||||
Commercial mortgage-backed securities |
213,943 | 3.5 | % | 255,020 | 4.3 | % | (41,077 | ) | (16.1 | %) | |||||||||
Total mortgage-backed securities |
1,266,128 | 21.0 | % | 1,110,594 | 18.7 | % | 155,534 | 14.0 | % | ||||||||||
Asset-backed securities |
|||||||||||||||||||
Auto |
53,647 | 0.9 | % | 95,812 | 1.6 | % | (42,165 | ) | (44.0 | %) | |||||||||
Credit cards |
48,008 | 0.8 | % | 12,056 | 0.2 | % | 35,952 | 298.2 | % | ||||||||||
Other - Stranded cost |
7,670 | 0.1 | % | 7,639 | 0.1 | % | 31 | 0.4 | % | ||||||||||
Other |
42,241 | 0.7 | % | 50,515 | 0.8 | % | (8,274 | ) | (16.4 | %) | |||||||||
Total asset-backed securities |
151,566 | 2.5 | % | 166,022 | 2.7 | % | (14,456 | ) | (8.7 | %) | |||||||||
Total securitized assets |
1,417,694 | 23.5 | % | 1,276,616 | 21.4 | % | 141,078 | 11.1 | % | ||||||||||
Total fixed maturity investments available for sale |
3,164,848 | 52.5 | % | 2,996,885 | 50.4 | % | 167,963 | 5.6 | % | ||||||||||
Other investments | |||||||||||||||||||
Private equity partnerships |
247,559 | 4.1 | % | 258,901 | 4.3 | % | (11,342 | ) | (4.4 | %) | |||||||||
Senior secured bank loan funds |
220,202 | 3.6 | % | 215,870 | 3.6 | % | 4,332 | 2.0 | % | ||||||||||
Catastrophe bonds |
93,798 | 1.6 | % | 93,085 | 1.8 | % | 713 | 0.8 | % | ||||||||||
Non-U.S. fixed income funds |
81,757 | 1.4 | % | 81,719 | 1.6 | % | 38 | 0.0 | % | ||||||||||
Hedge funds |
72,428 | 1.2 | % | 105,838 | 1.4 | % | (33,410 | ) | (31.6 | %) | |||||||||
Miscellaneous other investments |
17,279 | 0.2 | % | 18,062 | 0.3 | % | (783 | ) | (4.3 | %) | |||||||||
Total other investments |
733,023 | 12.1 | % | 773,475 | 13.0 | % | (40,452 | ) | (5.2 | %) | |||||||||
Total managed investment portfolio |
$ | 6,034,207 | 100.0 | % | $ | 5,942,703 | 100.0 | % | $ | 91,504 | 1.5 | % |
11
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Fixed Maturity Investments Available for Sale - Securitized Assets
(in thousands of United States Dollars)
(Unaudited)
At March 31, 2009 |
Fair Value | % of Total Managed Investment Portfolio |
% of Total Managed Investment Portfolio | % of Total Securitized Assets |
Average Duration |
||||||||||||||||||||||||
Vintage | |||||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | 2004 & Prior |
||||||||||||||||||||||||
Total managed investment portfolio |
$ | 6,034,207 | 100.0 | % | |||||||||||||||||||||||||
Mortgage-backed securities |
|||||||||||||||||||||||||||||
Residential mortgage-backed securities |
|||||||||||||||||||||||||||||
Agency securities |
990,126 | 16.4 | % | 3.7 | % | 6.8 | % | 2.9 | % | 0.7 | % | 1.1 | % | 1.2 | % | 69.8 | % | 2.5 | |||||||||||
Non-agency securities |
39,887 | 0.7 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.1 | % | 0.2 | % | 0.3 | % | 2.8 | % | 0.8 | |||||||||||
Non-agency securities - Alt A |
22,172 | 0.4 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.1 | % | 0.2 | % | 1.6 | % | 0.3 | |||||||||||
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 |
62,059 | 1.1 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.1 | % | 0.3 | % | 0.5 | % | 4.4 | % | 0.6 | |||||||||||
Total residential mortgage-backed securities |
1,052,185 | 17.5 | % | 3.7 | % | 6.8 | % | 2.9 | % | 0.8 | % | 1.4 | % | 1.7 | % | 74.2 | % | 2.3 | |||||||||||
Commercial mortgage-backed securities |
213,943 | 3.5 | % | 0.0 | % | 0.1 | % | 0.2 | % | 0.5 | % | 0.8 | % | 2.0 | % | 15.1 | % | 2.0 | |||||||||||
Total mortgage-backed securities |
1,266,128 | 21.0 | % | 3.7 | % | 6.9 | % | 3.1 | % | 1.3 | % | 2.2 | % | 3.7 | % | 89.3 | % | 2.2 | |||||||||||
Asset-backed securities |
|||||||||||||||||||||||||||||
Credit cards |
53,647 | 0.9 | % | 0.0 | % | 0.3 | % | 0.0 | % | 0.4 | % | 0.2 | % | 0.0 | % | 3.8 | % | 0.6 | |||||||||||
Auto |
48,008 | 0.8 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.5 | % | 0.3 | % | 0.0 | % | 3.4 | % | 0.8 | |||||||||||
Other - Stranded cost |
7,670 | 0.1 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | 0.1 | % | 0.0 | % | 0.5 | % | 1.7 | |||||||||||
Other |
42,241 | 0.7 | % | 0.0 | % | 0.4 | % | 0.0 | % | 0.0 | % | 0.2 | % | 0.1 | % | 3.0 | % | 0.3 | |||||||||||
Total asset-backed securities |
151,566 | 2.5 | % | 0.0 | % | 0.7 | % | 0.0 | % | 0.9 | % | 0.8 | % | 0.1 | % | 10.7 | % | 0.7 | |||||||||||
Total securitized assets |
$ | 1,417,694 | 23.5 | % | 3.7 | % | 7.6 | % | 3.1 | % | 2.2 | % | 3.0 | % | 3.8 | % | 100.0 | % | 2.0 | ||||||||||
RenaissanceRe Holdings Ltd. and Subsidiaries
Supplemental Financial Data - Investment Portfolio - Fixed Maturity Investments Available for Sale - Corporate
(in thousands of United States Dollars)
(Unaudited)
Sector |
At March 31, 2009 | |||||||||||||||||
Total | AAA | AA | A | BBB | Non-Investment Grade |
|||||||||||||
Financials |
$ | 285,738 | $ | 16,130 | $ | 154,438 | $ | 97,593 | $ | 8,238 | $ | 9,339 | ||||||
Industrial, utilities and energy |
87,671 | 167 | 21,453 | 31,730 | 19,393 | 14,928 | ||||||||||||
Consumer |
77,641 | 2,418 | 22,820 | 26,165 | 11,480 | 14,758 | ||||||||||||
Communications and technology |
60,437 | | | 36,478 | 13,980 | 9,979 | ||||||||||||
Basic materials |
6,913 | | | 3,306 | 1,643 | 1,964 | ||||||||||||
Total corporate fixed maturity investments available for sale, at fair value (1) |
$ | 518,400 | $ | 18,715 | $ | 198,711 | $ | 195,272 | $ | 54,734 | $ | 50,968 | ||||||
(1) | Excludes FDIC guaranteed corporate fixed maturity investments available for sale, at fair value. |
12
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)
Issuer |
At March 31, 2009 | ||||||||
Total | Short term investments |
Fixed maturity investments available for sale |
|||||||
General Electric Company |
$ | 71,238 | $ | | $ | 71,238 | |||
Wells Fargo & Company |
38,019 | | 38,019 | ||||||
JP Morgan Chase & Co. |
20,600 | 2,054 | 18,546 | ||||||
BP PLC |
16,032 | | 16,032 | ||||||
Chevron Corporation |
15,701 | | 15,701 | ||||||
Bank of America Corporation |
12,274 | 100 | 12,174 | ||||||
The Goldman Sachs Group, Inc. |
9,828 | | 9,828 | ||||||
Morgan Stanley |
9,184 | | 9,184 | ||||||
Wal-Mart Stores, Inc. |
8,555 | | 8,555 | ||||||
Citigroup Inc. |
8,555 | | 8,555 | ||||||
Total (1) |
$ | 209,986 | $ | 2,154 | $ | 207,832 | |||
(1) | Excludes FDIC guaranteed corporate fixed maturity investments available for sale, at fair value. |
13
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 RenaissanceRe common shareholders, which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized gains and losses on 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 RenaissanceRe common shareholders to operating income available to RenaissanceRe common shareholders; 2) net income available to RenaissanceRe common shareholders per common share diluted to operating income available to RenaissanceRe common shareholders per common share diluted; and 3) return on average common equity annualized to operating return on average common equity annualized:
(in thousands of United States Dollars, except for per share amounts) |
Three months ended | |||||||
March 31, 2009 | March 31, 2008 | |||||||
Net income available to RenaissanceRe common shareholders |
$ | 97,284 | $ | 137,165 | ||||
Adjustment for net realized (gains) losses on investments |
(3,104 | ) | 10,670 | |||||
Operating income available to RenaissanceRe common shareholders |
$ | 94,180 | $ | 147,835 | ||||
Net income available to RenaissanceRe common shareholders per common share - diluted |
$ | 1.57 | $ | 2.05 | ||||
Adjustment for net realized (gains) losses on investments |
(0.05 | ) | 0.16 | |||||
Operating income available to RenaissanceRe common shareholders per common share - diluted |
$ | 1.52 | $ | 2.21 | ||||
Return on average common equity - annualized |
16.0 | % | 19.7 | % | ||||
Adjustment for net realized (gains) losses on investments |
(0.5 | %) | 1.6 | % | ||||
Operating return on average common equity - annualized |
15.5 | % | 21.3 | % | ||||
The Company has also included in this Press Release managed catastrophe premiums. 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. 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.
14