Table of Contents

RenaissanceRe

RenaissanceRe Holdings Ltd. 2010 Annual Report

Table of Contents

2010 Annual Report

Contents

Financial Highlights 01

Company Overview 02

Letter to Shareholders 05

Message from the Chairman 11

Executive Committee 12

Capital Management at RenaissanceRe 15

Comments on Regulation G 21

Form 10-K 23

Senior Officers Last Page

Board of Directors Inside Back Cover

Financial and Investor Information Inside Back Cover

Table of Contents

Financial Highlights

RenaissanceRe Holdings Ltd. and Subsidiaries

(in thousands of United States dollars, except per share amounts and percentages) 2010 2009 2008

Gross premiums written $ 1,165,295 1,228,881 1,242,287

Operating income available to RenaissanceRe common shareholders (1) $ 536,394 768,177 193,034

Net income (loss) available (attributable) to RenaissanceRe common shareholders $ 702,613 838,858 (13,280)

Total assets $ 8,138,278 7,926,212 8,155,609

Total shareholders’ equity $ 3,939,214 3,840,786 3,032,743

Per common share amounts

Operating income available to RenaissanceRe common shareholders per common share – diluted (1) $ 9.32 12.25 3.04

Net income (loss) available (attributable) to RenaissanceRe common shareholders per common share – diluted $ 12.31 13.40 (0.21)

Tangible book value per common share (1) $ 60.55 49.73 36.73

Dividends per common share $ 1.00 0.96 0.92

Operating ratios

Operating return on average common equity (1) % 16.5 27.6 7.4

Net claims and claim expense ratio % 15.0 (8.0) 48.9

Underwriting expense ratio % 30.1 29.2 24.0

Combined ratio % 45.1 21.2 72.9

Gross Managed Premiums Written (1) (in millions)

Insurance

Lloyd’s

Specialty

Managed Catastrophe (1)

1,200

900 600 300 0

08 09 10

Tangible Book Value Per Common Share Plus Accumulated Dividends (1) ($)

Accumulated Dividends

Tangible Book Value

06 07 08 09 10

60 45 30 15 0

(1) In this Annual Report, we refer to various non-GAAP measures, which are explained in the Comments on Regulation G on pages 21 and 22.

Financial Highlights 01

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Company Overview

RenaissanceRe is a leading global provider of property catastrophe and specialty reinsurance, as well as other insurance coverages. Founded in Bermuda in 1993, the Company has gained recognition for excellence in the industry through disciplined underwriting, capital management expertise, sophisticated risk modeling and responsive client service. RenaissanceRe is traded on the New York Stock Exchange under the ticker symbol ‘RNR’.

Reinsurance

Property Catastrophe One of the largest providers of property catastrophe in the world based on managed catastrophe premium, our principal products include catastrophe excess of loss reinsurance and excess of loss retrocessional reinsurance. We underwrite our reinsurance business primarily through Renaissance Reinsurance Ltd., DaVinci Reinsurance Ltd. and Top Layer Reinsurance Ltd. Using sophisticated computer modeling and our proprietary technology for risk analysis and management, our seasoned team of underwriters seeks to construct a superior risk portfolio, while cultivating long-term relationships with clients who appreciate our problem-solving capabilities.

Specialty In addition to our expertise in property catastrophe reinsurance, we offer coverages including aviation, casualty clash, medical malpractice, political risk, trade credit, surety, terrorism and catastrophe-exposed workers’ compensation reinsurance.

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Performance Through Discipline

Lloyd’s

RenaissanceRe operates through Syndicate 1458 at Lloyd’s. The extensive distribution network and worldwide licenses of the Lloyd’s marketplace complement and extend both our strategy and our strong underwriting platform in Bermuda.

Coverages currently include property catastrophe reinsurance, property insurance, casualty treaty, casualty insurance and crop reinsurance. The disciplined underwriting approach and rigorous risk management which underpin our Bermuda operation are reflected by our London team.

Ventures

RenaissanceRe’s Ventures unit structures and manages joint ventures as well as other strategic relationships that leverage the Company’s underwriting expertise and experience. We manage several property catastrophe joint ventures that provide additional high quality capacity to our clients and generate fee income for RenaissanceRe. Our principal joint ventures include Top Layer Reinsurance Ltd. and DaVinci Reinsurance Ltd., and we structure other joint ventures when market opportunities arise. We also make strategic investments to provide capital to existing clients in forms other than reinsurance.

Our weather and energy risk management advisory services, RenRe Energy Advisors Ltd. (REAL), has been a part of the RenaissanceRe group since 2007. This unit offers risk management solutions pertaining to weather and energy price risks, which include weather derivatives, commodity and hybrid products.

Company Overview 03

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Performance Through Discipline

Letter to Shareholders

In 2010, RenaissanceRe achieved superior performance through disciplined execution.

Dear Shareholders,

I am pleased with the financial results we achieved in 2010 despite the softening market conditions and significant catastrophic events that characterized the year. The Company achieved growth in tangible book value per share plus accumulated dividends – our most important metric for reflecting the value we create for shareholders – of 24%.

In addition to executing well in underwriting and capital management, our performance was aided by strong investment returns for the full year. We also benefited from favorable loss reserve development.

Streamlining Our Company

In 2010 we examined our strengths and our opportunities as an organization. We re-evaluated who we are and what has made our Company unique. In the process we articulated our aspiration to be the world’s best underwriter of low-frequency, high-severity risk. This delineated a pathway to emphasize those businesses most aligned with our objectives and highlighted our skills. It also dovetailed with our belief that, when adequately paid for the risks we assume, we can achieve superior profitability over time by excelling in a business that can produce uneven results from one year to the next.

With this identity in mind, we proceeded with confidence on several fronts. Our most far-reaching decision was to sell our U.S. admitted insurance operations. In November we announced a transaction with QBE Holdings, Inc., which included the sale of our U.S. property and casualty business, our commercial property insurance business, and the largest of our U.S.-based operations, our crop insurance business written through Agro National Inc.

We had invested significantly in developing Agro National and it performed well in 2010, but we believe the playing field in U.S. crop insurance is changing considerably. We believe that scale, as opposed to underwriting expertise, is increasingly important as the requisite ingredient to maximize profitability. We had to choose between growing and selling; we chose to sell.

Through the sale of our U.S.-based insurance operations, we also exited our U.S. program management business. Once again, our view was that our business was of insufficient scale to generate acceptable levels of profitability.

And by selling to one of the largest insurers in this business, we provided our operations and our colleagues working there an appropriate new home where they might have the opportunity to flourish.

This decision resulted in the repositioning of our Company to be more nimble and sharply focused. We will continue to participate selectively in the U.S. insurance market through RenaissanceRe Syndicate 1458 at Lloyd’s, by providing excess and surplus lines coverage on a non-admitted basis as opportunities arise. This is in keeping with our focus on providing coverage for low-frequency, high-severity exposures and gives us more rate flexibility than writing business on an admitted basis.

Capital and Catastrophes

In 2010, the property catastrophe reinsurance landscape was dominated by excess capital and losses occurring outside of the U.S.

Letter to Shareholders 05

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“Our careful preparation for renewals during the year and strong customer and broker relationships, coupled with disciplined risk assessment, enabled us to achieve an attractive portfolio of business going into 2011.”

Tangible Book Value Per Common Share Plus Accumulated Dividends (1) ($)

Accumulated Dividends Tangible Book Value

60 45 30 15 0

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

(1) In this Annual Report, we refer to various non-GAAP measures, which are explained in the Comments on Regulation G on pages 21 and 22.

While the ready availability of capital led to further softening in the market, pricing remained generally acceptable as it came down from the higher levels of previous years. We remained disciplined, careful to assume only those risks for which we were being adequately compensated. As a result, despite our catastrophe premiums being approximately 9% lower than in 2009, we achieved a good overall return profile.

Early on in 2010, we had projected an increased frequency of Atlantic hurricanes, and indeed the year was one of the most active on record. Fortunately, none of these hurricanes made landfall in the U.S. – an unusual occurrence.

On the other hand, it was a relatively bad year for earthquakes around the world. Large seismic events in Chile and New Zealand caused considerable damage, while the Haitian earthquake, though largely uninsured, caused extensive loss of life. Events such as these remind us of the relative unpredictability of earthquakes, which occur – unlike hurricanes – without warning or seasonality.

The Chilean earthquake was the largest non-U.S. insured event in many years, with losses to the industry estimated at approximately $8 billion. For RenaissanceRe, exposure came largely through retrocessional coverage (reinsurance of other reinsurers). Although the losses were significant, they remained within our expectations for an event of that magnitude.

The New Zealand earthquake was different from the Chilean quake; it inflicted more residential than commercial damage, and the ultimate industry loss remains difficult to estimate.

Despite these events, we achieved good results for the year. Our careful preparation for renewals during the year and strong customer and broker relationships, coupled with

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Performance Through Discipline

“We are confident RenaissanceRe Syndicate 1458 represents a long-term investment with strong potential.”

disciplined risk assessment, enabled us to achieve an attractive portfolio of business going into 2011.

Discipline and Groundwork

In specialty reinsurance, we maintained a diversified book of business but added risks cautiously due to the prevailing market environment. Some new opportunities emerged within the credit risk sector resulting from the financial crisis of 2008-09, and we also increased our participation in other lines of business with a view of developing our capabilities in these sectors for the future.

We continued to build our presence at Lloyd’s through RenaissanceRe Syndicate 1458, which commenced operations in the fourth quarter of 2009. Ross Curtis, a member of our Executive Committee, moved from Bermuda to London to be the syndicate’s Active Underwriter. While we expect its expenses to exceed revenue over the near term, we are confident RenaissanceRe Syndicate 1458 represents a long-term investment with strong potential. We have already been able to access business otherwise not presented to us in Bermuda as a result of the extensive distribution network and global licenses offered by Lloyd’s, and have been successful in increasing the awareness of RenaissanceRe within the London market broker network.

Value from Ventures

Our Ventures unit, which creates alternative means of providing reinsurance capacity for our customers, had a noteworthy year in all areas of its activity, including catastrophe reinsurance joint ventures, venture capital, and its RenRe Energy Advisors Ltd. (REAL) business.

Operating Return on Average Common Equity (1) (%)

40 30 20 10 0 -10

01 02 03 04 05 06 07 08 09 10

(1) In this Annual Report, we refer to various non-GAAP measures, which are explained in the Comments on Regulation G on pages 21 and 22.

The DaVinci and Top Layer Re joint ventures that we manage provide alternative, highly-rated balance sheets to our customers. Although these entities were impacted by the global catastrophe activity, DaVinci registered another year of excellent profitability, achieving an ROE in excess of 15%. Top Layer Re, which specializes in providing high layer coverage to insurance companies with risks located outside of the U.S., saw its first loss since inception (over a decade ago) as a result of the 2010 New Zealand earthquake. For our clients, the loss served to highlight the value of Top Layer Re. And, the already-strong relationships that we had were further strengthened.

We rationalized our venture capital portfolio, one example being the disposition of our remaining investment in ChannelRe, realizing $16 million from an asset we had previously marked to a carrying value of zero.

Letter to Shareholders 07

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“Once again, RenaissanceRe was one of only a very few reinsurers rated “Excellent” by Standard & Poor’s for its Enterprise Risk Management.”

Our Houston-based energy advisory group, REAL, which provides energy risk management and weather-contingent hedging services to power and utilities companies, recorded its third consecutive year of profitability. REAL continues to broaden its customer base and is developing into a unique franchise.

Results and Capital Management

Net income available to RenaissanceRe common shareholders for the year was $703 million, or $12.31 per diluted common share, and operating income came in at $536 million, or $9.32 per diluted common share. Gross premiums written decreased 5%, as we refrained from writing business that did not meet our hurdles for risk-adjusted profitability.

As I mentioned earlier, we achieved growth in tangible book value per share, plus accumulated dividends, of 24%. Since our inception, we have achieved an average annual increase of 22%. Coming on the heels of 2009’s unusually large 38% increase, this year’s results were especially gratifying. Our stated objective has always been to grow this measure over time. “Over time” is key: we try to obtain the best return that we can rationally expect within prevailing market conditions. In some years, that return will be better; in others, it will be worse. We will remain disciplined about not attempting to force a return at the wrong time.

Contributing to our performance for 2010 were strong returns from our investment portfolio. Benefiting for most of the year from steadily falling interest rates and tighter credit spreads, our portfolio appreciated significantly in value. We saw good returns in all asset classes, including investment grade corporate bonds as well as high-yield securities and our alternative investments.

Throughout the year our investment portfolio maintained a relatively conservative credit profile and a relatively short duration. We reduced our exposure to high yield debt and continued to exit our hedge fund investments.

Given the prevailing market conditions, investment gains similar to those achieved in 2010 are unlikely to be repeated for the foreseeable future.

Another important contributor to this year’s financial performance was capital management, which included returning excess capital to shareholders. During 2010, our capital management decision regarding excess capital was straightforward: the industry was saturated with capital and our stock, which over much of our history has traded at a significant premium to book value, was trading at attractive prices, so we bought back shares.

We bought back a total of 8.2 million shares for $460 million during 2010. We also redeemed $100 million of 7.30% Series B Preference Shares and sold $250 million of 5.750% Senior Notes. In addition, our managed joint venture DaVinciRe Holdings Ltd. returned $173.6 million of capital to its shareholders. In the essay “Capital Management at RenaissanceRe” that follows this letter, we outline our capital management philosophy in more detail.

Risk Management Excellence

Once again, RenaissanceRe was one of only a very few reinsurers rated “Excellent” by Standard & Poor’s for its Enterprise Risk Management. While the awareness of risk management has grown profoundly since the financial

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“Bermuda remains a global center of excellence for reinsurance and the most attractive domicile for our flagship operations.”

Credit Ratings

A.M. Best S&P (5) Moody’s Fitch (6)

Reinsurance Segment (1)

Renaissance Reinsurance A+ AA- A1 A+

DaVinci A A+ – –

Top Layer Re A+ AA – –

Renaissance Reinsurance of Europe A+ AA- – –

Lloyd’s Segment

RenaissanceRe Syndicate 1458 – – – –

Lloyd’s Overall Market Rating (2) A A+ – A+

Insurance Segment (1)

Glencoe (3) A A+ – –

RenaissanceRe (4) – Excellent – –

(1) The A.M. Best, S&P, Moody’s and Fitch ratings for the companies in the Reinsurance and Insurance segments reflect the insurer’s financial strength rating.

(2) The A.M. Best, S&P and Fitch ratings for the Lloyd’s Overall Market Rating represent its financial strength rating.

(3) The A.M. Best rating for Glencoe is under review with negative implications and the S&P rating for Glencoe is under CreditWatch negative.

(4) The S&P rating for RenaissanceRe represents rating on its Enterprise Risk Management practices.

(5) The S&P ratings for the companies in the Reinsurance and Insurance segments reflect, in addition to the insurer’s financial strength rating, the insurer’s issuer credit rating.

(6) On January 19, 2011, Fitch upgraded the insurer’s financial strength rating of Renaissance Reinsurance to “A+” from “A”. The outlook is stable for this rating.

crisis, at RenaissanceRe it has been a discipline that has been at the very core of our strategy since our inception. Our most essential task is the careful management of risk in a volatile business, so that our capital will be there for our clients as promised, when they need it, while providing superior returns for our shareholders.

Back in 1993, we pioneered the use of advanced technology and sophisticated risk modeling to help achieve this task. In the years that have followed, we have continued to make significant investments in our systems and analytical tools to maintain our industry-leading position, and 2010 was no exception.

We continued to enhance our proprietary REMS© modeling technology this year. We constructed a new framework for our specialty businesses and created new tools for our Lloyd’s platform. We also upgraded our reserving models.

We worked extensively in preparation for Solvency II, which will impose rigorous compliance criteria on insurers and reinsurers wishing to conduct business in Europe.

In this regard, we are pleased to note that Bermuda has been chosen as one of the few jurisdictions for review regarding equivalency status under Solvency II. Bermuda remains a global center of excellence for reinsurance and the most attractive domicile for our flagship operations.

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“At every level, our people share a common drive to make our Company the best it can be and to provide outstanding service to our customers.”

People and Culture

Just as we have established a distinctive market-leading franchise, we have created a unique culture within our Company. This year marked further positive evolution as we continued to develop the many talents of our people throughout the organization.

At the most senior levels, we expanded our Executive Committee to include four new members: Ross Curtis, who now heads our Lloyd’s syndicate; Aditya Dutt, the new head of our Ventures unit; Jon Paradine, chief underwriter of Renaissance Reinsurance Ltd.; and Mark Wilcox, our chief accounting officer. They have all made significant contributions to our Company over the years. Today we have an experienced, cohesive executive team, dedicated to our mission, our values and our corporate goals.

And we continued to develop the depth of our managerial talent. We initiated a new leadership program providing managers with training to deepen their skills. This complements our ongoing efforts in training and mentoring for more senior-level professionals.

I am proud that RenaissanceRe consistently attracts and challenges people of the highest caliber. At every level, our people share a common drive to make our Company the best it can be and to provide outstanding service to our customers.

Outlook

The year ahead should be challenging but rewarding, as long as we continue to exercise the discipline that is our hallmark. The January renewal season reflected continued softening and uncertainty in the market. But overall, we were able to assemble a good book of business with satisfactory expected returns. And as the industry processes the full impact of the recent storms in Australia and the earthquakes in New Zealand and Japan, we are reminded that one can never foretell when events will occur that could affect the market.

I am confident that we have positioned our business for success. Through consistent adherence to our underwriting principles, we remain one of the world’s leading property catastrophe reinsurers with additional franchises in related specialty areas. We continue to leverage our core capabilities into innovative avenues for providing capital to our customers. We are squarely focused on our strengths and on laying the foundation for future opportunities.

Thank you for your continued support.

Sincerely,

Neill A. Currie

President and Chief Executive Officer

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Message from the Chairman

On behalf of the Board of Directors, I would like to thank all the employees of RenaissanceRe for their dedication and hard work resulting in another admirable performance for our shareholders.

I also wish to commend our management team for its efforts to reposition the Company for the future, and thank my fellow directors for their contributions in support of this endeavor. With a sound, cohesive strategy, the Company is on course to best utilize its cutting edge capabilities and to continue its leadership position in our industry.

I especially wish to thank William F. Hecht, who retired from our Board during the year, for his insight and wise counsel over the past decade. In turn, we welcome Edward J. Zore, who joins our Board after an illustrious career at The Northwestern Mutual Life Insurance Company, where he was Chairman and Chief Executive Officer.

After five gratifying years, I will be stepping down as Chairman. It has been an honor to serve in this capacity. The Board has elected Ralph B. Levy, a director since 2007, to assume this position immediately following our annual shareholder meeting in May 2011, as detailed in our proxy statement. I am confident that Ralph’s leadership will help ensure our Board continues to support the Company with attentive supervision and outstanding governance.

Together with Neill and our fellow Board members, I also wish to thank our customers, partners and shareholders for their welcome support. We look forward to continuing to serve you in the future.

Sincerely,

W. James MacGinnitie Chairman of the Board

Message from the Chairman 11

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Executive Committee

1 Neill A. Currie

President and Chief Executive Officer, RenaissanceRe Holdings Ltd.

2 Peter C. Durhager

Executive Vice President, Chief Administrative Officer, RenaissanceRe Holdings Ltd.

3 Jeffrey D. Kelly

Executive Vice President, Chief Financial Officer, RenaissanceRe Holdings Ltd.

4 Kevin J. O’Donnell

Executive Vice President, Global Chief Underwriting Officer, RenaissanceRe Holdings Ltd.

5 Ian D. Branagan

Senior Vice President, Chief Risk Officer, RenaissanceRe Holdings Ltd.

6 Ross A. Curtis

Senior Vice President, RenaissanceRe Holdings Ltd.

Chief Underwriting Officer of European Operations

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7 Aditya K. Dutt

Senior Vice President, RenaissanceRe Holdings Ltd.

President, RenaissanceRe Ventures Ltd.

8 Todd R. Fonner

Senior Vice President, Chief Investment Officer, Treasurer, RenaissanceRe Holdings Ltd.

9 Jonathan D. A. Paradine

Senior Vice President, RenaissanceRe Holdings Ltd.

Chief Underwriting Officer, Renaissance Reinsurance Ltd.

10 Stephen H. Weinstein

Senior Vice President, General Counsel,

Chief Compliance Officer and Secretary, RenaissanceRe Holdings Ltd.

11 Mark A. Wilcox

Senior Vice President, Chief Accounting Officer, Corporate Controller, RenaissanceRe Holdings Ltd.

Executive Committee 13

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Capital Management at RenaissanceRe

Capital management is a fundamental, firm-wide concern, inextricably linked to our risk management and underwriting activities.

Throughout 2010, the theme of capital management figured prominently at industry conventions and in discussions on regulatory reform. How much capital is needed to support an insurance or reinsurance company, and how should it be managed? In this essay, we present a framework for how we manage our capital.

At RenaissanceRe, capital management is a fundamental, firm-wide concern, inextricably linked to our risk management and underwriting activities. It is embedded in the tools and techniques used by our underwriters to assume risk, in the decisions of our investment managers as they invest capital, and in the work of our Treasury and Ventures teams in building the optimal capital base to support our risk-taking activities.

Ultimately, we try to answer three essential questions when we think about capital management:

How much capital do we need to support the business?

What is the optimal way to structure that capital?

What is the best way to manage excess capital?

Each of these questions requires individual analysis but also must be considered within an overarching framework that combines all of them into a coherent and coordinated view.

How much capital do we need to support the business?

A logical starting point in the capital management process is to define a company’s risk tolerance, or its willingness to put capital at risk. Risk-taking, and the risk tests applied to that activity, should not be agnostic as to how much one is getting paid; rather, a company’s willingness to assume a risk should depend directly upon how much it is being paid to assume that risk. Of course, at some point absolute risk limits should kick in, forcing the company to either raise capital or reduce risk. Internal risk tests, measuring potential reward against risk projections, should be consistent and consistently applied. Businesses that do not demonstrate a logical and consistent appetite for risk often face difficulties in building a stable client base and an ongoing franchise in risk-taking businesses.

At the same time, test criteria should not be set in stone and need to be adaptable as business conditions evolve. While sophisticated quantitative tools and theoretical frameworks play an important role, they have limitations and are not a substitute for sound judgment. They must

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“By delivering capital and capacity when both are scarce, we build stronger relationships with clients. By returning capital to investors when it is abundant, we build stronger relationships with those investors.”

be combined with common sense and experience. At RenaissanceRe, while a consistent required capital framework has been an integral part of our underwriting and capital management decisions since our inception, it has been amended based on our experience. Our experienced management team is able to make decisions quickly and with confidence. A robust risk capital allocation framework used in real time must ensure that a company can monitor how much capital its risk portfolio is consuming and also allow underwriters to target new opportunities that will generate the highest expected returns on the capital required.

Every company must develop its own proprietary view of capital consumption. However, regulators and rating agencies have their own unique – and evolving – criteria regarding required capital, and these must be factored into a company’s capital modeling.

Importantly, while one risk test or view of required capital may be binding, companies should avoid the temptation to optimize a business portfolio against a single constraint. That constraint can change and, if controlled externally, could change quickly and unexpectedly. This may leave a business poorly positioned to comply, and thus unable to support an existing portfolio of risk.

Our understanding of how much capital we require depends on our understanding of how much risk we take – both today and in the future. We therefore attempt to capture, as accurately as possible, every known source of risk via a stochastic distribution. In the end, the tools we use are only as good as the inputs, so our risk management capabilities serve us well in our capital management decisions.

What is the optimal way to structure that capital?

As an insurance and reinsurance company, we intermediate the process of matching insurable risk with capital that is willing to assume that risk for the right price. Having access to multiple sources of capital can be a significant advantage in our business. Typically, the cycles in our industry are driven in part by moments of over- and under-supply of capital, and an important aspect to managing capital is to have enough of it at the right times in order to write attractive business. By delivering capital and capacity when both are scarce, we build stronger relationships with clients and intermediaries. By returning capital to investors when it is abundant, we build stronger relationships with those investors, generate the greatest returns for them and improve our ability to bring that capital back to our clients when it is needed.

Retrocessional Reinsurance

We often manage some portion of our capital requirements by purchasing reinsurance – referred to as retrocessional reinsurance – for our book of business. The pricing and availability of this product varies and we vary our reliance

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“The joint ventures we have managed over the years are examples of the work we have done to broaden our base of relationships beyond one or two traditional classes of investors, thereby maximizing our ability to bring capital to our clients when it is needed most.”

on this market accordingly. The risk that remains net of reinsurance we purchase must be supported by balance sheets, which we assemble from a variety of capital sources.

Traditional Sources of Capital

As is the case for most companies in our industry, the majority of our capital has typically consisted of equity we have raised in the public markets or from retained earnings. We have also selectively levered our balance sheet by issuing debt and preferred equity.

Leverage has the potential to amplify our ability to grow tangible book value per share over time, but it also creates a more volatile capital profile. Balance sheet leverage can lead to increased requirements to raise equity capital following a loss in order to satisfy rating agency expectations for a company’s leverage ratios. If these expectations are not managed appropriately, or if modeled estimates of losses prove inaccurate, a company’s ratings could face downward pressure.

Given the relatively volatile nature of our core business, we are particularly careful in thinking about how much leverage to carry and the form it takes. Over time, most of our leverage has therefore consisted of long-dated instruments, such as perpetual preferred stock with cumulative dividends.

Alternative Sources of Capital

Over the last ten to fifteen years, new sources of capital have emerged, including industry partners looking for uncorrelated sources of underwriting risk, pension funds, hedge funds and others. These sources of capital are willing to assume underwriting risk, often through capital structures different from the ones that have been used historically. These include collateralized reinsurance, side cars and insurance-linked securities.

Under some circumstances, these capital structures can be better suited to address a market dislocation than traditional forms of capital. Some market dislocations are very concentrated with respect to peril and geography and are only expected to exist over a short time frame. In these circumstances, a temporary underwriting facility with dedicated capital proves particularly effective. An example of such a facility would be a sidecar, through which investors invest in a specific market opportunity with the expectation that their capital will be returned after some defined time frame. At RenaissanceRe, we have a history of successfully setting up such sidecars at appropriate times in the market cycle.

We also manage more permanent joint ventures, such as DaVinci and Top Layer Re. Here our goal is to provide a separate counterparty for our clients, which allows them to better diversify their credit exposure, while still dealing with a single underwriter at RenaissanceRe. Historically,

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“By delivering access to as many sources of capital as possible, we can maximize our underwriting opportunities, deliver value to policyholders and intermediaries, and provide our shareholders with attractive returns over time.”

we have funded these balance sheets with capital raised through alternative sources, rather than the public markets.

Our Ventures unit is dedicated to identifying alternative sources of capital willing to assume underwriting risk, forging relationships with these capital providers and developing structures that best match their interests with opportunities that develop in the marketplace. The joint ventures we have managed over the years are examples of the work we have done to broaden our base of relationships beyond one or two traditional classes of investors, thereby maximizing our ability to bring capital to our clients when it is needed most. Through this dedicated effort, we have created what we refer to as ‘accordion’ capital – an effective mechanism by which we can modulate our underwriting capacity in response to cyclical fluctuations in our business.

In sum, by developing access to as many sources of capital as possible, we can maximize our underwriting opportunities, deliver value to policyholders and intermediaries, and provide our shareholders with attractive returns over time.

What is the best way to manage excess capital?

A great deal of attention is being focused today on what companies should do with their excess capital. How a company manages its excess capital has important implications for its ability to create shareholder value over time.

The presence of excess capital and the soft part of the underwriting cycle often coincide. Following a period of favorable underwriting results, capital available to insure or reinsure risk accumulates while the demand for it declines. Soft or softening market conditions present companies with the conundrum of writing business at unacceptable returns or returning capital to investors. At RenaissanceRe, we prefer the latter.

Once a decision has been made to return capital, we must decide how and when to return it. The principal methods for returning equity capital are share repurchases and dividends. The choice between the two requires a view on whether repurchasing shares at valuations prevalent at the time produces better returns to shareholders than simply paying out a dividend. Throughout our history, the predominant means we have chosen to return capital is via share repurchases and we believe that decision has proven beneficial to our shareholders over time.

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“Our proprietary tools and frameworks for matching capital to risk-taking activities have been recognized as among the best in the industry.”

Having a diversified capital structure helps in returning capital as well. Rather than being forced to return capital to our equity holders, we can reduce how much retrocessional reinsurance we purchase, redeem preferred securities or pay down debt. As for our joint venture structures, our decision comes down to an assessment of how much capital a given joint venture or sidecar can deploy at attractive returns.

Another consideration in returning excess capital is when to do so. Beyond price, one factor we consider carefully in our decision is our ability to replace it if necessary. Capital market disruptions or firm-specific issues that could limit our ability to access capital, must be taken into account when we consider the timing and pace of returning capital.

Conclusion

RenaissanceRe was started in 1993 with $141 million of capital. Through strong earnings, well-timed capital raises, accessing non-traditional capital, and the relationships developed by our Ventures unit, we now deploy over $9 billion of capital in underwriting activities. Our average operating ROE over this time period has been over 23%.

Our Ventures unit has raised and returned over $1 billion of capital and generated an average return for our partners in these deals of over 46%. Through regular dividends and share repurchases, we have returned over $2 billion to RenaissanceRe’s shareholders since our IPO in 1995, representing roughly one third of the earnings we have generated over the same time period.

We believe this data speaks to our ability to attract capital, deploy it in attractive risk-taking opportunities and return it to our investors when we cannot deploy it at an acceptable rate of return. Our proprietary tools and frameworks for matching capital to risk-taking activities have been recognized as among the best in the industry, as reflected in our “Excellent” ERM rating from Standard & Poor’s. Additionally, our financial strength ratings recognize the strong capital base from which we operate, as well as our ability to manage that capital effectively throughout the underwriting cycle.

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Financial Information

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COMMENTS ON REGULATION G

In addition to the generally accepted accounting principles (“GAAP”) financial measures set forth in this Annual Report, the Company has included certain non-GAAP financial measures in this Annual Report within the meaning of Regulation G. The Company has consistently provided these financial measurements in previous investor communications and the Company’s 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 years 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 Company’s overall financial performance.

The Company uses “operating income (loss) available (attributable) to RenaissanceRe common shareholders” 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 (loss) available (attributable) to RenaissanceRe common shareholders” as used herein differs from “net income (loss) available (attributable) to RenaissanceRe common shareholders”, which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized and unrealized gains and losses on fixed maturity investments from continuing and discontinued operations, net other-than-temporary impairments from continuing and discontinued operations, the gain on sale of the Company’s ownership interest in ChannelRe Holdings Ltd. (“ChannelRe”), net unrealized gains and losses on credit derivatives issued by entities included in investments in other ventures, under equity method and the cumulative effect of a change in accounting principle – goodwill. The Company’s management believes that “operating income (loss) available (attributable) to RenaissanceRe common shareholders” is useful to investors because it more accurately measures and predicts the Company’s results of operations by removing the variability arising from fluctuations in the Company’s fixed maturity investment portfolio, the gain associated with the sale of the Company’s ownership in ChannelRe, net unrealized losses on credit derivatives issued by entities included in investments in other ventures, under equity method and the cumulative effect of a change in accounting principle – goodwill. The Company also uses “operating income (loss) available (attributable) to RenaissanceRe common shareholders” to calculate “operating income (loss) available (attributable) to RenaissanceRe common shareholders per common share – diluted” and “operating return on average common equity”. The following is a reconciliation of: 1) net income (loss) available (attributable) to RenaissanceRe common shareholders to operating income (loss) available (attributable) to RenaissanceRe common shareholders; 2) net income (loss) available (attributable) to RenaissanceRe common shareholders per common share – diluted to operating income (loss) available (attributable) to RenaissanceRe common shareholders per common share – diluted; and 3) return on average common equity to operating return on average common equity:

Year Ended December 31,

(in thousands of United States dollars, except per share amounts and percentages)

2010 2009 2008 2007 2006 2005 2004 2003 2002 2001

Net income (loss) available (attributable) to RenaissanceRe common shareholders

$702,613 $838,858 $(13,280) $569,575 $761,635 $(281,413) $133,108 $605,992 $342,879 $184,956

Adjustment for net realized and unrealized (gains) losses on fixed maturity investments

(151,213) (93,162) (10,700) (26,806) 34,464 6,962 (23,442) (80,504) (10,177) (18,096)

Adjustment for net other-than-temporary impairments * 829 22,481 217,014 25,513 - - - - - -

Adjustment for gain on sale of ChannelRe (15,835) - - - - - - - - -

Adjustment for net unrealized losses on credit derivatives issued by entities included in investments in other ventures, under equity method - - - 167,171 - - - - - -

Adjustment for cumulative effect of a change in accounting principle - FAS 142 - Goodwill - - - - - - - - 9,187 -

Operating income (loss) available (attributable) to RenaissanceRe common shareholders $536,394 $768,177 $193,034 $735,453 $796,099 $(274,451) $109,666 $525,488 $341,889 $166,860

Net income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted $12.31 $13.40 $(0.21) $7.93 $10.57 $(3.99) $1.85 $8.53 $4.88 $2.96

Adjustment for net realized and unrealized (gains) losses on fixed maturity investments (2.72) (1.52) (0.17) (0.38) 0.48 0.10 (0.32) (1.13) (0.14) (0.29)

Adjustment for net other-than-temporary impairments * 0.02 0.37 3.42 0.36 - - - - - -

Adjustment for gain on sale of ChannelRe (0.29) - - - - - - - - -

Adjustment for net unrealized losses on credit derivatives issued by entities included in investments in other ventures, under equity method - - - 2.33 - - - - - -

Adjustment for cumulative effect of a change in accounting principle - FAS 142 - Goodwill - - - - - - - - 0.13 -

Operating income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted $9.32 $12.25 $3.04 $10.24 $11.05 $(3.89) $1.53 $7.40 $4.87 $2.67

Return on average common equity 21.7% 30.2% (0.5%) 20.9% 36.3% (13.6%) 6.2% 33.8% 27.0% 22.1%

Adjustment for net realized and unrealized (gains) losses on fixed maturity investments (4.7%) (3.4%) (0.4%) (1.0%) 1.6% 0.3% (1.1%) (4.5%) (0.8%) (2.2%)

Adjustment for net other-than-temporary impairments * - 0.8% 8.3% 0.9% - - - - - -

Adjustment for gain on sale of ChannelRe (0.5%) - - - - - - - - -

Adjustment for net unrealized losses on credit derivatives issued by entities included in investments in other ventures, under equity method - - - 6.2% - - - - - -

Adjustment for cumulative effect of a change in accounting principle - FAS 142 - Goodwill - - - - - - - - 0.7% -

Operating return on average common equity 16.5% 27.6% 7.4% 27.0% 37.9% (13.3%) 5.1% 29.3% 26.9% 19.9%

* For the years ending December 31, 2006 and prior, the Company included net other-than-temporary impairments in net realized and unrealized (gains) losses on fixed maturity investments.

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The Company has also included in this Annual Report “gross managed premiums written” and “managed catastrophe premiums”. “Gross managed premiums written” differs from gross premiums written, which the Company believes is the most directly comparable GAAP measure, due to the inclusion of premiums written on behalf of the Company’s joint venture, Top Layer Reinsurance Ltd. (“Top Layer Re”), which is accounted for under the equity method of accounting. “Managed catastrophe premiums” is defined as gross catastrophe premiums written by Renaissance Reinsurance Ltd. and its related joint ventures, excluding catastrophe premiums assumed from the Company’s Insurance segment. “Managed catastrophe premiums” differ from total catastrophe unit premiums, which the Company believes is the most directly comparable GAAP measure, due to the inclusion of catastrophe premiums written on behalf of the Company’s joint venture Top Layer Re, which is accounted for under the equity method of accounting, the inclusion of catastrophe premiums written on behalf of the Company’s Lloyd’s segment, and the exclusion of catastrophe premiums assumed from the Company’s Insurance segment. The Company’s management believes “gross managed premiums written” and “managed catastrophe premiums” are useful to investors and other interested parties because they provide a measure of total catastrophe reinsurance premiums assumed by the Company through its consolidated subsidiaries and related joint ventures. The following is a reconciliation of 1) total catastrophe unit premiums to managed catastrophe premiums and 2) gross premiums written to gross managed premiums written:

Year Ended December 31,

(in thousands of U.S. dollars) 2010 2009 2008

Total catastrophe unit premiums $ 994,233 $1,096,449 $ 994,621

Catastrophe premiums written on behalf of our joint venture, Top Layer Re 47,546 51,974 55,370

Catastrophe premiums written in the Lloyd’s segment 14,724 - -

Catastrophe premiums assumed from the Insurance segment (9,481) (12,650) (5,672)

Total managed catastrophe premiums $1,047,022 $1,135,773 $1,044,319

Gross premiums written $1,165,295 $1,228,881 $1,242,287

Catastrophe premiums written on behalf of our joint venture, Top Layer Re 47,546 51,974 55,370

Gross managed premiums written $1,212,841 $1,280,855 $1,297,657

The Company has also included in this Annual Report “tangible book value per common share” and “tangible book value per common share plus accumulated dividends.” “Tangible book value per common share” is defined as book value per common share excluding goodwill and intangible assets; “tangible book value per common share plus accumulated dividends” is defined as book value per common share excluding goodwill and intangible assets, plus accumulated dividends. “Tangible book value per common share” 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 intangible assets. “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 intangible assets and the inclusion of accumulated dividends. The Company’s management believes “tangible book value per common share” and “tangible book value per common share plus accumulated dividends” are useful to investors because they provide a more accurate measure of the realizable value of shareholder returns, excluding the impact of goodwill and intangible assets. The following is a reconciliation of book value per common share to tangible book value per common share and tangible book value per common share plus accumulated dividends:

At December 31,

2010 2009 2008 2007 2006 2005 2004 2003 2002

Book value per common share $62.58 $51.68 $38.74 $41.03 $34.38 $24.52 $30.19 $29.61 $21.37

Adjustment for goodwill and other intangibles (1) (2.03) (1.95) (2.01) (0.09) (0.08) - - - -

Tangible book value per common share 60.55 49.73 36.73 40.94 34.30 24.52 30.19 29.61 21.37

Adjustment for accumulated dividends 9.88 8.88 7.92 7.00 6.12 5.28 4.48 3.72 3.12

Tangible book value per common share plus accumulated dividends $70.43 $58.61 $44.65 $47.94 $40.42 $29.80 $34.67 $33.33 $24.49

(1) For 2010, 2009 and 2008, goodwill and other intangibles includes $38.1 million, $43.8 million and $49.8 million, respectively, of goodwill and other intangibles included in investments in other ventures, under equity method. For 2010 and 2009, goodwill and intangibles includes $57.0 million and $61.4 million, respectively, of goodwill and intangibles included in assets of discontinued operations held for sale.

2001 2000 1999 1998 1997 1996 1995 1994 1993

Book value per common share $16.14 $11.91 $10.17 $9.43 $8.89 $7.74 $6.33 $3.93 $2.56

Adjustment for goodwill and other intangibles (0.14) (0.17) (0.11) (0.23) - - - - -

Tangible book value per common share 16.00 11.74 10.06 9.20 8.89 7.74 6.33 3.93 2.56

Adjustment for accumulated dividends 2.55 2.05 1.53 1.05 0.65 0.33 0.05 - -

Tangible book value per common share plus accumulated dividends $18.55 $13.79 $11.59 $10.25 $9.54 $8.07 $6.38 $3.93 $2.56

22 RenaissanceRe Holdings Ltd. 2010 Annual Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

OR

¨     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 001-14428

RENAISSANCERE HOLDINGS LTD.

(Exact Name Of Registrant As Specified In Its Charter)

Renaissance House, 12 Crow Lane, Pembroke HM 19 Bermuda

(Address of Principal Executive Offices)

(441) 295-4513

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Act.

Yes x    No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ¨    No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x    No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x    No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, as defined in Rule 12b-2 of the Act. Large accelerated filer x, Accelerated filer ¨, Non-accelerated filer ¨, Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ¨    No x

The aggregate market value of Common Shares held by nonaffiliates of the registrant at June 30, 2010 was $2,825.2 million based on the closing sale price of the Common Shares on the New York Stock Exchange on that date.

The number of Common Shares outstanding at February 16, 2011 was 52,827,367.

The information required by Part III of this report, to the extent not set forth herein, is incorporated by reference to the registrant’s Definitive Proxy Statement to be filed in respect of our 2011 Annual General Meeting of Shareholders.

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RENAISSANCERE HOLDINGS LTD.

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NOTE ON FORWARD-LOOKING STATEMENTS

This Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, us.

In particular, statements using words such as “may”, “should”, “estimate”, “expect”, “anticipate”, “intends”, “believe”, “predict”, “potential”, or words of similar import generally involve forward-looking statements. For example, we may include certain forward-looking statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” with regard to trends in results, prices, volumes, operations, investment results, margins, combined ratios, reserves, market conditions, risk management and exchange rates. This Form 10-K also contains forward-looking statements with respect to our business and industry, such as those relating to our strategy and management objectives, market standing and product volumes, insured losses from loss events, government initiatives and regulatory matters affecting the reinsurance and insurance industries.

In light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this report should not be considered as a representation by us or any other person that our objectives or plans will be achieved. Numerous factors could cause our actual results to differ materially from those addressed by the forward-looking statements, including the following:

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The factors listed above should not be construed as exhaustive. Certain of these risk factors and others are described in more detail in “Item 1A. Risk Factors” below. We undertake no obligation to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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PART I

ITEM 1.    BUSINESS

Unless the context otherwise requires, references in this Form 10-K to “RenaissanceRe” or the “Company” mean RenaissanceRe Holdings Ltd. and its subsidiaries, which principally include, but are not limited to, Renaissance Reinsurance, Glencoe Insurance Ltd. (“Glencoe”) , Renaissance Trading Ltd. (“Renaissance Trading”), RenRe Energy Advisors Ltd. (“REAL”) and the Company’s Lloyd’s syndicate, RenaissanceRe Syndicate 1458 (“Syndicate 1458”).

We also underwrite reinsurance on behalf of joint ventures, principally including Top Layer Reinsurance Ltd. (“Top Layer Re”), recorded under the equity method of accounting, and DaVinci Reinsurance Ltd. (“DaVinci”). The financial results of DaVinci and DaVinci’s parent company, DaVinciRe Holdings Ltd. (“DaVinciRe”), are consolidated in our financial statements. For your convenience, we have included a glossary beginning on page 49 of selected insurance and reinsurance terms. All dollar amounts referred to in this Form 10-K are in U.S. dollars unless otherwise indicated. Any discrepancies in the tables included herein between the amounts listed and the totals thereof are due to rounding.

GENERAL

RenaissanceRe was established in Bermuda in 1993 to write principally property catastrophe reinsurance and today is a leading global provider of reinsurance and insurance coverages and related services. Our aspiration is to be the world’s best underwriter of high-severity, low frequency risks. Through our operating subsidiaries, we seek to produce superior returns for our shareholders by being a trusted, long-term partner to our customers, for assessing and managing risk, delivering responsive solutions, and keeping our promises. We accomplish this by leveraging our core capabilities of risk assessment and information management, and by investing in our capabilities to serve our customers across the cycles that have historically characterized our markets. Overall, our strategy focuses on superior risk selection, customer relationships and capital management. We provide value to our customers and joint venture partners in the form of financial security, innovative products, and responsive service. We are known as a leader in paying valid reinsurance claims promptly. We principally measure our financial success through long-term growth in tangible book value per common share plus the change in accumulated dividends, which we believe is the most appropriate measure of our Company’s financial performance, and believe we have delivered superior performance in respect of this measure over time.

Our core products include property catastrophe reinsurance, which we primarily write through our principal operating subsidiary Renaissance Reinsurance, our Lloyd’s syndicate, Syndicate 1458, and joint ventures, principally DaVinci and Top Layer Re; specialty reinsurance risks written through Renaissance Reinsurance, Syndicate 1458 and DaVinci; and other insurance products primarily written through Syndicate 1458. We believe that we are one of the world’s leading providers of property catastrophe reinsurance. We also believe we have a strong position in certain specialty reinsurance lines of business. Our reinsurance and insurance products are principally distributed through intermediaries, with whom we seek to cultivate strong relationships.

Discontinued Operations

During the fourth quarter of 2010, we made the strategic decision to divest substantially all of our U.S.-based insurance operations in order to focus on the business encompassed within our Reinsurance and Lloyd’s segments and our other businesses. Except as explicitly described as held for sale or as discontinued operations, and unless otherwise noted, all discussions and amounts presented herein relate to our continuing operations. See “Note 3. Discontinued Operations in our Notes to Consolidated Financial Statements” for additional information related to discontinued operations. All prior years presented have been reclassified to conform to this new presentation.

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On November 18, 2010, we entered into a Stock Purchase Agreement with QBE to sell substantially all of our U.S.-based insurance operations, including our U.S. property and casualty business underwritten through managing general agents, our crop insurance business underwritten through Agro National Inc. (“Agro National”), our commercial property insurance operations and our claims operations. We have classified the assets and liabilities associated with this transaction as held for sale. The financial results for these operations have been presented as discontinued operations in our consolidated statements of operations. See “Note 3. Discontinued Operations in our Notes to Consolidated Financial Statements” for additional information.

Consideration for the transaction is book value at December 31, 2010, for the aforementioned businesses, currently estimated to be $283.4 million, payable in cash at closing and subject to adjustment for certain tax and other items. The transaction is expected to close in early 2011 and is subject to regulatory approvals and customary closing conditions.

Segments

As a result of the strategic decision to divest substantially all of our U.S.-based insurance operations noted above, we revised our reportable segments. As described in more detail below under “Business Segments”, our reportable segments include: (1) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain property catastrophe and specialty joint ventures, (2) Lloyd’s, which includes reinsurance and insurance business written through Syndicate 1458, and (3) Insurance, which includes the Bermuda-based insurance operations of our former Insurance segment which are not being sold pursuant to the Stock Purchase Agreement with QBE. In addition, our Other category primarily includes our strategic investments, weather and energy risk management operations, investments unit, corporate expenses, capital servicing costs and noncontrolling interests. Previously, our Lloyd’s unit was included in our Reinsurance segment and the underwriting results associated with our discontinued operations were included in our Insurance segment. All prior periods presented have been reclassified to conform to this new presentation.

For the year ended December 31, 2010, our Reinsurance, Lloyd’s and Insurance segments accounted for 95.5%, 4.2% and 0.3%, respectively, of our total consolidated gross premiums written. We currently expect contributions from our Lloyd’s segment to increase over time, on both an absolute and relative basis, although we cannot assure you we will succeed in meeting this goal. Financial data relating to our segments is included in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

CORPORATE STRATEGY

Our mission is to produce superior returns for our shareholders by being a trusted, long-term partner to our customers, for assessing and managing risk, delivering responsive solutions, and keeping our promises. Our aspiration is to be the world’s best underwriter of high-severity, low frequency risks. Our vision is to be a leader in select financial services through our people and culture, expertise in risk, and passion for exceeding customers’ expectations.

Since our inception, we have cultivated and endeavor to preserve certain competitive advantages that position us to fulfill our strategic objectives. We believe these competitive advantages include:

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We believe we are well positioned to fulfill these objectives by virtue of the experience and skill of our management team, our significant financial strength, and our strong relationships with brokers and customers. In addition, we believe our superior service, our proprietary modeling technology, and our extensive business relationships, which have enabled us to become a leader in the property catastrophe reinsurance market, will be instrumental in allowing us to achieve our strategic objectives. In particular, we believe our strategy, high performance culture, and commitment to our customers and joint venture partners permit us to differentiate ourselves by offering specialized services and products at times and in markets where capacity and alternatives may be limited.

BUSINESS SEGMENTS

Reinsurance Segment

Our Reinsurance segment is comprised of two main units: 1) property catastrophe reinsurance, primarily written through Renaissance Reinsurance and DaVinci, and 2) specialty reinsurance, primarily written through Renaissance Reinsurance and DaVinci. Our Reinsurance segment is managed by the Global Chief Underwriting Officer, who leads a team of underwriters, risk modelers and other industry professionals, who have access to our proprietary risk management, underwriting and modeling resources and tools. We believe the expertise of our underwriting and modeling team and our proprietary analytic tools, together with superior customer service, provide us with a significant competitive advantage.

Our portfolio of business has continued to be increasingly characterized by relatively large transactions with ceding companies with whom we do business, although no current relationship exceeds 10% of our gross premiums written. Accordingly, our gross premiums written are subject to significant fluctuations depending on our success in maintaining or expanding our relationships with these large customers. We market our reinsurance products worldwide exclusively through brokers, whose market has become extremely consolidated in recent years. In 2010, three brokerage firms accounted for 88.2% of our Reinsurance segment gross premiums written. We believe that recent market dynamics, and trends in our industry in respect of potential future consolidation, have increased our exposure to the risks of broker, client and counterparty concentration.

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The following table shows our total Reinsurance segment gross premiums written split between catastrophe and specialty reinsurance, respectively:

Property Catastrophe Reinsurance

We believe we are one of the largest providers of property catastrophe reinsurance in the world, based on our total catastrophe gross premiums written. Our principal property catastrophe reinsurance products include catastrophe excess of loss reinsurance and excess of loss retrocessional reinsurance as described below.

Catastrophe Excess of Loss Reinsurance.    We principally write catastrophe reinsurance on an excess of loss basis, which means we provide coverage to our insureds when aggregate claims and claim expenses from a single occurrence of a covered peril exceed the attachment point specified in a particular contract. Under these contracts, we indemnify an insurer for a portion of the losses on insurance policies in excess of a specified loss amount, and up to an amount per loss specified in the contract. The coverage provided under excess of loss reinsurance contracts may be on a worldwide basis or limited in scope to selected geographic areas. Coverage can also vary from “all property” perils to limited coverage on selected perils, such as “earthquake only” coverage.

Excess of Loss Retrocessional Reinsurance.    We also write retrocessional reinsurance contracts that provide property catastrophe coverage to other reinsurers or retrocedants. In providing retrocessional reinsurance, we focus on property catastrophe retrocessional reinsurance, which covers the retrocedant on an excess of loss basis when aggregate claims and claim expenses from a single occurrence of a covered peril and from a multiple number of reinsureds exceed a specified attachment point. The coverage provided under excess of loss retrocessional contracts may be on a worldwide basis or limited in scope to selected geographic areas. Coverage can also vary from “all property” perils to limited coverage on selected perils, such as “earthquake only” coverage. The information available to retrocessional underwriters concerning the original primary risk can be less precise than the information received from primary companies directly. Moreover, exposures from retrocessional business can change within a contract term as the underwriters of a retrocedant alter their book of business after retrocessional coverage has been bound.

Our property catastrophe reinsurance contracts are generally “all risk” in nature. Our most significant exposure is to losses from earthquakes and hurricanes and other windstorms, although we are also exposed to claims arising from other catastrophes, such as tsunamis, freezes, floods, fires, tornadoes, explosions and acts of terrorism in connection with the coverages we provide. Our predominant exposure under such coverage is to property damage. However, other risks, including business interruption and other non-property losses, may also be covered under our property reinsurance contracts when arising from a covered peril. We offer our coverages on a worldwide basis.

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Because of the wide range of possible catastrophic events to which we are exposed, including the size of such events and because of the potential for multiple events to occur in the same time period, our catastrophe reinsurance business is volatile and our results of operations reflect this volatility. Further, our financial condition may be impacted by this volatility over time or at any point in time. The effects of claims from one or a number of severe catastrophic events could have a material adverse effect on us. We expect that increases in the values and concentrations of insured property and the effects of inflation will increase the severity of such occurrences in the future.

Insurance-Linked Securities.    We also invest in insurance-linked securities. Insurance-linked securities are generally privately placed fixed income securities as to which all or a portion of the repayment of the principal is linked to catastrophic events; for example, the occurrence of one or more hurricanes or earthquakes producing industry losses exceeding certain specified thresholds. We underwrite, model, evaluate and monitor these securities using similar tools and techniques used to evaluate our more traditional property catastrophe reinsurance business assumed. In addition, we may enter into derivative transactions, such as total return swaps, that are based on or referenced to underlying insurance-linked securities. Based on an evaluation of the specific features of each insurance-linked security, we account for these securities as reinsurance or at fair value, as applicable, in accordance with U.S. generally accepted accounting principles (“GAAP”). In addition, in future periods we may utilize the growing market for insurance-linked securities to expand our ceded reinsurance buying if we find the pricing and terms of such coverage attractive.

We seek to moderate the volatility of our risk portfolio through superior risk selection, diversification and the purchase of retrocessional coverages and other protections. In furtherance of our strategy, we may increase or decrease our presence in the catastrophe reinsurance business based on market conditions and our assessment of risk-adjusted pricing adequacy. We frequently seek to purchase reinsurance or other protection for our own account to further reduce the financial impact that a large catastrophe or a series of catastrophes could have on our results.

As a result of our position in the market and reputation for superior customer relationships, we believe we have superior access to reinsurance business we view as desirable compared to the market as a whole. As described above, we use our proprietary underwriting tools and guidelines to attempt to construct an attractive portfolio from these opportunities. We dynamically model policy submissions against our current in-force underwriting portfolio, comparing our estimate of the modeled expected returns of the contract against the amount of capital that we allocate to the contract, based on our estimate of its marginal impact on our overall risk portfolio. At times, our approach to portfolio management has resulted and may result in the future in our having a relatively large market share of catastrophe reinsurance exposure in a particular geographic region, such as Florida, or to a particular peril, such as U.S. hurricane risk, where we believe supply and demand characteristics promote our providing significant capacity, or where the risks or class of risks otherwise adds efficiency to our portfolio. Conversely, from time to time we may have a disproportionately low market share in certain regions or perils where we believe our capital would be less effectively deployed.

Specialty Reinsurance

We write a number of lines of reinsurance other than property catastrophe, such as catastrophe exposed workers’ compensation, surety, terrorism, political risk, trade credit, medical malpractice, financial, mortgage guarantee, catastrophe-exposed personal lines property, casualty clash, certain other casualty lines and other specialty lines of reinsurance that we collectively refer to as specialty reinsurance. We believe that we are seen as a market leader in certain of these classes of business. As with our catastrophe business, our team of experienced professionals seek to underwrite these lines using a disciplined underwriting approach and sophisticated analytical tools. We are seeking to expand our specialty reinsurance operations over time, although we cannot assure you that we will do so, particularly in light of current and forecasted market conditions.

We generally target lines of business where we believe we can adequately quantify the risks assumed and where potential losses could be characterized as low frequency and high severity, similar to our catastrophe reinsurance coverages. We also seek to identify market dislocations and write new lines of business whose risk and return characteristics are estimated to exceed our hurdle rates. Furthermore, we also seek to manage the correlations of this business with our overall portfolio, including our aggregate exposure to single and aggregated catastrophe events. We believe that our underwriting and analytical capabilities have positioned us well to manage this business.

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We offer our specialty reinsurance products principally on an excess of loss basis, as described above with respect to our catastrophe reinsurance products, and also provide some proportional coverage. In a proportional reinsurance arrangement (also referred to as quota share reinsurance and pro-rata reinsurance), the reinsurer shares a proportional part of the original premiums and losses of the reinsured. The reinsurer pays the cedant a commission which is generally based on the cedant’s cost of acquiring the business being reinsured (including commissions, premium taxes, assessments and miscellaneous administrative expenses) and may also include a profit factor. Our products frequently include tailored features such as limits or sub-limits which we believe help us manage our exposures. Any liability exceeding, or otherwise not subject to, such limits reverts to the cedant. As with our catastrophe reinsurance business, our specialty reinsurance frequently provides coverage for relatively large limits or exposures, and thus we are subject to potential significant claims volatility.

We generally seek to write significant lines on our specialty reinsurance treaties. As a result of our financial strength, we have the ability to offer significant capacity and, for select risks, we have made available significant limits. We believe these capabilities, the strength of our specialty reinsurance underwriting team, and our demonstrated ability and willingness to pay valid claims are competitive advantages of our specialty reinsurance business. While we believe that these and other initiatives will support growth in our specialty reinsurance unit, we intend to continue to apply our disciplined underwriting approach which, together with currently prevailing market conditions, is likely to temper such growth in current and near term-term periods.

Ventures

We pursue a number of other opportunities through our ventures unit, which has responsibility for managing our joint venture relationships, executing customized reinsurance transactions to assume or cede risk and managing certain investments directed at classes of risk other than catastrophe reinsurance. We also provide customized weather and energy risk management solutions to various customers on a worldwide basis.

Property Catastrophe Managed Joint Ventures.    We actively manage property catastrophe-oriented joint ventures, which provide us with an additional presence in the market, enhance our client relationships and generate fee income and profit commissions. These joint ventures allow us to leverage our access to business and our underwriting capabilities on a larger capital base. Currently, our joint ventures include Top Layer Re and DaVinci. Renaissance Underwriting Managers, Ltd. (“RUM”), a wholly owned subsidiary of the Company, acts as the exclusive underwriting manager for each of these joint ventures.

DaVinci was established in 2001 and principally writes property catastrophe reinsurance and certain low frequency, high severity specialty reinsurance lines of business on a global basis. In general, we seek to construct for DaVinci a property catastrophe reinsurance portfolio with risk characteristics similar to those of Renaissance Reinsurance’s property catastrophe reinsurance portfolio and certain lines of specialty reinsurance such as terrorism and catastrophe exposed workers’ compensation. In accordance with DaVinci’s underwriting guidelines, it can only participate in business that is underwritten by Renaissance Reinsurance. We maintain majority voting control of DaVinciRe and, accordingly, consolidate the results of DaVinciRe into our consolidated results of operations and financial position. We seek to manage DaVinci’s capital efficiently over time in light of the market opportunities and needs we perceive and believe we are able to serve. Our ownership in DaVinciRe was 41.2% and 38.2% at December 31, 2010 and 2009, respectively. In January 2011, DaVinciRe redeemed shares from certain DaVinciRe shareholders, and as a result, our ownership interest in DaVinciRe increased to 44.0%. We expect our ownership in DaVinciRe to fluctuate over time.

Top Layer Re writes high excess non-U.S. property catastrophe reinsurance. Top Layer Re is owned 50% by State Farm Mutual Automobile Insurance Company (“State Farm”) and 50% by Renaissance Reinsurance. State Farm provides $3.9 billion of stop loss reinsurance coverage to Top Layer Re. We account for our equity ownership in Top Layer Re under the equity method of accounting and our proportionate share of its results is reflected in equity in (losses) earnings of other ventures in our consolidated statements of operations.

Ventures works on a range of other customized reinsurance transactions. For example, we have participated in and continuously analyze other attractive opportunities in the market for insurance-linked securities and derivatives. We believe our products contain a number of customized features designed to fit the needs of our partners, as well as our risk management objectives.

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Strategic Investments.    Ventures also pursues strategic investments where, rather than assuming exclusive management responsibilities ourselves, we instead partner with other market participants. These investments are directed at classes of risk other than catastrophe, and at times may also be directed at non-insurance risks. We find these investments attractive both for their expected returns, and also because they provide us diversification benefits and information and exposure to other aspects of the market. Examples of these investments include our investments in Tower Hill Insurance Group, LLC (“THIG”), Tower Hill Claims Services, LLC (“THCS”) and Tower Hill Claims Management, LLC (“THCM”) (collectively, the “Tower Hill Companies”), which operate primarily in the State of Florida, Essent Group Ltd. (“Essent”) and Angus Fund L.P. (the “Angus Fund”). THIG is a managing general agency specializing in insurance coverage for site built and manufactured homes. THCS and THCM provide claim adjustment services through exclusive agreements with THIG. During the third quarter of 2008, we invested $50.0 million in the Tower Hill Companies, representing a 25.0% ownership interest, to expand our core platforms by obtaining ownership in an additional distribution channel for the Florida homeowners market and to enhance our relationships with other stakeholders. Essent provides mortgage insurance and reinsurance coverage for mortgages located in the U.S.

Weather and Energy Risk Management Operations.    We provide energy related risk management solutions and financial products primarily through Renaissance Trading and REAL and sell certain financial products primarily to address weather risks, and engage in certain weather, energy and commodity derivatives trading activities. Certain of these trading activities require the physical delivery of energy-related commodities, including natural gas. We expect that our participation will increase in the trading markets for securities and derivatives linked to energy, commodities, weather, other natural phenomena, and/or products or indices linked in part to such phenomena. While our activities focus on financial products that allow various energy, utility and other customers to manage their exposures to energy related commodities, we expect our own results in this area to potentially be volatile over time. As this unit grows, we intend to seek to continue to invest in operating and control environment systems and procedures, hire staff and develop and install management information and other systems. Accordingly, costs related to these operational investments increased in 2010 and may increase in the future.

Business activities that appear in our consolidated underwriting results, such as DaVinci and certain reinsurance transactions, are included in our Reinsurance segment results; the results of our investments, such as Top Layer Re and our weather and energy related activities and other ventures are included in the “Other” category of our segment results.

Lloyd’s Segment

Our Lloyd’s segment includes reinsurance and insurance business written through Syndicate 1458. Syndicate 1458 started writing certain lines of insurance and reinsurance business incepting on or after June 1, 2009. The syndicate was established to enhance our underwriting platform by providing access to Lloyd’s extensive distribution network and worldwide licenses. RenaissanceRe Corporate Capital (UK) Limited (“RenaissanceRe CCL”), an indirect wholly owned subsidiary of the Company, is the sole corporate member of Syndicate 1458. The results of Syndicate 1458 were not significant to our overall consolidated results of operations and financial position during 2009; however, we anticipate that Syndicate 1458’s absolute and relative contributions to our consolidated results of operations may have a meaningful impact over time.

Syndicate 1458 generally targets lines of business where we believe we can adequately quantify the risks assumed and where potential losses could be characterized as low frequency and high severity, similar to our catastrophe and specialty reinsurance coverages. We also seek to identify market dislocations and to write new lines of business whose risk and return characteristics are estimated to exceed our hurdle rates. Furthermore, we seek to manage the correlations of this business with our overall portfolio, including our aggregate exposure to single and aggregated catastrophe events. We believe that our underwriting and analytical capabilities have positioned us well to manage this business.

We offer a range of insurance and reinsurance products including, but not limited to, direct and facultative property, property catastrophe, agriculture, medical malpractice, professional indemnity, political risk and trade credit. As with our catastrophe and specialty reinsurance business, we frequently provide coverage for relatively large limits or exposures, and thus we are subject to potential significant claims volatility.

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Insurance Segment

The Insurance segment includes the insurance policies previously written in connection with our Bermuda-based insurance operations which are not being sold pursuant to the Stock Purchase Agreement with QBE and have effectively been put into runoff. Our Insurance segment is managed by our Global Chief Underwriting Officer. The Bermuda-based insurance business is written by Glencoe, a Bermuda domiciled excess and surplus lines insurance company that is currently eligible to do business on an excess and surplus lines basis in 49 U.S. states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. Although we are not actively underwriting new business in the Insurance segment, we may from time to time evaluate potential opportunities for the Insurance segment.

Other

Our Other category primarily includes the results of: (1) our share of strategic investments in certain markets we believe offer attractive risk-adjusted returns or where we believe our investment adds value, such as our investments in the Tower Hill Companies, Essent Group Ltd. and the Angus Fund, where, rather than assuming exclusive management responsibilities ourselves, we partner with other market participants; (2) our weather and energy risk management operations primarily through Renaissance Trading and REAL; (3) our investment unit which manages and invests the funds generated by our consolidated operations; and (4) corporate expenses, capital servicing costs and noncontrolling interests.

COMPETITION

The markets in which we operate are highly competitive, and we believe that competition is in general increasing and becoming more robust. Our competitors include independent reinsurance and insurance companies, subsidiaries and/or affiliates of globally recognized insurance companies, reinsurance divisions of certain insurance companies and domestic and international underwriting operations. As our business evolves over time we expect our competitors to change as well.

Hedge funds, investment banks, exchanges and other capital market participants continue to show interest in entering the reinsurance market, in light of the continuing recovery in the financial markets. In addition, we continue to anticipate further, and perhaps accelerating, growth in financial products such as exchange traded catastrophe options, insurance-linked securities, unrated privately held reinsurance companies providing collateralized reinsurance, catastrophe-linked derivative agreements and other financial products, intended to compete with traditional reinsurance. We believe that competition from non-traditional sources such as these will increase in the future. Many of these competitors have greater financial, marketing and management resources than we do. In addition, the tax policies of the countries where our customers operate, as well as government sponsored or backed catastrophe funds, affect demand for reinsurance, sometimes significantly. We are unable to predict the extent to which the foregoing new, proposed or potential initiatives may affect the demand for our products or the risks for which we seek to provide coverage.

RATINGS

Financial strength ratings are an important factor in respect of the competitive position of reinsurance and insurance companies. Rating organizations continually review the financial positions of our reinsurers and insurers. We continue to receive high claims-paying and financial strength ratings from A.M. Best Co. (“A.M. Best”), Standard & Poor’s Rating Agency (“S&P”), Moody’s Investors Service (“Moody’s) and Fitch Ratings Ltd. (“Fitch”). These ratings represent independent opinions of an insurer’s financial strength, operating performance and ability to meet policyholder obligations, and are not an evaluation directed toward the protection of investors or a recommendation to buy, sell or hold any of our securities.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations, Capital Resources, Credit Ratings” for the ratings of our principal operating subsidiaries and joint ventures by segment, as well as the enterprise risk management (“ERM”) rating of RenaissanceRe and details of recent ratings actions.

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UNDERWRITING AND ENTERPRISE RISK MANAGEMENT

Underwriting

Our primary underwriting goal is to construct a portfolio of reinsurance and insurance contracts and other financial risks that maximizes our return on shareholders’ equity, subject to prudent risk constraints, and to generate long-term growth in tangible book value per common share plus the change in accumulated dividends. We assess each new (re)insurance contract on the basis of the expected incremental return relative to the incremental contribution to portfolio risk.

We have developed a proprietary, computer-based pricing and exposure management system, REMS^©. Since inception, we have continued to invest in and improve REMS^©, incorporating our underwriting and modeling experience, adding proprietary software and a significant amount of new industry data. REMS^© has analytic and modeling capabilities that help us to assess the risk and return of each incremental reinsurance contract in relation to our overall portfolio of reinsurance contracts. We combine the analyses generated by REMS^© with other information available to us, including our own knowledge of the client submitting the proposed program, to assess the premium offered against the risk of loss and the cost of utilized capital which the program presents. We utilize a multiple model and multiple risk approach combining both probabilistic and deterministic techniques. The underlying risk models integrated into our underwriting and REMS^© framework are a combination of internally constructed and commercially available models. We use commercially available natural hazard catastrophe models to assist with validating and stress testing our base model and REMS^© results. We continually strive to improve our analytical techniques for both natural hazard and non-natural hazard models in REMS^© and while our experience is most developed for analyzing natural hazard catastrophe risks, we continue to make significant advances in our capabilities for assessing non-natural hazards catastrophe risks.

We believe that REMS^© is a robust underwriting and risk management system that has been successfully integrated into our business processes and culture. Before we bind a reinsurance risk, exposure data, historical loss information and other risk data is gathered from customers. Using a combination of proprietary software, underwriting experience, actuarial techniques and engineering expertise where appropriate, the exposure data is reviewed and augmented. We use this data as primary inputs into the REMS^© modeling system as a base to create risk distributions to represent the risk being evaluated. We believe that the REMS^© modeling system helps us to analyze each policy on a consistent basis, assisting our determination of what we believe to be an appropriate price to charge for each policy based upon the risk that is assumed. REMS^© combines computer-generated statistical simulations that estimate event probabilities with exposure and coverage information on each client’s reinsurance contract to produce expected claims for reinsurance programs submitted to us. Operationally, on a deal-by-deal basis, our models employ simulation techniques that have the ability to generate 40,000 years of loss activity. When deemed necessary, we stress test the 40,000 year simulations with simulations of up to 1,000,000 years. At a consolidated level, we routinely utilize simulations of 500,000 years to incorporate investment risk, expense risk and operational risk at a portfolio and risk assuming entity level. For natural hazards, we have modeled certain simulated events in excess of $400 billion in insured industry losses. From this simulation, we generate a probability distribution of potential outcomes for each policy in our portfolio and for our total portfolio. In part, through the process described above and the utilization of REMS^©, we seek to compare our estimate of the expected returns in respect of a contract with the amount of capital that we notionally allocate to the contract based on our estimate of its marginal impact on our portfolio of risks. We have also customized REMS^© by including additional perils, risks and geographic areas that may not be captured in commercially available models.

We periodically review the estimates and assumptions that are reflected in REMS^© and our other tools. For example, in the second half of 2009 we assessed recent U.S. Geological Survey research updates and independently evaluated and revised our assumptions relating to U.S. earthquake risks. In 2005, we revised our assumptions on Atlantic basin hurricane frequency and severity. The publicly available commercial catastrophe models historically base their frequency and severity distributions on the last 100 years of hurricane activity, assuming that this time frame is an appropriate framework on which to base estimates of the hurricane risk to which the insurance industry is exposed. We currently do not believe, based on our review of the scientific literature, private research, and discussions with climatologists, meteorologists and other weather scientists, including those at Weather Predict, that the past 100 years of data is reflective of current climatological risks. In

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particular, we believe there has been an increase in the frequency and severity of hurricanes that have the potential to make landfall in the U.S., potentially as a result of decadal ocean water temperature cyclical trends, climate, or both, or other factors.

Our underwriters use this combination of our risk assessment and underwriting process, REMS^© and other tools in their pricing decisions, which we believe provides them with several competitive advantages. These include the ability to:

As part of our risk management process, we also use REMS^© to assist us with the purchase of reinsurance coverage for our own account.

Our underwriting and risk management process, in conjunction with REMS^©, quantifies and manages our exposure to claims from any single catastrophic event and the exposure to losses from a series of catastrophic events. As part of our pricing and underwriting process, we also assess a variety of other factors, including:

In order to estimate the risk profile of each line of non-natural hazard reinsurance (i.e. lines of business within our specialty unit), we establish probability distributions and assess the correlations with the rest of our portfolio. In lines with catastrophe risk, such as excess workers’ compensation and terrorism, we seek to directly leverage our skill in modeling for our property catastrophe reinsurance risks, and seek to appropriately estimate and manage the correlations between these specialty lines and our catastrophe reinsurance portfolio. For other classes of business, in which we believe we have little or no natural catastrophe exposure, and therefore less correlation with our property catastrophe reinsurance coverages, we derive probability distributions from a variety of underlying information sources, including recent historical experience, and the application of judgment as appropriate. The nature of some of these businesses lends itself less to the analysis that we use for our property catastrophe reinsurance coverages, reflecting both the nature of available exposure information, and the impact of human factors such as tort exposure. We produce probability distributions to represent our estimates of the related underlying risks which our products cover, which we believe helps us to make consistent underwriting decisions and to manage our total risk portfolio.

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Enterprise Risk Management

We believe that high-quality and effective risk management is best achieved through it being a shared cultural value throughout the organization. We have sought to develop and utilize a series of tools and processes that support a culture of risk management and to create a robust framework of ERM within our organization. We consider ERM to be a key process which is the responsibility of every individual within the Company. ERM is managed by our senior executive team under the oversight of our Board of Directors, and implemented by personnel from across our organization. We believe that ERM helps us to identify potential events that may affect us, to quantify, evaluate and manage the risks to which we are exposed, and to provide reasonable assurance regarding the achievement of our objectives. We believe that effective ERM can provide us with a significant competitive advantage. We also believe that effective ERM assists our efforts to minimize the likelihood of suffering financial outcomes in excess of the ranges which we have estimated in respect of specific investments, underwriting decisions, or other operating or business activities, although we do not believe this risk can be eliminated. We believe that our risk management tools support our strategy of pursuing opportunities and help us to identify opportunities that we believe to be the most attractive. In particular, we utilize our risk management tools to support our efforts to monitor our capital position, on a consolidated basis and for each of our major operating subsidiaries, and to allocate an appropriate amount of capital to support the risks that we have assumed in the aggregate and for each of our major operating subsidiaries. We believe that our risk management efforts are essential to our corporate strategy and our goal of achieving long-term growth in tangible book value per share plus the change in accumulated dividends for our shareholders.

Our ERM framework comprises three primary areas of focus, as set forth below:

Embedded within our consideration of assumed risk is our management of the Company’s aggregate risk profile. In part through the utilization of REMS^© and our other systems and procedures, we seek to analyze our in-force aggregate assumed risk portfolio on a daily basis. We believe this capability helps us to manage our aggregate exposures, as well as to rigorously analyze individual proposed transactions and evaluate them in the context of our in-force portfolio. This aggregation process captures line of business, segment and corporate risk profiles, calculates internal and external capital tests and explicitly models ceded reinsurance. Generally, additional data is added quarterly to our aggregate risk framework to reflect updated or new information or estimates relating to matters such as interest rate risk, credit risk, capital adequacy and liquidity. This information is used in day-to-day decision making for underwriting, investments and operations and is also reviewed quarterly from both a unit level and in respect of our consolidated financial position.

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Identification and monitoring of business environment risk and operational risk is coordinated by senior personnel including our Chief Financial Officer (“CFO”), General Counsel and Chief Compliance Officer (“CCO”), Corporate Controller and Chief Accounting Officer (“CAO”), Chief Administrative Officer, Chief Risk Officer (“CRO”) and Internal Audit, utilizing resources throughout the Company.

Although financial reporting is a key area of our focus, other operational risks are addressed through our disaster recovery program, human resource practices such as motivating and retaining top talent, our strict tax protocols and our legal and regulatory policies and procedures.

Controls and Compliance Committee.    We believe that a key component of our current operational risk management platform is our Controls and Compliance Committee. The Controls and Compliance Committee is comprised of our CFO, CCO, CAO, Chief Administrative Officer, CRO, staff compliance professionals and representatives from our business units. The purpose of the Controls and Compliance Committee is to establish, assess the effectiveness of, and enforce policies, procedures and practices relating to accounting, financial reporting, internal controls, regulatory, legal, compliance and related matters, for ensuring compliance with applicable laws and regulations, the Company’s Code of Ethics and Conduct (the “Code of Ethics”), and other relevant standards. In addition, the Controls and Compliance Committee is charged with reviewing certain transactions that potentially contain complex and/or significant underwriting, tax, legal, accounting, regulatory, reporting, reputational or compliance issues.

Ongoing Development and Enhancement.    We frequently seek to accurately capture, reflect and categorize risks we monitor in part through quantitative risk distributions, even where we believe that such quantitative analysis is not as robust or well developed as our tools and models for measuring and evaluating other risks, such as catastrophe and market risks. We also seek to improve the methods by which we measure risks. We believe effective risk management is a core attribute of our culture and is a continual process that requires ongoing improvement and development. We seek from time to time to identify new best practices or additional developments both from within our industry and from other sectors. We believe that our ongoing efforts to embed ERM throughout our organization are important to our efforts to produce and maintain a competitive advantage to achieve our corporate goals.

GEOGRAPHIC BREAKDOWN

Our exposures are generally diversified across geographic zones, but are also a function of market conditions and opportunities. The Company’s largest exposure has historically been to the U.S. and Caribbean property catastrophe market, which represented 68.1% of the Company’s gross premiums written for the year ended December 31, 2010. A significant amount of our U.S. and Caribbean premium provides coverage against windstorms, mainly U.S. Atlantic hurricanes, as well as earthquakes and other natural and man-made catastrophes.

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The following table sets forth the percentage of our gross premiums written allocated to the territory of coverage exposure:

RESERVES FOR CLAIMS AND CLAIM EXPENSES

We believe the most significant accounting judgment made by management is our estimate of claims and claim expense reserves. Claims and claim expense reserves represent estimates, including actuarial and statistical projections at a given point in time, of the ultimate settlement and administration costs for unpaid claims and claim expenses arising from the insurance and reinsurance contracts we sell. We establish our claims and claim expense reserves by taking claims reported to us by insureds and ceding companies, but which have not yet been paid (“case reserves”), adding the costs for additional case reserves (“additional case reserves”) which represent our estimates for claims previously reported to us which we believe may not be adequately reserved as of that date, and adding estimates for the anticipated cost of claims incurred but not yet reported to us (“IBNR”).

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The following table summarizes our claims and claim expense reserves by line of business and split between case reserves, additional case reserves and IBNR at December 31, 2010 and 2009:

Our estimates of claims and claim expense reserves are not precise in that, among other matters, they are based on predictions of future developments and estimates of future trends and other variable factors. Some, but not all, of our reserves are further subject to the uncertainty inherent in actuarial methodologies and estimates. Because a reserve estimate is simply an insurer’s estimate at a point in time of its ultimate liability, and because there are numerous factors which affect reserves and claims payments that cannot be determined with certainty in advance, our ultimate payments will vary, perhaps materially, from our estimates of reserves. If we determine in a subsequent period that adjustments to our previously established reserves are appropriate, such adjustments are recorded in the period in which they are identified. During the year ended December 31, 2010, changes to prior year estimated claims reserves increased our net income by $302.1 million (2009 – $266.2 million, 2008 – $196.9 million), excluding the consideration of changes in reinstatement premium, profit commissions, redeemable noncontrolling interest – DaVinciRe and income tax benefit (expense).

Our reserving methodology for each line of business uses a loss reserving process that calculates a point estimate for the Company’s ultimate settlement and administration costs for claims and claim expenses. We do not calculate a range of estimates. We use this point estimate, along with paid claims and case reserves, to record our best estimate of additional case reserves and IBNR in our consolidated financial statements. Under GAAP, we are not permitted to establish estimates for catastrophe claims and claim expense reserves until an event occurs that gives rise to a loss.

Reserving for our reinsurance claims involves other uncertainties, such as the dependence on information from ceding companies, which among other matters, includes the time lag inherent in reporting information from the primary insurer to us or to our ceding companies and differing reserving practices among ceding companies. The information received from ceding companies is typically in the form of bordereaux, broker notifications of loss and/or discussions with ceding companies or their brokers. This information can be received on a monthly, quarterly or transactional basis and normally includes estimates of paid claims and case reserves. We sometimes also receive an estimate or provision for IBNR. This information is often updated and adjusted from time to time during the loss settlement period as new data or facts in respect of initial claims, client accounts, industry or event trends may be reported or emerge in addition to changes in applicable statutory and case laws.

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We recorded $540.5 million of gross claims and claim expenses incurred in 2008 as a result of losses arising from hurricanes Gustav and Ike which struck the U.S. in 2008. In 2010, we recorded $159.7 million, $166.8 million and $23.0 million of gross claims and claim expenses as a result of losses arising from the Chilean earthquake, the New Zealand earthquake and the Australian flooding, respectively. Our estimates of losses from these events are based on factors including currently available information derived from the Company’s preliminary claims information from certain customers and brokers, industry assessments of losses from the events, proprietary models, and the terms and conditions of our contracts. The uncertainty of our estimates for these 2010 events is additionally impacted by the preliminary nature of the information available, the magnitude and relative infrequency of the events, the expected duration of the respective claims development period, inadequacies in the data provided thus far by industry participants and the potential for further reporting lags or insufficiencies (particularly in respect of the Chilean and New Zealand earthquakes (the “2010 earthquakes”)); and in the case of the Australian flooding, significant uncertainty as to the form of the claims and legal issues including, but not limited to, the number, nature and fiscal periods of the loss events under the relevant terms of insurance contracts and reinsurance treaties. Given the magnitude and relatively recent occurrence of these events, and the continuing uncertainty relating to the large storms of 2005, especially hurricane Katrina, and those of 2008, meaningful uncertainty remains regarding total covered losses for the insurance industry and, accordingly, several of the key assumptions underlying our loss estimates. In addition, our actual net losses from these events may increase if our reinsurers or other obligors fail to meet their obligations.

Because of the inherent uncertainties discussed above, we have developed a reserving philosophy which attempts to incorporate prudent assumptions and estimates. While we have generally experienced favorable net development on prior year reserves in the last several years, there is no assurance that this will occur in future periods.

Our reserving techniques, assumptions and processes differ between our property catastrophe reinsurance, specialty reinsurance and insurance businesses within our Reinsurance and Lloyd’s segment. Refer to our “Claims and Claim Expense Reserves Critical Accounting Estimates” discussion in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information on the risks we insure and reinsure, the reserving techniques, assumptions and processes we follow to estimate our claims and claim expense reserves, and our current estimates versus our initial estimates of our claims reserves, for each of these units.

The following table represents the development of our GAAP balance sheet reserves for December 31, 2000 through December 31, 2010. This table does not present accident or policy year development data. The top line of the table shows the gross reserves for claims and claim expenses at the balance sheet date for each of the indicated years. This represents the estimated amounts of claims and claim expenses arising in the current year and all prior years that are unpaid at the balance sheet date, including additional case reserves and IBNR reserves. The table also shows the re-estimated amount of the previously recorded reserves based on experience as of the end of each succeeding year. The estimate changes as more information becomes known about the frequency and severity of claims for individual years. The “cumulative redundancy on net reserves” represents the aggregate change to date from the indicated estimate of the gross reserve for claims and claim expenses, net of reinsurance recoverable on the second line of the table. The table also shows the cumulative net paid amounts as of successive years with respect to the net reserve liability. At the bottom of the table is a reconciliation of the gross reserve for claims and claim expenses to the net reserve for claims and claim expenses, the gross re-estimated liability to the net re-estimated liability for claims and claim expenses, and the cumulative redundancy on gross reserves.

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With respect to the information in the table below, it should be noted that each amount includes the effects of all changes in amounts for prior periods, including the effect of foreign exchange rates.