Form: 8-K

Current report filing

November 5, 2013

            

RenaissanceRe Reports Net Income of $179.7 Million for the Third Quarter of 2013 or $4.01 Per Diluted Common Share; Quarterly Operating Income of $151.3 Million or $3.36 Per Diluted Common Share
Pembroke, Bermuda, November 5, 2013 -- RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported net income available to RenaissanceRe common shareholders of $179.7 million or $4.01 per diluted common share in the third quarter of 2013, compared to $180.7 million or $3.62 per diluted common share in the third quarter of 2012. Operating income available to RenaissanceRe common shareholders was $151.3 million, or $3.36 per diluted common share for the third quarter of 2013, compared to $104.4 million or $2.07, respectively, in the third quarter of 2012. The Company reported an annualized return on average common equity of 22.2% and an annualized operating return on average common equity of 18.7% in the third quarter of 2013, compared to 22.0% and 12.7%, respectively, in the third quarter of 2012. Book value per common share increased $3.20, or 4.5%, in the third quarter of 2013 to $74.58, compared to a 4.8% increase in the third quarter of 2012. Tangible book value per common share plus accumulated dividends increased $3.49, or 4.9%, in the third quarter of 2013, compared to a 5.3% increase in the third quarter of 2012.
Kevin J. O'Donnell, CEO, commented:  "For the third quarter of 2013, we reported an increase in our tangible book value per share, plus accumulated dividends of 4.9% and an annualized operating return on equity of 18.7%.  Our results reflect a combination of strong underwriting performance, driven in part by light catastrophe loss activity, and solid investment results."
Mr. O'Donnell continued:  "Our results were helped in no small part by our decision earlier in the year to adjust our portfolio, in an increasingly competitive environment.  As we approach the next major renewal season, our flexible capital structure, multiple underwriting platforms and proven access to the capital markets position us well to serve the needs of our clients.  Going forward, our ability to be responsive long term partners to our clients and investors while remaining disciplined underwriters will be a differentiator in our business."
DISCONTINUED OPERATIONS
On August 30, 2013, the Company entered into a purchase agreement with a subsidiary of Munich-American Holding Corporation ("Munich") to sell its U.S.-based weather and weather-related energy risk management unit ("REAL") and, on October 1, 2013, the Company closed the sale of REAL. The Company has classified the assets and liabilities associated with this transaction as held for sale and the financial results are reflected in the Company's consolidated financial statements as “discontinued operations.”  Except as explicitly described as held for sale or as discontinued operations, and unless otherwise noted, all discussions and amounts presented herein relate to the Company's continuing operations. All prior periods presented have been reclassified to conform to this form of presentation.
THIRD QUARTER 2013 HIGHLIGHTS (1) 
Underwriting income of $151.4 million and a combined ratio of 48.6%, compared to $122.6 million and 53.3%, respectively. The increase in underwriting income was primarily driven by a $32.1 million increase in net premiums earned due to growth in gross premiums written principally in the Company's specialty unit and Lloyd's segment, combined with a $12.3 million decrease in net claims and claim expenses, driven by a relatively light loss quarter, partially offset by a $13.3 million increase in acquisition expenses primarily due to the Company's specialty unit.
Total investment gains of $88.2 million, which includes the sum of net investment income, net realized and unrealized gains (losses) on investments and net other-than-temporary impairments, compared to gains of $122.8 million. Although positive returns were generated in the Company's fixed maturity investment portfolio during the third quarter of 2013, the decrease when compared to the third quarter of 2012 was primarily driven by significant credit spread tightening during the third quarter of 2012. Offsetting this decrease was a $13.8 million increase in net investment income from other investments principally driven by improved returns in the Company's private equity investments and an $18.1 million increase in the fair value of the Company's investment in Essent Group Ltd. (“Essent”), which is included in other investments.

1

            

Underwriting Results by Segment (1) 
Reinsurance Segment
Gross premiums written in the Reinsurance segment were $142.7 million, an increase of $35.1 million, or 32.6%, comprised of:
a $22.2 million, or 58.6% increase in the Company's specialty unit to $60.2 million, compared to $37.9 million, primarily due to higher quota share premiums in RenaissanceRe Specialty Risks Ltd. ("RenaissanceRe Specialty"); and
a $12.8 million, or 18.4% increase in the Company's catastrophe unit.
Managed catastrophe premiums, net of reinstatement premiums written, totaled $87.9 million, an increase of $18.0 million, or 25.7% for the third quarter of 2013.
For the the first nine months of 2013, managed catastrophe premiums, net of reinstatement premiums written, totaled $1,225.9 million, a decrease of $62.4 million, or 4.8%, principally due to reduced risk-adjusted pricing in the Florida market as a whole and the non-renewal of a number of contracts during the January and June renewals. Gross premiums written in the specialty unit for the first nine months of 2013 were $201.0 million, an increase of $25.3 million, or 14.4%, principally due to a number of new contracts and higher renewal rates in certain lines of business within the specialty unit. The Company's premiums are prone to significant volatility due to the timing of contract inception and also due to the business being characterized by a relatively small number of relatively large transactions.
The Reinsurance segment generated underwriting income of $152.4 million and a combined ratio of 38.4%, compared to $134.2 million and 41.8%, respectively. The $18.3 million increase in underwriting income was driven by a $17.1 million increase in net premiums earned and a relatively light catastrophe loss quarter resulting in a $21.2 million decrease in current accident year net claims and claim expenses, partially offset by a $10.5 million increase in acquisition expenses and an $8.6 million decrease in favorable development on prior accident years net claims and claim expenses. The increase in acquisition expenses is primarily attributable to the specialty unit, which experienced growth in lines of business written through RenaissanceRe Specialty that carry a relatively higher acquisition expense ratio.
The Reinsurance segment experienced $8.9 million of favorable development on prior years reserves, compared to $17.4 million, including $6.1 million and $2.7 million of favorable development in the catastrophe and specialty units, respectively. Favorable development on prior years reserves within the catastrophe unit was primarily due to $4.7 million of favorable development related to a reduction in the expected ultimate net loss for the 2008 Hurricanes, Gustav and Ike, as reported claims came in better than expected. The $2.7 million of prior accident years favorable development in the specialty unit was principally due to reported claims coming in better than expected.
Lloyd's Segment
Gross premiums written in the Lloyd's segment were $40.0 million, an increase of $11.2 million, or 39.1%, primarily due to continued organic growth within the segment. The Lloyd's segment incurred an underwriting loss of $2.5 million and a combined ratio of 105.3%, compared to an underwriting loss of $11.5 million and a combined ratio of 135.6%, respectively. The decrease in the underwriting loss in the Lloyd's segment reflects the increase in net earned premiums due to the growth in gross premiums written noted above.

2

            

Other Items (1) 
The operating results of REAL, have been classified as discontinued operations in the statements of operations and resulted in a loss of $9.8 million, compared to a loss of $0.2 million. The $9.8 million loss from discontinued operations includes an $8.8 million loss on the sale of REAL and a $1.0 net loss from the operations of REAL in the third quarter of 2013.
Included in net investment income in the third quarter of 2013 is $18.1 million resulting from an increase in the fair value of the Company’s investment in Essent, reflecting the Company's estimate of the fair value of its investment in the common shares of Essent of $48.0 million at September 30, 2013. On October 31, 2013, Essent began publicly trading on the New York Stock Exchange ("NYSE") and the Company currently holds 5,032,575 common shares of Essent. As of the close of business on November 4, 2013, Essent's common shares were priced at $22.01 per share on the NYSE. The Company has agreed, subject to certain exceptions, not to dispose of or hedge any of the shares of Essent it holds prior to April 28, 2014.
During the third quarter of 2013, the Company repurchased 224 thousand common shares in open market transactions at an aggregate cost of $18.9 million and at an average share price of $84.41.
Subsequent to September 30, 2013 and through the period ended November 4, 2013, the Company has not repurchased any additional common shares.
Net income attributable to noncontrolling interests of $44.3 million decreased from $51.1 million, primarily impacted by a decrease in profitability of DaVinciRe, primarily driven by lower investment income. The Company's ownership percentage in DaVinciRe was 32.9% at September 30, 2013, compared to 31.5% at September 30, 2012.

3

            

This Press Release includes certain non-GAAP financial measures including “operating income available to RenaissanceRe common shareholders”, “operating income available to RenaissanceRe common shareholders per common share - diluted”, “operating return on average common equity - annualized”, “managed catastrophe premiums”, "tangible book value per common share" and "tangible book value per common share plus accumulated dividends." A reconciliation of such measures to the most comparable GAAP figures in accordance with Regulation G is presented in the attached supplemental financial data.
Please refer to the “Investor Information - Financial Reports - Financial Supplements” section of the Company's website at www.renre.com for a copy of the Financial Supplement which includes additional information on the Company's financial performance.
RenaissanceRe Holdings Ltd. will host a conference call on Wednesday, November 6, 2013 at 10:00 a.m. (ET) to discuss this release. Live broadcast of the conference call will be available through the “Investor Information - Company Webcasts” section of RenaissanceRe's website at www.renre.com.
RenaissanceRe Holdings Ltd. is a global provider of reinsurance and insurance. The Company's business consists of two reportable segments: (i) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain property catastrophe and specialty joint ventures managed by the Company's ventures unit, and (ii) Lloyd's, which includes reinsurance and insurance business written through Syndicate 1458.
Cautionary Statement under “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995: Statements made in this earnings release contain information about the Company's future business prospects. These statements may be considered “forward-looking.” These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. For further information regarding cautionary statements and factors affecting future results, please refer to RenaissanceRe Holdings Ltd.'s filings with the Securities and Exchange Commission, including its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q.
(1)
All comparisons are with the third quarter of 2012 unless specifically stated.
INVESTOR CONTACT:
MEDIA CONTACT:
Rohan Pai
Kekst and Company
Director of Investor Relations
Peter Hill or Dawn Dover
RenaissanceRe Holdings Ltd.
(212) 521-4800
(441) 295-4513
 

4

            

RenaissanceRe Holdings Ltd.
Summary Consolidated Statements of Operations
(in thousands of United States Dollars, except per share amounts and percentages)
(Unaudited)
 
Three months ended
 
Nine months ended
 
September 30,
2013
 
September 30,
2012
 
September 30,
2013
 
September 30,
2012
Revenues
 
 
 
 
 
 
 
Gross premiums written
$
182,649

 
$
136,359

 
$
1,521,290

 
$
1,467,846

Net premiums written
$
127,241

 
$
105,035

 
$
1,123,163

 
$
1,025,240

Decrease (increase) in unearned premiums
167,476

 
157,588

 
(265,302
)
 
(239,536
)
Net premiums earned
294,717

 
262,623

 
857,861

 
785,704

Net investment income
59,931

 
46,135

 
129,296

 
126,725

Net foreign exchange gains
488

 
3,187

 
170

 
3,468

Equity in earnings of other ventures
7,313

 
4,310

 
16,920

 
16,626

Other income (loss)
651

 
(1,053
)
 
(2,186
)
 
730

Net realized and unrealized gains (losses) on investments
28,472

 
75,297

 
(26,788
)
 
150,982

Total other-than-temporary impairments

 

 

 
(395
)
Portion recognized in other comprehensive income, before taxes

 

 

 
52

     Net other-than-temporary impairments

 

 

 
(343
)
Total revenues
391,572

 
390,499

 
975,273

 
1,083,892

Expenses
 
 
 
 
 
 
 
Net claims and claim expenses incurred
60,928

 
73,215

 
192,141

 
138,318

Acquisition expenses
37,699

 
24,438

 
94,475

 
74,157

Operational expenses
44,672

 
42,356

 
133,447

 
126,055

Corporate expenses
4,307

 
3,796

 
30,318

 
12,567

Interest expense
4,298

 
5,891

 
13,632

 
17,325

Total expenses
151,904

 
149,696

 
464,013

 
368,422

Income from continuing operations before taxes
239,668

 
240,803

 
511,260

 
715,470

Income tax expense
(223
)
 
(144
)
 
(356
)
 
(1,008
)
Income from continuing operations
239,445

 
240,659

 
510,904

 
714,462

(Loss) income from discontinued operations
(9,779
)
 
(166
)
 
2,422

 
(25,505
)
Net income
229,666

 
240,493

 
513,326

 
688,957

Net income attributable to noncontrolling interests
(44,331
)
 
(51,083
)
 
(96,953
)
 
(138,348
)
Net income available to RenaissanceRe
185,335

 
189,410

 
416,373

 
550,609

Dividends on preference shares
(5,595
)
 
(8,750
)
 
(19,353
)
 
(26,250
)
Net income available to RenaissanceRe common shareholders
$
179,740

 
$
180,660

 
$
397,020

 
$
524,359

 
 
 
 
 
 
 
 
Income from continuing operations available to RenaissanceRe common shareholders per common share - basic
$
4.32

 
$
3.67

 
$
8.95

 
$
10.89

(Loss) income from discontinued operations available to RenaissanceRe common shareholders per common share - basic
(0.23
)
 

 
0.06

 
(0.51
)
Net income available to RenaissanceRe common shareholders per common share - basic
$
4.09

 
$
3.67

 
$
9.01

 
$
10.38

Income from continuing operations available to RenaissanceRe common shareholders per common share - diluted
$
4.23

 
$
3.62

 
$
8.79

 
$
10.75

(Loss) income from discontinued operations available to RenaissanceRe common shareholders per common share - diluted
(0.22
)
 

 
0.05

 
(0.51
)
Net income available to RenaissanceRe common shareholders per common share - diluted
$
4.01

 
$
3.62

 
$
8.84

 
$
10.24

 
 
 
 
 
 
 
 
Average shares outstanding - basic
43,330

 
48,394

 
43,412

 
49,683

Average shares outstanding - diluted
44,135

 
49,119

 
44,247

 
50,370

 
 
 
 
 
 
 
 
Net claims and claim expense ratio
20.7
%
 
27.9
%
 
22.4
%
 
17.6
%
Underwriting expense ratio
27.9
%
 
25.4
%
 
26.6
%
 
25.5
%
Combined ratio
48.6
%
 
53.3
%
 
49.0
%
 
43.1
%
Operating income available to RenaissanceRe common shareholders per common share - diluted (1)
$
3.36

 
$
2.07

 
$
9.45

 
$
7.21

Operating return on average common equity - annualized (1)
18.7
%
 
12.7
%
 
17.7
%
 
15.4
%
(1)
See Comments on Regulation G for a reconciliation of non-GAAP financial measures.

5

            

RenaissanceRe Holdings Ltd.
Summary Consolidated Balance Sheets
(in thousands of United States Dollars, except per share amounts)
 
 
 
 
 
September 30,
2013
 
December 31,
2012
Assets
 
 
 
Fixed maturity investments trading, at fair value
$
4,751,237

 
$
4,660,168

Fixed maturity investments available for sale, at fair value
38,530

 
83,442

Total fixed maturity investments, at fair value
4,789,767

 
4,743,610

Short term investments, at fair value
925,329

 
821,163

Equity investments trading, at fair value
113,986

 
58,186

Other investments, at fair value
500,770

 
644,711

Investments in other ventures, under equity method
97,660

 
87,724

Total investments
6,427,512

 
6,355,394

Cash and cash equivalents
266,350

 
304,145

Premiums receivable
735,937

 
491,365

Prepaid reinsurance premiums
166,340

 
77,082

Reinsurance recoverable
149,201

 
192,512

Accrued investment income
26,887

 
33,478

Deferred acquisition costs
103,844

 
52,622

Receivable for investments sold
240,191

 
168,673

Other assets
113,159

 
110,777

Goodwill and other intangibles
8,978

 
8,486

Assets of discontinued operations held for sale
115,556

 
134,094

Total assets
$
8,353,955

 
$
7,928,628

Liabilities, Noncontrolling Interests and Shareholders' Equity
 
 
 
Liabilities
 
 
 
Reserve for claims and claim expenses
$
1,683,709

 
$
1,879,377

Unearned premiums
754,077

 
399,517

Debt
249,407

 
349,339

Reinsurance balances payable
358,988

 
290,419

Payable for investments purchased
407,788

 
278,787

Other liabilities
183,362

 
198,434

Liabilities of discontinued operations held for sale
56,275

 
57,440

Total liabilities
3,693,606

 
3,453,313

Redeemable noncontrolling interest
945,915

 
968,259

Shareholders' Equity
 
 
 
Preference shares
400,000

 
400,000

Common shares
44,391

 
45,542

Accumulated other comprehensive income
4,566

 
13,622

Retained earnings
3,261,757

 
3,043,901

Total shareholders' equity attributable to RenaissanceRe
3,710,714

 
3,503,065

Noncontrolling interest
3,720

 
3,991

Total shareholders' equity
3,714,434

 
3,507,056

Total liabilities, noncontrolling interests and shareholders' equity
$
8,353,955

 
$
7,928,628

 
 
 
 
Book value per common share
$
74.58

 
$
68.14




6

            

RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars, except percentages)
(Unaudited)
 
 
 
 
 
 
 
Three months ended September 30, 2013
 
Reinsurance
 
Lloyd’s
 
Other
 
Total
Gross premiums written
$
142,695

 
$
39,954

 
$

 
$
182,649

Net premiums written
$
88,097

 
$
39,014

 
$
130

 
$
127,241

Net premiums earned
$
247,461

 
$
47,150

 
$
106

 
$
294,717

Net claims and claim expenses incurred
34,417

 
28,175

 
(1,664
)
 
60,928

Acquisition expenses
28,740

 
8,938

 
21

 
37,699

Operational expenses
31,876

 
12,559

 
237

 
44,672

Underwriting income
$
152,428

 
$
(2,522
)
 
$
1,512

 
151,418

Net investment income
 
 
 
 
59,931

 
59,931

Net foreign exchange gains
 
 
 
 
488

 
488

Equity in earnings of other ventures
 
 
 
 
7,313

 
7,313

Other income
 
 
 
 
651

 
651

Net realized and unrealized gains on investments
 
 
 
 
28,472

 
28,472

Corporate expenses
 
 
 
 
(4,307
)
 
(4,307
)
Interest expense
 
 
 
 
(4,298
)
 
(4,298
)
Income from continuing operations before taxes
 
 
 
 
 
 
239,668

Income tax expense
 
 
 
 
(223
)
 
(223
)
Loss from discontinued operations
 
 
 
 
(9,779
)
 
(9,779
)
Net income attributable to noncontrolling interests
 
 
 
 
(44,331
)
 
(44,331
)
Dividends on preference shares
 
 
 
 
(5,595
)
 
(5,595
)
Net income available to RenaissanceRe common shareholders
 
 
 
 
 
 
$
179,740

 
 
 
 
 
 
 
 
Net claims and claim expenses incurred – current accident year
$
43,268

 
$
24,886

 
$

 
$
68,154

Net claims and claim expenses incurred – prior accident years
(8,851
)
 
3,289

 
(1,664
)
 
(7,226
)
Net claims and claim expenses incurred – total
$
34,417

 
$
28,175

 
$
(1,664
)
 
$
60,928

 
 
 
 
 
 
 
 
Net claims and claim expense ratio – current accident year
17.5
 %
 
52.8
 %
 
 %
 
23.1
 %
Net claims and claim expense ratio – prior accident years
(3.6
)%
 
7.0
 %
 
(1,569.8
)%
 
(2.4
)%
Net claims and claim expense ratio – calendar year
13.9
 %
 
59.8
 %
 
(1,569.8
)%
 
20.7
 %
Underwriting expense ratio
24.5
 %
 
45.5
 %
 
243.4
 %
 
27.9
 %
Combined ratio
38.4
 %
 
105.3
 %
 
(1,326.4
)%
 
48.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30, 2012
 
Reinsurance
 
Lloyd’s
 
Other
 
Total
Gross premiums written
$
107,637

 
$
28,722

 
$

 
$
136,359

Net premiums written
$
78,164

 
$
26,982

 
$
(111
)
 
$
105,035

Net premiums earned
$
230,359

 
$
32,375

 
$
(111
)
 
$
262,623

Net claims and claim expenses incurred
47,080

 
26,331

 
(196
)
 
73,215

Acquisition expenses
18,258

 
6,051

 
129

 
24,438

Operational expenses
30,856

 
11,532

 
(32
)
 
42,356

Underwriting income (loss)
$
134,165

 
$
(11,539
)
 
$
(12
)
 
122,614

Net investment income
 
 
 
 
46,135

 
46,135

Net foreign exchange gains
 
 
 
 
3,187

 
3,187

Equity in earnings of other ventures
 
 
 
 
4,310

 
4,310

Other loss
 
 
 
 
(1,053
)
 
(1,053
)
Net realized and unrealized gains on investments
 
 
 
 
75,297

 
75,297

Corporate expenses
 
 
 
 
(3,796
)
 
(3,796
)
Interest expense
 
 
 
 
(5,891
)
 
(5,891
)
Income from continuing operations before taxes
 
 
 
 
 
 
240,803

Income tax benefit
 
 
 
 
(144
)
 
(144
)
Loss from discontinued operations
 
 
 
 
(166
)
 
(166
)
Net income attributable to noncontrolling interests
 
 
 
 
(51,083
)
 
(51,083
)
Dividends on preference shares
 
 
 
 
(8,750
)
 
(8,750
)
Net income available to RenaissanceRe common shareholders
 
 
 
 
 
 
$
180,660

 
 
 
 
 
 
 
 
Net claims and claim expenses incurred – current accident year
$
64,488

 
$
29,051

 
$

 
$
93,539

Net claims and claim expenses incurred – prior accident years
(17,408
)
 
(2,720
)
 
(196
)
 
(20,324
)
Net claims and claim expenses incurred – total
$
47,080

 
$
26,331

 
$
(196
)
 
$
73,215

 
 
 
 
 
 
 
 
Net claims and claim expense ratio – current accident year
28.0
 %
 
89.7
 %
 
 %
 
35.6
 %
Net claims and claim expense ratio – prior accident years
(7.6
)%
 
(8.4
)%
 
176.6
 %
 
(7.7
)%
Net claims and claim expense ratio – calendar year
20.4
 %
 
81.3
 %
 
176.6
 %
 
27.9
 %
Underwriting expense ratio
21.4
 %
 
54.3
 %
 
(87.4
)%
 
25.4
 %
Combined ratio
41.8
 %
 
135.6
 %
 
89.2
 %
 
53.3
 %

7

            

RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars, except percentages)
(Unaudited)
 
 
 
 
 
 
 
Nine months ended September 30, 2013
 
Reinsurance
 
Lloyd’s
 
Other
 
Eliminations (1)
 
Total
Gross premiums written
$
1,339,263

 
$
183,015

 
$

 
$
(988
)
 
$
1,521,290

Net premiums written
$
963,169

 
$
159,581

 
$
413

 
 
 
$
1,123,163

Net premiums earned
$
730,610

 
$
126,862

 
$
389

 
 
 
$
857,861

Net claims and claim expenses incurred
126,243

 
68,239

 
(2,341
)
 
 
 
192,141

Acquisition expenses
70,005

 
24,338

 
132

 
 
 
94,475

Operational expenses
96,745

 
36,193

 
509

 
 
 
133,447

Underwriting income
$
437,617

 
$
(1,908
)
 
$
2,089

 
 
 
437,798

Net investment income
 
 
 
 
129,296

 
 
 
129,296

Net foreign exchange gains
 
 
 
 
170

 
 
 
170

Equity in earnings of other ventures
 
 
 
 
16,920

 
 
 
16,920

Other loss
 
 
 
 
(2,186
)
 
 
 
(2,186
)
Net realized and unrealized losses on investments
 
 
 
 
(26,788
)
 
 
 
(26,788
)
Corporate expenses
 
 
 
 
(30,318
)
 
 
 
(30,318
)
Interest expense
 
 
 
 
(13,632
)
 
 
 
(13,632
)
Income from continuing operations before taxes
 
 
 
 
 
 
 
 
511,260

Income tax expense
 
 
 
 
(356
)
 
 
 
(356
)
Income from discontinued operations
 
 
 
 
2,422

 
 
 
2,422

Net income attributable to noncontrolling interests
 
 
 
 
(96,953
)
 
 
 
(96,953
)
Dividends on preference shares
 
 
 
 
(19,353
)
 
 
 
(19,353
)
Net income available to RenaissanceRe common shareholders
 
 
 
 
 
 
 
 
$
397,020

 
 
 
 
 
 
 
 
 
 
Net claims and claim expenses incurred – current accident year
$
192,569

 
$
71,274

 
$

 
 
 
$
263,843

Net claims and claim expenses incurred – prior accident years
(66,326
)
 
(3,035
)
 
(2,341
)
 
 
 
(71,702
)
Net claims and claim expenses incurred – total
$
126,243

 
$
68,239

 
$
(2,341
)
 
 
 
$
192,141

 
 
 
 
 
 
 
 
 
 
Net claims and claim expense ratio – current accident year
26.4
 %
 
56.2
 %
 
 %
 
 
 
30.8
 %
Net claims and claim expense ratio – prior accident years
(9.1
)%
 
(2.4
)%
 
(601.8
)%
 
 
 
(8.4
)%
Net claims and claim expense ratio – calendar year
17.3
 %
 
53.8
 %
 
(601.8
)%
 
 
 
22.4
 %
Underwriting expense ratio
22.8
 %
 
47.7
 %
 
164.8
 %
 
 
 
26.6
 %
Combined ratio
40.1
 %
 
101.5
 %
 
(437.0
)%
 
 
 
49.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2012
 
Reinsurance
 
Lloyd’s
 
Other
 
Eliminations (1)
 
Total
Gross premiums written
$
1,334,438

 
$
133,836

 
$

 
$
(428
)
 
$
1,467,846

Net premiums written
$
916,171

 
$
109,429

 
$
(360
)
 
 
 
$
1,025,240

Net premiums earned
$
698,473

 
$
87,566

 
$
(335
)
 
 
 
$
785,704

Net claims and claim expenses incurred
90,892

 
50,292

 
(2,866
)
 
 
 
138,318

Acquisition expenses
57,742

 
16,229

 
186

 
 
 
74,157

Operational expenses
93,246

 
32,395

 
414

 
 
 
126,055

Underwriting income (loss)
$
456,593

 
$
(11,350
)
 
$
1,931

 
 
 
447,174

Net investment income
 
 
 
 
126,725

 
 
 
126,725

Net foreign exchange gains
 
 
 
 
3,468

 
 
 
3,468

Equity in earnings of other ventures
 
 
 
 
16,626

 
 
 
16,626

Other income
 
 
 
 
730

 
 
 
730

Net realized and unrealized gains on investments
 
 
 
 
150,982

 
 
 
150,982

Net other-than-temporary impairments
 
 
 
 
(343
)
 
 
 
(343
)
Corporate expenses
 
 
 
 
(12,567
)
 
 
 
(12,567
)
Interest expense
 
 
 
 
(17,325
)
 
 
 
(17,325
)
Income from continuing operations before taxes
 
 
 
 
 
 
 
 
715,470

Income tax expense
 
 
 
 
(1,008
)
 
 
 
(1,008
)
Income from discontinued operations
 
 
 
 
(25,505
)
 
 
 
(25,505
)
Net income attributable to noncontrolling interests
 
 
 
 
(138,348
)
 
 
 
(138,348
)
Dividends on preference shares
 
 
 
 
(26,250
)
 
 
 
(26,250
)
Net income available to RenaissanceRe common shareholders
 
 
 
 
 
 
 
 
$
524,359

 
 
 
 
 
 
 
 
 
 
Net claims and claim expenses incurred – current accident year
$
196,263

 
$
63,697

 
$

 
 
 
$
259,960

Net claims and claim expenses incurred – prior accident years
(105,371
)
 
(13,405
)
 
(2,866
)
 
 
 
(121,642
)
Net claims and claim expenses incurred – total
$
90,892

 
$
50,292

 
$
(2,866
)
 
 
 
$
138,318

 
 
 
 
 
 
 
 
 
 
Net claims and claim expense ratio – current accident year
28.1
 %
 
72.7
 %
 
 %
 
 
 
33.1
 %
Net claims and claim expense ratio – prior accident years
(15.1
)%
 
(15.3
)%
 
855.5
 %
 
 
 
(15.5
)%
Net claims and claim expense ratio – calendar year
13.0
 %
 
57.4
 %
 
855.5
 %
 
 
 
17.6
 %
Underwriting expense ratio
21.6
 %
 
55.6
 %
 
(179.1
)%
 
 
 
25.5
 %
Combined ratio
34.6
 %
 
113.0
 %
 
676.4
 %
 
 
 
43.1
 %
(1) Represents $1.0 million of gross premiums ceded from the Lloyd's segment to the Reinsurance segment for the nine months ended September 30, 2013 (2012 - $0.4 million).


8

            


RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Gross Premiums Written and Managed Premiums
(in thousands of United States Dollars)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three months ended
 
Nine months ended
 
September 30,
2013
 
September 30,
2012
 
September 30,
2013
 
September 30,
2012
Reinsurance Segment
 
 
 
 
 
 
 
Renaissance catastrophe premiums
$
55,849

 
$
44,699

 
$
733,928

 
$
720,220

Renaissance specialty premiums
60,156

 
37,932

 
198,340

 
173,255

Total Renaissance premiums
116,005

 
82,631

 
932,268

 
893,475

DaVinci catastrophe premiums
26,690

 
25,006

 
404,310

 
438,463

DaVinci specialty premiums

 

 
2,685

 
2,500

Total DaVinci premiums
26,690

 
25,006

 
406,995

 
440,963

Total catastrophe unit premiums
82,539

 
69,705

 
1,138,238

 
1,158,683

Total specialty unit premiums
60,156

 
37,932

 
201,025

 
175,755

Total Reinsurance segment gross premiums written
$
142,695

 
$
107,637

 
$
1,339,263

 
$
1,334,438

 
 
 
 
 
 
 
 
Lloyd's Segment
 
 
 
 
 
 
 
Specialty
$
36,545

 
$
26,455

 
$
145,509

 
$
98,709

Catastrophe
3,409

 
2,267

 
37,506

 
35,127

Total Lloyd's segment gross premiums written
$
39,954

 
$
28,722

 
$
183,015

 
$
133,836

 
 
 
 
 
 
 
 
Managed Premiums (1)
 
 
 
 
 
 
 
Total catastrophe unit gross premiums written
$
82,539

 
$
69,705

 
$
1,138,238

 
$
1,158,683

Catastrophe premiums written on behalf of the Company's joint venture, Top Layer Re (2)
1,963

 
5,382

 
60,027

 
70,867

Catastrophe premiums written in the Lloyd's segment
3,409

 
2,267

 
37,506

 
35,127

Total managed catastrophe premiums (1)
$
87,911

 
$
77,354

 
$
1,235,771

 
$
1,264,677

(1)
See Comments on Regulation G for a reconciliation of non-GAAP financial measures.
(2)
Top Layer Re is accounted for under the equity method of accounting.


9

            

RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Total Investment Result
(in thousands of United States Dollars)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three months ended
 
Nine months ended
 
September 30,
2013
 
September 30,
2012
 
September 30,
2013
 
September 30,
2012
Fixed maturity investments
$
24,423

 
$
25,741

 
$
71,148

 
$
75,934

Short term investments
563

 
236

 
1,318

 
1,006

Equity investments trading
706

 
181

 
1,050

 
532

Other investments
 
 
 
 
 
 
 
Hedge funds and private equity investments
14,179

 
10,383

 
31,296


28,443

Other
22,735

 
12,735

 
32,874

 
29,295

Cash and cash equivalents
47

 
63

 
108

 
143

 
62,653

 
49,339

 
137,794

 
135,353

Investment expenses
(2,722
)
 
(3,204
)
 
(8,498
)
 
(8,628
)
Net investment income
59,931

 
46,135

 
129,296

 
126,725

 
 
 
 
 
 
 
 
Gross realized gains
8,813

 
19,891

 
60,437

 
75,635

Gross realized losses
(22,241
)
 
(2,811
)
 
(41,396
)
 
(13,055
)
Net realized (losses) gains on fixed maturity investments
(13,428
)
 
17,080

 
19,041

 
62,580

Net unrealized gains (losses) on fixed maturity investments trading
33,405

 
56,936

 
(85,338
)
 
83,735

Net realized and unrealized gains (losses) on investments-related derivatives
3,557

 
(955
)
 
24,488

 
(2,390
)
Net realized gains on equity investments trading
560

 

 
18,195

 

Net unrealized gains (losses) on equity investments trading
4,378

 
2,236

 
(3,174
)
 
7,057

Net realized and unrealized gains (losses) on investments
28,472

 
75,297

 
(26,788
)
 
150,982

Total other-than-temporary impairments

 

 

 
(395
)
Portion recognized in other comprehensive income, before taxes

 

 

 
52

Net other-than-temporary impairments

 

 

 
(343
)
Change in net unrealized gains on fixed maturity investments available for sale
(252
)
 
1,326

 
(7,558
)
 
1,398

Total investment result
$
88,151

 
$
122,758

 
$
94,950

 
$
278,762

Comments on Regulation G
In addition to the GAAP financial measures set forth in this Press Release, the Company has included certain non-GAAP financial measures in this Press Release within the meaning of Regulation G. The Company has provided these financial measurements in previous investor communications and the 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 quarters and for the comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP measures in assessing the Company's overall financial performance.
The Company uses “operating income available 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 available to RenaissanceRe common shareholders” as used herein differs from “net income available to RenaissanceRe common shareholders,” which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized and unrealized gains and losses on investments from continuing and discontinued operations, net other-than-temporary impairments from continuing operations, and commencing in 2013, also excludes net realized and unrealized gains and losses on investments-related derivatives. Prior to 2013, investments-related derivative net realized and unrealized gains and losses were included in net investment income and were also included in the calculation of operating income available to RenaissanceRe common shareholders and related measures. The Company's management believes that “operating income available to RenaissanceRe common shareholders” is useful to investors because it more

10

            

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 and equity investments trading.  The Company also uses “operating income available to RenaissanceRe common shareholders” to calculate “operating income available to RenaissanceRe common shareholders per common share - diluted” and “operating return on average common equity - annualized”.  The following is a reconciliation of:  1) net income available to RenaissanceRe common shareholders to operating income available to RenaissanceRe common shareholders; 2) net income available to RenaissanceRe common shareholders per common share - diluted to operating income available to RenaissanceRe common shareholders per common share - diluted; and 3) return on average common equity - annualized to operating return on average common equity - annualized:
 
Three months ended
 
Nine months ended
(in thousands of United States Dollars, except percentages)
September 30,
2013
 
September 30,
2012
 
September 30,
2013
 
September 30,
2012
Net income available to RenaissanceRe common shareholders
$
179,740

 
$
180,660

 
$
397,020

 
$
524,359

Adjustment for net realized and unrealized (gains) losses on investments from continuing operations
(28,472
)
 
(75,297
)
 
26,788

 
(150,982
)
Adjustment for net realized and unrealized (gains) losses on investments from discontinued operations
5

 
(6
)
 
18

 
(2
)
Adjustment for investments-related derivative net realized and unrealized (gains) losses included in operating income prior to 2013

 
(955
)
 

 
(2,390
)
Adjustment for net other-than-temporary impairments from continuing operations

 

 

 
343

Operating income available to RenaissanceRe common shareholders
$
151,273

 
$
104,402

 
$
423,826

 
$
371,328

 
 
 
 
 
 
 
 
Net income available to RenaissanceRe common shareholders per common share - diluted
$
4.01

 
$
3.62

 
$
8.84

 
$
10.24

Adjustment for net realized and unrealized (gains) losses on investments from continuing operations
(0.65
)
 
(1.53
)
 
0.61

 
(3.00
)
Adjustment for net realized and unrealized (gains) losses on investments from discontinued operations

 

 

 

Adjustment for investments-related derivative net realized and unrealized (gains) losses included in operating income prior to 2013

 
(0.02
)
 

 
(0.04
)
Adjustment for net other-than-temporary impairments from continuing operations

 

 

 
0.01

Operating income available to RenaissanceRe common shareholders per common share - diluted
$
3.36

 
$
2.07

 
$
9.45

 
$
7.21

 
 
 
 
 
 
 
 
Return on average common equity - annualized
22.2
 %
 
22.0
 %
 
16.6
%
 
21.7
 %
Adjustment for net realized and unrealized (gains) losses on investments from continuing operations
(3.5
)%
 
(9.2
)%
 
1.1
%
 
(6.2
)%
Adjustment for net realized and unrealized (gains) losses on investments from discontinued operations
 %
 
 %
 
%
 
 %
Adjustment for investments-related derivative net realized and unrealized (gains) losses included in operating income prior to 2013
 %
 
(0.1
)%
 
%
 
(0.1
)%
Adjustment for net other-than-temporary impairments from continuing operations
 %
 
 %
 
%
 
 %
Operating return on average common equity - annualized
18.7
 %
 
12.7
 %
 
17.7
%
 
15.4
 %
The Company has also included in this Press Release “managed catastrophe premiums”. “Managed catastrophe premiums” is defined as gross catastrophe premiums written by Renaissance Reinsurance and its related joint ventures. “Managed catastrophe premiums” differs from total catastrophe unit gross premiums written, 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 and the inclusion of catastrophe premiums written on behalf of the Company's Lloyd's segment. The Company's management believes “managed catastrophe premiums” is useful to investors and other interested parties because it provides a measure of total catastrophe premiums, as applicable, assumed by the Company through its consolidated subsidiaries and related joint ventures.

11

            

The Company has also included in this Press Release “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 per share. "Tangible book value per common share plus accumulated dividends” is defined as book value per common share excluding goodwill and intangible assets per share, 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 per share. 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
 
September 30,
2013
 
June 30,
2013
 
March 31,
2013
 
December 31,
2012
 
September 30,
2012
Book value per common share
$
74.58

 
$
71.38

 
$
71.07

 
$
68.14

 
$
68.20

Adjustment for goodwill and other intangibles (1)
(0.84
)
 
(0.85
)
 
(0.85
)
 
(0.86
)
 
(0.85
)
Tangible book value per common share
73.74

 
70.53

 
70.22

 
67.28

 
67.35

Adjustment for accumulated dividends
12.84

 
12.56

 
12.28

 
12.00

 
11.73

Tangible book value per common share plus accumulated dividends
$
86.58

 
$
83.09

 
$
82.50

 
$
79.28

 
$
79.08

 
 
 
 
 
 
 
 
 
 
Quarterly change in book value per common share
4.5
%
 
0.4
%
 
4.3
%
 
(0.1
)%
 
4.8
%
Quarterly change in tangible book value per common share plus change in accumulated dividends
4.9
%
 
0.8
%
 
4.8
%
 
0.3
 %
 
5.3
%
Year to date change in book value per common share
9.5
%
 
 
 
 
 
 
 
15.1
%
Year to date change in tangible book value per common share plus change in accumulated dividends
10.9
%
 
 
 
 
 
 
 
16.6
%
(1)
At September 30, 2013, June 30, 2013, March 31, 2013, December 31, 2012 and September 30, 2012, goodwill and other intangibles included $28.5 million, $29.3 million, $29.3 million, $30.4 million and $32.2 million, respectively, of goodwill and other intangibles included in investments in other ventures, under equity method.

12