Operating Income of$242.2 Million for the Third Quarter of 2009 or $3.85 Per Diluted Common Share
RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported operating income available to common shareholders of $242.2 million for the third quarter of 2009, compared to an operating loss attributable to common shareholders of $143.4 million in the third quarter of 2008. Operating income (loss) excludes net realized gains on investments and net other-than-temporary impairments of $16.8 million and $0.3 million, respectively, in the third quarter of 2009, and $11.2 million and $98.8 million, respectively, in the third quarter of 2008. Operating income per diluted common share was $3.85 in the third quarter of 2009, compared to an operating loss per diluted common share of $2.35 in the third quarter of 2008. Net income available to common shareholders was $258.6 million or $4.12 per diluted common share in the third quarter of 2009, compared to a net loss attributable to common shareholders of $231.0 million or $3.79 per diluted common share for the third quarter of 2008.
The Company reported an annualized return on average common equity of 35.5% and an annualized operating return on average common equity of 33.3% in the third quarter of 2009, compared to negative 36.1% and negative 22.4%, respectively, in the third quarter of 2008. Book value per common share was $49.21 at September 30, 2009, an increase of $5.04, or 11.4%, in the third quarter of 2009, compared to a 10.1% decrease in the third quarter of 2008. For the nine months ended September 30, 2009, the Company''s book value per common share has increased $10.47, or 27.0%.
Neill A. Currie, CEO, commented: “I am pleased to report another strong quarter with an annualized operating ROE of 33% and over 11% growth in book value per share in the quarter. We generated solid underwriting profits and strong investment returns in the quarter, reflecting the quality of the portfolio of risks we have underwritten, a lack of insured catastrophes and improved investment markets.”
Mr. Currie added: “Year-to-date, our book value per share has increased 27% and we have generated an annualized operating return on equity in excess of 29%.”
Mr. Currie concluded: “I''m very pleased with the quality of the portfolio of risks our team has constructed, which reflects our strong underwriting discipline. We look forward to continuing to serve our clients, brokers and joint venture partners during the upcoming renewal season.”
THIRD QUARTER 2009 RESULTS
Underwriting Results
Gross premiums written for the third quarter of 2009 decreased $37.4 million to $202.4 million, compared to $239.8 million in the third quarter of 2008, principally due to $49.0 million in reinstatement premiums written in the Company''s Reinsurance segment in the third quarter of 2008, as a result of hurricanes Gustav and Ike, that did not recur in the third quarter of 2009. The Company generated $167.7 million of underwriting income and a combined ratio of 43.3% in the third quarter of 2009, compared to an underwriting loss of $240.5 million and a combined ratio of 163.4% in the third quarter of 2008. The $408.3 million increase in underwriting income and 120.1 percentage point decrease in the combined ratio was driven by the comparably low level of insured catastrophes during the third quarter of 2009, compared to the third quarter of 2008, specifically the comparative impact of hurricanes Gustav and Ike which resulted in an underwriting loss of $419.6 million and increased the Company''s combined ratio by 116.8 percentage points during the third quarter of 2008. The Company experienced $70.4 million of favorable development on prior year reserves in the third quarter of 2009, compared to $36.0 million of favorable development in the third quarter of 2008. As discussed in more detail below, the favorable development during the third quarter of 2009 is primarily a result of reductions in estimated ultimate losses on certain specific events within the catastrophe unit, and lower than expected claims emergence within the Company''s specialty unit.
Reinsurance Segment
Gross premiums written for the Company''s Reinsurance segment decreased $37.0 million, or 21.8%, to $132.5 million in the third quarter of 2009, compared to $169.5 million in the third quarter of 2008. The decrease in the Company''s Reinsurance segment gross premiums written is primarily due to the absence of $49.0 million of reinstatement premiums written and earned in the third quarter of 2008 as a result of hurricanes Gustav and Ike and partially offset by the inception of a new program in the catastrophe unit for the third quarter of 2009. For the nine months ended September 30, 2009, the Company''s managed catastrophe gross premiums written increased $194.4 million, or 20%, compared to the comparative period in 2008, excluding the impact of $49.0 million of reinstatement premiums written in 2008 as a result of hurricanes Gustav and Ike, due to improved market conditions which has resulted in higher premium rates on business written during 2009. For the nine months ended September 30, 2009, the Company''s specialty gross premiums written have decreased $37.6 million, or 28.7%, compared to the comparative period in 2008, principally due to the non-renewal and portfolio transfer out of a catastrophe exposed homeowners personal lines property quota share contract.
The Reinsurance segment generated $167.0 million of underwriting income and a combined ratio of 17.4% in the third quarter of 2009, compared to an underwriting loss of $227.6 million and a combined ratio of 190.6% in the third quarter of 2008. The $394.6 million increase in underwriting income and 173.2 percentage point decrease in the combined ratio in the third quarter of 2009 compared to the third quarter of 2008 was principally driven by the impact of hurricanes Gustav and Ike during the third quarter of 2008. Hurricanes Gustav and Ike resulted in an underwriting loss of $379.9 million and added 166.0 percentage points to the Reinsurance segment''s combined ratio in the third quarter of 2008. The Reinsurance segment experienced $62.7 million of favorable development on prior years reserves in the third quarter of 2009, compared to $30.6 million in the third quarter of 2008. The favorable development during the third quarter of 2009 was primarily due to reductions in the Company''s ultimate loss estimates on specific events in its catastrophe unit, including European windstorm Kyrill (2007), a California wildfire (2007), hurricane Dean (2007) and hurricane Emily (2005) combined with lower than expected claims emergence in the Company''s specialty reinsurance unit.
Individual Risk Segment
Gross premiums written for the Company''s Individual Risk segment were relatively flat at $83.3 million in the third quarter of 2009, compared to $83.7 million in the third quarter of 2008. The Company''s multi-peril crop insurance gross premiums written increased $9.4 million during the third quarter of 2009, to $21.3 million from $11.9 million in the third quarter of 2008, primarily due to additional insured acres which more than offset a decline in commodity prices used in determining the policy premium. Offsetting the increase in multi-peril crop insurance gross premiums written during the third quarter of 2009, was the Company''s commercial property gross premiums written, which decreased $9.3 million, to $15.5 million from $24.9 million in the third quarter of 2008, primarily due to the Company''s decision in late 2008 to terminate a commercial property quota share reinsurance contract. For the nine months ended September 30, 2009, the Company''s Individual Risk gross premiums written decreased $32.1 million, or 6.7%, compared to the comparative period in 2008. Gross premiums written in the Company''s Individual Risk segment can fluctuate, perhaps significantly, between quarters and between years based on several factors, including, without limitation, the timing of the inception or cessation of new program managers and quota share reinsurance contracts. In addition, the Company''s gross premiums written in respect of its multi-peril crop insurance line of business are subject to fluctuations from a number of factors including the impact of relevant commodity prices.
The Individual Risk segment generated $0.7 million of underwriting income and a combined ratio of 99.3% in the third quarter of 2009, compared to an underwriting loss of $13.0 million and a combined ratio of 110.1% in the third quarter of 2008. The $13.6 million increase in underwriting income and 10.8 percentage point decrease in the combined ratio in the third quarter of 2009 compared to the third quarter of 2008 was principally driven by the absence of catastrophe events such as hurricanes Gustav and Ike which occurred in the third quarter of 2008. Hurricanes Gustav and Ike resulted in $39.7 million in underwriting losses and added 30.2 percentage points to the Individual Risk segment''s combined ratio in the third quarter of 2008. Partially offsetting the lack of hurricane-related losses in the third quarter of 2009 was the impact of significantly higher crop hail losses within the Individual Risk segment''s multi-peril crop insurance line of business in the third quarter of 2009. Multiple hail storms in highly insured areas during the third quarter of 2009 resulted in $16.6 million of underwriting losses in crop hail, a specific product line within the overall multi-peril crop insurance line of business, compared to $3.0 million of underwriting profits for this product line in the third quarter of 2008. The Individual Risk segment experienced $7.8 million of favorable development on prior years reserves in the third quarter of 2009 compared to $5.4 million of favorable development in the third quarter of 2008, primarily as a result of lower than expected reported claims on prior year reserves.
Underwriting expenses in the third quarter of 2009 were $38.6 million and the underwriting expense ratio was 41.2%, compared to $29.5 million and 23.0%, respectively, in the third quarter of 2008. The 18.2 percentage point increase in the Company''s underwriting expense ratio was driven by increased acquisition expenses, primarily due to profit sharing commissions, increased operating expenses, as discussed below, and decreased net premiums earned, primarily due to the portion of the estimated underwriting income generated by the multi-peril crop insurance business that is remitted to the U.S. government in the form of ceded premiums earned. Operational expenses increased $1.8 million, adding 2.0 percentage points to the underwriting expense ratio, principally as a result of the Company''s investment in personnel and related infrastructure in association with its ongoing business development initiatives.
Investments
Returns on the Company''s investment portfolio were significantly higher in the third quarter of 2009 compared to the third quarter of 2008, primarily due to higher total returns on the Company''s non-investment grade allocations which the Company includes in other investments including its senior secured bank loan funds and non-U.S. fixed income funds as discussed in more detail below. The Company''s total investment result, which includes the sum of net investment income, net realized gains on investments, net other-than-temporary impairments on fixed maturity investments available for sale and the net change in unrealized holding gains on fixed maturity investments available for sale, was $198.0 million in the third quarter of 2009, compared to negative $93.3 million in the third quarter of 2008, an increase of $291.3 million. The Company''s total investment result for the third quarter of 2009 benefitted from the significant tightening of credit spreads, which resulted in increases in the fair value of many of the Company''s investments. The Company does not anticipate a repeat of this quarter''s investment performance in future periods.
Net investment income was $106.8 million in the third quarter of 2009, compared to net investment income of $15.8 million in the third quarter of 2008. The $91.0 million increase in net investment income was principally driven by a $30.6 million increase from the Company''s hedge fund and private equity investments and a $78.1 million increase in net investment income from its other investments, principally senior secured bank loan funds and non-U.S. fixed income funds, and partially offset by an $8.0 million and $7.7 million decrease in net investment income from the Company''s fixed maturity investments available for sale and short term investments, respectively, principally due to lower yields on these investments. The Company''s hedge fund, private equity and other investments are accounted for at fair value with the change in fair value recorded in net investment income, which included net unrealized gains of $19.2 million in the third quarter of 2009, compared to net unrealized losses of $54.3 million in the third quarter of 2008.
Net realized gains on investments were $16.8 million in the third quarter of 2009, compared to $11.2 million in the third quarter of 2008, an increase of $5.6 million. Net other-than-temporary impairments recognized in earnings were $0.3 million in the third quarter of 2009, compared to $98.8 million for the third quarter of 2008. The significant decrease in net other-than-temporary impairments is due to the combination of improved economic conditions in the third quarter of 2009, compared to the third quarter of 2008, and the adoption of new authoritative accounting guidance related to the recognition and presentation of other-than-temporary impairments during the second quarter of 2009.
Other Items
- Corporate expenses decreased $7.4 million to negative $4.3 million in the third quarter of 2009, compared to $3.1 million in the third quarter of 2008, primarily due to the recognition of a corporate insurance recovery.
- Net (income) loss attributable to redeemable noncontrolling interest - DaVinciRe increased to $(37.7) million for the third quarter of 2009, compared to $92.0 million in the third quarter of 2008, principally due to DaVinciRe generating net income in the third quarter of 2009, compared to a net loss in the third quarter of 2008. The significant change was driven by DaVinciRe generating strong underwriting profits and investment income in the third quarter of 2009, compared to an underwriting loss and lower investment income in the third quarter of 2008.
- Other income increased by $11.2 million to $13.4 million in the third quarter of 2009 compared to $2.3 million in the third quarter of 2008, principally due to a $14.3 million increase in income from the Company''s weather and energy risk operations and a $7.3 million increase in the mark-to-market on the Company''s investment in the Platinum Underwriters Holdings Ltd. warrant and partially offset by an $11.3 million increase in losses on assumed and ceded reinsurance contracts accounted for at fair value or as deposits.
- The Company expects to exercise its option to purchase all of the outstanding shares of Spectrum Partners Ltd., the parent company of Spectrum Syndicate Management Ltd., the managing agency for the Company''s Lloyd''s syndicate, RenaissanceRe Syndicate 1458. Subject to specified closing conditions, the Company expects to complete the transaction in the fourth quarter of 2009.
This press release includes certain non-GAAP financial measures including “operating income (loss)”, “operating income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted”, “operating return on average common equity - annualized” and “managed catastrophe premium”. 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, October 28, 2009 at 9:30 a.m. (ET) to discuss this release. Live broadcast of the conference call will be available through the “Investor Information - Company Webcasts” section of 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 segments: (1) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain joint ventures and other investments managed by the Company''s subsidiary RenaissanceRe Ventures Ltd., and (2) Individual Risk, which includes primary insurance and quota share reinsurance.
Cautionary Statement under “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995: Statements made in this news release contain information about the 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 Report on Form 10-K for the year ended December 31, 2008 and its quarterly reports on Form 10-Q.
| RenaissanceRe Holdings Ltd. and Subsidiaries | |||||||||||||||||
| Summary Consolidated Statements of Operations | |||||||||||||||||
| (in thousands of United States Dollars, except per share amounts) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||
| September 30, 2009 | September 30, 2008 | September 30, 2009 | September 30, 2008 | ||||||||||||||
| Revenues | |||||||||||||||||
| Gross premiums written | $ | 202,413 | $ | 239,806 | $ | 1,655,886 | $ | 1,574,419 | |||||||||
| Net premiums written | $ | 75,098 | $ | 194,408 | $ | 1,153,304 | $ | 1,211,546 | |||||||||
| Decrease (increase) in unearned premiums | 220,915 | 184,934 | (175,726 | ) | (146,717 | ) | |||||||||||
| Net premiums earned | 296,013 | 379,342 | 977,578 | 1,064,829 | |||||||||||||
| Net investment income | 106,815 | 15,767 | 263,234 | 106,955 | |||||||||||||
| Net foreign exchange gains (losses) | 1,556 | 3,448 | (12,761 | ) | 8,153 | ||||||||||||
| Equity in earnings of other ventures | 4,331 | 2,333 | 11,499 | 13,455 | |||||||||||||
| Other income (loss) | 13,424 | 2,258 | (5,027 | ) | 10,246 | ||||||||||||
| Net realized gains on investments | 16,794 | 11,198 | 57,809 | 28,322 | |||||||||||||
| Total other-than-temporary impairments | (1,408 | ) | (98,808 | ) | (25,719 | ) | (150,763 | ) | |||||||||
| Portion recognized in other comprehensive income, before taxes | 1,062 | - | 4,518 | - | |||||||||||||
| Net other-than-temporary impairments | (346 | ) | (98,808 | ) | (21,201 | ) | (150,763 | ) | |||||||||
| Total revenues | 438,587 | 315,538 | 1,271,131 | 1,081,197 | |||||||||||||
| Expenses | |||||||||||||||||
| Net claims and claim expenses incurred | 38,567 | 535,347 | 191,587 | 731,720 | |||||||||||||
| Acquisition expenses | 44,203 | 54,231 | 141,302 | 154,272 | |||||||||||||
| Operational expenses | 45,498 | 30,296 | 132,120 | 93,903 | |||||||||||||
| Corporate expenses | (4,319 | ) | 3,116 | 8,608 | 18,930 | ||||||||||||
| Interest expense | 3,748 | 5,379 | 12,084 | 18,120 | |||||||||||||
| Total expenses | 127,697 | 628,369 | 485,701 | 1,016,945 | |||||||||||||
| Income (loss) before taxes | 310,890 | (312,831 | ) | 785,430 | 64,252 | ||||||||||||
| Income tax (expense) benefit | (3,993 | ) | 455 | (3,793 | ) | (936 | ) | ||||||||||
| Net income (loss) | 306,897 | (312,376 | ) | 781,637 | 63,316 | ||||||||||||
| Net (income) loss attributable to redeemable noncontrolling interest - DaVinciRe | (37,694 | ) | 91,977 | (122,821 | ) | 10,321 | |||||||||||
| Net income (loss) attributable to RenaissanceRe | 269,203 | (220,399 | ) | 658,816 | 73,637 | ||||||||||||
| Dividends on preference shares | (10,575 | ) | (10,575 | ) | (31,725 | ) | (31,725 | ) | |||||||||
| Net income (loss) available (attributable) to RenaissanceRe | |||||||||||||||||
| common shareholders | $ | 258,628 | $ | (230,974 | ) | $ | 627,091 | $ | 41,912 | ||||||||
| Operating income (loss) available (attributable) to RenaissanceRe | |||||||||||||||||
| common shareholders per common share - diluted (1) | $ | 3.85 | $ | (2.35 | ) | $ | 9.43 | $ | 2.56 | ||||||||
| Net income (loss) available (attributable) to RenaissanceRe common | |||||||||||||||||
| shareholders per common share - basic | $ | 4.15 | $ | (3.79 | ) | $ | 10.09 | $ | 0.66 | ||||||||
| Net income (loss) available (attributable) to RenaissanceRe common | |||||||||||||||||
| shareholders per common share - diluted (2) | $ | 4.12 | $ | (3.79 | ) | $ | 10.03 | $ | 0.65 | ||||||||
| Average shares outstanding - basic | 60,898 | 60,943 | 60,832 | 63,131 | |||||||||||||
| Average shares outstanding - diluted (2) | 61,367 | 61,694 | 61,226 | 64,125 | |||||||||||||
| Net claims and claim expense ratio | 13.0 | % | 141.1 | % | 19.6 | % | 68.7 | % | |||||||||
| Underwriting expense ratio | 30.3 | % | 22.3 | % | 28.0 | % | 23.3 | % | |||||||||
| Combined ratio | 43.3 | % | 163.4 | % | 47.6 | % | 92.0 | % | |||||||||
| Operating return on average common equity - annualized (1) | 33.3 | % | (22.4 | %) | 29.5 | % | 8.2 | % | |||||||||
| (1) | See Comments on Regulation G for a reconciliation of non-GAAP financial measures. |
| (2) | Earnings per share calculations use average common shares outstanding - basic, when in a net loss position, as required by the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic Earnings Per Share. |
| RenaissanceRe Holdings Ltd. and Subsidiaries | |||||||
| Summary Consolidated Balance Sheets | |||||||
| (in thousands of United States Dollars, except per share amounts) | |||||||
| At | |||||||
| September 30, 2009 | December 31, 2008 | ||||||
| (Unaudited) | (Audited) | ||||||
| Assets | |||||||
| Fixed maturity investments available for sale, at fair value | $ | 4,505,446 | $ | 2,996,885 | |||
| Short term investments, at fair value | 880,406 | 2,172,343 | |||||
| Other investments, at fair value | 812,056 | 773,475 | |||||
| Investments in other ventures, under equity method | 94,859 | 99,879 | |||||
| Total investments | 6,292,767 | 6,042,582 | |||||
| Cash and cash equivalents | 347,993 | 274,692 | |||||
| Premiums receivable | 826,562 | 565,630 | |||||
| Ceded reinsurance balances | 207,257 | 88,019 | |||||
| Losses recoverable | 253,312 | 299,534 | |||||
| Accrued investment income | 34,076 | 26,614 | |||||
| Deferred acquisition costs | 95,614 | 81,904 | |||||
| Receivable for investments sold | 188,497 | 236,485 | |||||
| Other secured assets | 27,464 | 76,424 | |||||
| Other assets | 201,982 | 217,986 | |||||
| Goodwill and other intangibles | 69,175 | 74,181 | |||||
| Total assets | $ | 8,544,699 | $ | 7,984,051 | |||
| Liabilities, Redeemable Noncontrolling Interest and Shareholders'' Equity | |||||||
| Liabilities | |||||||
| Reserve for claims and claim expenses | $ | 1,837,879 | $ | 2,160,612 | |||
| Reserve for unearned premiums | 805,199 | 510,235 | |||||
| Debt | 450,000 | 450,000 | |||||
| Reinsurance balances payable | 457,947 | 315,401 | |||||
| Payable for investments purchased | 247,502 | 378,111 | |||||
| Other secured liabilities | 27,500 | 77,420 | |||||
| Other liabilities | 251,504 | 290,998 | |||||
| Total liabilities | 4,077,531 | 4,182,777 | |||||
| Redeemable noncontrolling interest - DaVinciRe | 746,698 | 768,531 | |||||
| Shareholders'' Equity | |||||||
| Preference shares | 650,000 | 650,000 | |||||
| Common shares | 62,390 | 61,503 | |||||
| Additional paid-in capital | 25,494 | - | |||||
| Accumulated other comprehensive income | 78,338 | 75,387 | |||||
| Retained earnings | 2,904,248 | 2,245,853 | |||||
| Total shareholders'' equity | 3,720,470 | 3,032,743 | |||||
| Total liabilities, redeemable noncontrolling interest and shareholders'' equity | $ | 8,544,699 | $ | 7,984,051 | |||
| Book value per common share | $ | 49.21 | $ | 38.74 | |||
| Common shares outstanding | 62,390 | 61,503 | |||||
| RenaissanceRe Holdings Ltd. and Subsidiaries | ||||||||||||||||||||||
| Supplemental Financial Data - Segment Information | ||||||||||||||||||||||
| (in thousands of United States Dollars) | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| Three months ended September 30, 2009 | ||||||||||||||||||||||
| Reinsurance | Individual Risk | Eliminations (1) | Other | Total | ||||||||||||||||||
| Gross premiums written | $ | 132,487 | $ | 83,349 | $ | (13,423 | ) | $ | - | $ | 202,413 | |||||||||||
| Net premiums written | $ | 43,202 | $ | 31,896 | - | $ | 75,098 | |||||||||||||||
| Net premiums earned | $ | 202,260 | $ | 93,753 | - | $ | 296,013 | |||||||||||||||
| Net claims and claim expenses incurred | (15,914 | ) | 54,481 | - | 38,567 | |||||||||||||||||
| Acquisition expenses | 17,164 | 27,039 | - | 44,203 | ||||||||||||||||||
| Operational expenses | 33,961 | 11,537 | - | 45,498 | ||||||||||||||||||
| Underwriting income | $ | 167,049 | $ | 696 | - | 167,745 | ||||||||||||||||
| Net investment income | 106,815 | 106,815 | ||||||||||||||||||||
| Equity in earnings of other ventures | 4,331 | 4,331 | ||||||||||||||||||||
| Other income | 13,424 | 13,424 | ||||||||||||||||||||
| Interest and preference share dividends | (14,323 | ) | (14,323 | ) | ||||||||||||||||||
| Redeemable noncontrolling interest - DaVinciRe | (37,694 | ) | (37,694 | ) | ||||||||||||||||||
| Other items, net | 1,882 | 1,882 | ||||||||||||||||||||
| Net realized gains on investments | 16,794 | 16,794 | ||||||||||||||||||||
| Net other-than-temporary impairments | (346 | ) | (346 | ) | ||||||||||||||||||
| Net income available to RenaissanceRe common shareholders | $ | 90,883 | $ | 258,628 | ||||||||||||||||||
| Net claims and claim expenses incurred - current accident year | $ | 46,755 | $ | 62,256 | $ | 109,011 | ||||||||||||||||
| Net claims and claim expenses incurred - prior accident years | (62,669 | ) | (7,775 | ) | (70,444 | ) | ||||||||||||||||
| Net claims and claim expenses incurred - total | $ | (15,914 | ) | $ | 54,481 | $ | 38,567 | |||||||||||||||
| Net claims and claim expense ratio - current accident year | 23.1 | % | 66.4 | % | 36.8 | % | ||||||||||||||||
| Net claims and claim expense ratio - prior accident years | (31.0 | %) | (8.3 | %) | (23.8 | %) | ||||||||||||||||
| Net claims and claim expense ratio - calendar year | (7.9 | %) | 58.1 | % | 13.0 | % | ||||||||||||||||
| Underwriting expense ratio | 25.3 | % | 41.2 | % | 30.3 | % | ||||||||||||||||
| Combined ratio | 17.4 | % | 99.3 | % | 43.3 | % | ||||||||||||||||
(1) Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. | ||||||||||||||||||||||
| Three months ended September 30, 2008 | ||||||||||||||||||||||
| Reinsurance | Individual Risk | Eliminations (1) | Other | Total | ||||||||||||||||||
| Gross premiums written | $ | 169,463 | $ | 83,685 | $ | (13,342 | ) | $ | - | $ | 239,806 | |||||||||||
| Net premiums written | $ | 129,229 | $ | 65,179 | - | $ | 194,408 | |||||||||||||||
| Net premiums earned | $ | 251,058 | $ | 128,284 | - | $ | 379,342 | |||||||||||||||
| Net claims and claim expenses incurred | 423,568 | 111,779 | - | 535,347 | ||||||||||||||||||
| Acquisition expenses | 34,469 | 19,762 | - | 54,231 | ||||||||||||||||||
| Operational expenses | 20,602 | 9,694 | - | 30,296 | ||||||||||||||||||
| Underwriting loss | $ | (227,581 | ) | $ | (12,951 | ) | - | (240,532 | ) | |||||||||||||
| Net investment income | 15,767 | 15,767 | ||||||||||||||||||||
| Equity in earnings of other ventures | 2,333 | 2,333 | ||||||||||||||||||||
| Other income | 2,258 | 2,258 | ||||||||||||||||||||
| Interest and preference share dividends | (15,954 | ) | (15,954 | ) | ||||||||||||||||||
| Redeemable noncontrolling interest - DaVinciRe | 91,977 | 91,977 | ||||||||||||||||||||
| Other items, net | 787 | 787 | ||||||||||||||||||||
| Net realized gains on investments | 11,198 | 11,198 | ||||||||||||||||||||
| Net other-than-temporary impairments | (98,808 | ) | (98,808 | ) | ||||||||||||||||||
| Net loss attributable to RenaissanceRe common shareholders | $ | 9,558 | $ | (230,974 | ) | |||||||||||||||||
| Net claims and claim expenses incurred - current accident year | $ | 454,187 | $ | 117,157 | $ | 571,344 | ||||||||||||||||
| Net claims and claim expenses incurred - prior accident years | (30,619 | ) | (5,378 | ) | (35,997 | ) | ||||||||||||||||
| Net claims and claim expenses incurred - total | $ | 423,568 | $ | 111,779 | $ | 535,347 | ||||||||||||||||
| Net claims and claim expense ratio - current accident year | 180.9 | % | 91.3 | % | 150.6 | % | ||||||||||||||||
| Net claims and claim expense ratio - prior accident years | (12.2 | %) | (4.2 | %) | (9.5 | %) | ||||||||||||||||
| Net claims and claim expense ratio - calendar year | 168.7 | % | 87.1 | % | 141.1 | % | ||||||||||||||||
| Underwriting expense ratio | 21.9 | % | 23.0 | % | 22.3 | % | ||||||||||||||||
| Combined ratio | 190.6 | % | 110.1 | % | 163.4 | % | ||||||||||||||||
(1) Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. | ||||||||||||||||||||||
| RenaissanceRe Holdings Ltd. and Subsidiaries | ||||||||||||||||||||||
| Supplemental Financial Data - Segment Information (cont''d.) | ||||||||||||||||||||||
| (in thousands of United States Dollars) | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| Nine months ended September 30, 2009 | ||||||||||||||||||||||
| Reinsurance | Individual Risk | Eliminations (1) | Other | Total | ||||||||||||||||||
| Gross premiums written | $ | 1,221,035 | $ | 447,229 | $ | (12,378 | ) | $ | - | $ | 1,655,886 | |||||||||||
| Net premiums written | $ | 852,970 | $ | 300,334 | - | $ | 1,153,304 | |||||||||||||||
| Net premiums earned | $ | 656,143 | $ | 321,435 | - | $ | 977,578 | |||||||||||||||
| Net claims and claim expenses incurred | (40,132 | ) | 231,719 | - | 191,587 | |||||||||||||||||
| Acquisition expenses | 57,321 | 83,981 | - | 141,302 | ||||||||||||||||||
| Operational expenses | 98,265 | 33,855 | - | 132,120 | ||||||||||||||||||
| Underwriting income (loss) | $ | 540,689 | $ | (28,120 | ) | - | 512,569 | |||||||||||||||
| Net investment income | 263,234 | 263,234 | ||||||||||||||||||||
| Equity in earnings of other ventures | 11,499 | 11,499 | ||||||||||||||||||||
| Other loss | (5,027 | ) | (5,027 | ) | ||||||||||||||||||
| Interest and preference share dividends | (43,809 | ) | (43,809 | ) | ||||||||||||||||||
| Redeemable noncontrolling interest - DaVinciRe | (122,821 | ) | (122,821 | ) | ||||||||||||||||||
| Other items, net | (25,162 | ) | (25,162 | ) | ||||||||||||||||||
| Net realized gains on investments | 57,809 | 57,809 | ||||||||||||||||||||
| Net other-than-temporary impairments | (21,201 | ) | (21,201 | ) | ||||||||||||||||||
| Net income available to RenaissanceRe common shareholders | $ | 114,522 | $ | 627,091 | ||||||||||||||||||
| Net claims and claim expenses incurred - current accident year | $ | 143,636 | $ | 217,350 | $ | 360,986 | ||||||||||||||||
| Net claims and claim expenses incurred - prior accident years | (183,768 | ) | 14,369 | (169,399 | ) | |||||||||||||||||
| Net claims and claim expenses incurred - total | $ | (40,132 | ) | $ | 231,719 | $ | 191,587 | |||||||||||||||
| Net claims and claim expense ratio - current accident year | 21.9 | % | 67.6 | % | 36.9 | % | ||||||||||||||||
| Net claims and claim expense ratio - prior accident years | (28.0 | %) | 4.5 | % | (17.3 | %) | ||||||||||||||||
| Net claims and claim expense ratio - calendar year | (6.1 | %) | 72.1 | % | 19.6 | % | ||||||||||||||||
| Underwriting expense ratio | 23.7 | % | 36.6 | % | 28.0 | % | ||||||||||||||||
| Combined ratio | 17.6 | % | 108.7 | % | 47.6 | % | ||||||||||||||||
(1) Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. | ||||||||||||||||||||||
| Nine months ended September 30, 2008 | ||||||||||||||||||||||
| Reinsurance | Individual Risk | Eliminations (1) | Other | Total | ||||||||||||||||||
| Gross premiums written | $ | 1,100,984 | $ | 479,351 | $ | (5,916 | ) | $ | - | $ | 1,574,419 | |||||||||||
| Net premiums written | $ | 825,336 | $ | 386,210 | - | $ | 1,211,546 | |||||||||||||||
| Net premiums earned | $ | 709,571 | $ | 355,258 | - | $ | 1,064,829 | |||||||||||||||
| Net claims and claim expenses incurred | 490,757 | 240,963 | - | 731,720 | ||||||||||||||||||
| Acquisition expenses | 78,495 | 75,777 | - | 154,272 | ||||||||||||||||||
| Operational expenses | 64,497 | 29,406 | - | 93,903 | ||||||||||||||||||
| Underwriting income | $ | 75,822 | $ | 9,112 | - | 84,934 | ||||||||||||||||
| Net investment income | 106,955 | 106,955 | ||||||||||||||||||||
| Equity in earnings of other ventures | 13,455 | 13,455 | ||||||||||||||||||||
| Other income | 10,246 | 10,246 | ||||||||||||||||||||
| Interest and preference share dividends | (49,845 | ) | (49,845 | ) | ||||||||||||||||||
| Redeemable noncontrolling interest - DaVinciRe | 10,321 | 10,321 | ||||||||||||||||||||
| Other items, net | (11,713 | ) | (11,713 | ) | ||||||||||||||||||
| Net realized gains on investments | 28,322 | 28,322 | ||||||||||||||||||||
| Net other-than-temporary impairments | (150,763 | ) | (150,763 | ) | ||||||||||||||||||
| Net income available to RenaissanceRe common shareholders | $ | (43,022 | ) | $ | 41,912 | |||||||||||||||||
| Net claims and claim expenses incurred - current accident year | $ | 582,624 | $ | 279,748 | $ | 862,372 | ||||||||||||||||
| Net claims and claim expenses incurred - prior accident years | (91,867 | ) | (38,785 | ) | (130,652 | ) | ||||||||||||||||
| Net claims and claim expenses incurred - total | $ | 490,757 | $ | 240,963 | $ | 731,720 | ||||||||||||||||
| Net claims and claim expense ratio - current accident year | 82.1 | % | 78.7 | % | 81.0 | % | ||||||||||||||||
| Net claims and claim expense ratio - prior accident years | (12.9 | %) | (10.9 | %) | (12.3 | %) | ||||||||||||||||
| Net claims and claim expense ratio - calendar year | 69.2 | % | 67.8 | % | 68.7 | % | ||||||||||||||||
| Underwriting expense ratio | 20.1 | % | 29.6 | % | 23.3 | % | ||||||||||||||||
| Combined ratio | 89.3 | % | 97.4 | % | 92.0 | % | ||||||||||||||||
(1) Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. | ||||||||||||||||||||||
| RenaissanceRe Holdings Ltd. and Subsidiaries | |||||||||||||||||||
| Supplemental Financial Data - Gross Premiums Written Analysis | |||||||||||||||||||
| (in thousands of United States Dollars) | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||||
Reinsurance Segment | September 30, 2009 | September 30, 2008 | September 30, 2009 | September 30, 2008 | |||||||||||||||
| Renaissance catastrophe premiums | $ | 78,232 | $ | 97,839 | $ | 724,131 | $ | 614,124 | |||||||||||
| Renaissance specialty premiums | 25,249 | 28,408 | 90,852 | 126,826 | |||||||||||||||
| Total Renaissance premiums | 103,481 | 126,247 | 814,983 | 740,950 | |||||||||||||||
| DaVinci catastrophe premiums | 29,076 | 43,413 | 403,595 | 355,940 | |||||||||||||||
| DaVinci specialty premiums | (70 | ) | (197 | ) | 2,457 | 4,094 | |||||||||||||
| Total DaVinci premiums | 29,006 | 43,216 | 406,052 | 360,034 | |||||||||||||||
| Total Reinsurance premiums | $ | 132,487 | $ | 169,463 | $ | 1,221,035 | $ | 1,100,984 | |||||||||||
| Total specialty premiums | $ | 25,179 | $ | 28,211 | $ | 93,309 | $ | 130,920 | |||||||||||
| Total catastrophe premiums | $ | 107,308 | $ | 141,252 | $ | 1,127,726 | $ | 970,064 | |||||||||||
| Catastrophe premiums written on behalf of our joint venture, Top Layer Re (1) | (434 | ) | (293 | ) | 49,542 | 55,370 | |||||||||||||
| Catastrophe premiums assumed from the Individual Risk segment | (13,423 | ) | (13,342 | ) | (12,378 | ) | (5,916 | ) | |||||||||||
| Total managed catastrophe premiums (2) | $ | 93,451 | $ | 127,617 | $ | 1,164,890 | $ | 1,019,518 | |||||||||||
(1) Top Layer Re is accounted for under the equity method of accounting. | |||||||||||||||||||
(2) See Comments on Regulation G for a reconciliation of non-GAAP financial measures. | |||||||||||||||||||
| Three months ended | Nine months ended | ||||||||||||||||||
Individual Risk Segment | September 30, 2009 | September 30, 2008 | September 30, 2009 | September 30, 2008 | |||||||||||||||
| Multi-peril crop | $ | 21,296 | $ | 11,881 | $ | 264,442 | $ | 220,330 | |||||||||||
| Commercial multi-line | 31,066 | 29,773 | 81,155 | 92,856 | |||||||||||||||
| Commercial property | 15,514 | 24,863 | 64,001 | 116,546 | |||||||||||||||
| Personal lines property | 15,473 | 17,168 | 37,631 | 49,619 | |||||||||||||||
| Total Individual Risk premiums | $ | 83,349 | $ | 83,685 | $ | 447,229 | $ | 479,351 | |||||||||||
| RenaissanceRe Holdings Ltd. and Subsidiaries | ||||||||||||||||||
| Supplemental Financial Data - Total Investment Result | ||||||||||||||||||
| (in thousands of United States Dollars) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||
| September 30, 2009 | September 30, 2008 | September 30, 2009 | September 30, 2008 | |||||||||||||||
| Fixed maturity investments available for sale | $ | 44,127 | $ | 52,087 | $ | 123,261 | $ | 147,930 | ||||||||||
| Short term investments | 2,285 | 9,990 | 8,097 | 41,124 | ||||||||||||||
| Other investments | ||||||||||||||||||
| Hedge funds and private equity investments | 15,510 | (15,080 | ) | 8,096 | (46,415 | ) | ||||||||||||
| Other | 47,748 | (30,306 | ) | 131,309 | (32,884 | ) | ||||||||||||
| Cash and cash equivalents | 102 | 1,956 | 632 | 5,900 | ||||||||||||||
| 109,772 | 18,647 | 271,395 | 115,655 | |||||||||||||||
| Investment expenses | (2,957 | ) | (2,880 | ) | (8,161 | ) | (8,700 | ) | ||||||||||
| Net investment income | 106,815 | 15,767 | 263,234 | 106,955 | ||||||||||||||
| Gross realized gains | 26,734 | 20,007 | 91,370 | 58,885 | ||||||||||||||
| Gross realized losses | (9,940 | ) | (8,809 | ) | (33,561 | ) | (30,563 | ) | ||||||||||
| Net realized gains on investments | 16,794 | 11,198 | 57,809 | 28,322 | ||||||||||||||
| Total other-than-temporary impairments | (1,408 | ) | (98,808 | ) | (25,719 | ) | (150,763 | ) | ||||||||||
| Portion recognized in other comprehensive income, before taxes | 1,062 | - | 4,518 | - | ||||||||||||||
| Net other-than-temporary impairments | (346 | ) | (98,808 | ) | (21,201 | ) | (150,763 | ) | ||||||||||
| Net unrealized gains (losses) on fixed maturity investments available for sale | 74,697 | (21,411 | ) | 12,124 | (32,930 | ) | ||||||||||||
| FAS 115-2 cumulative effect adjustment (1) | - | - | 76,615 | - | ||||||||||||||
| Net change in unrealized holding gains on | ||||||||||||||||||
| fixed maturity investments available for sale | 74,697 | (21,411 | ) | 88,739 | (32,930 | ) | ||||||||||||
| Total investment result | $ | 197,960 | $ | (93,254 | ) | $ | 388,581 | $ | (48,416 | ) | ||||||||
| (1) | Cumulative effect adjustment to opening retained earnings as of April 1, 2009, related to the recognition and presentation of other-than-temporary impairments, as required by FASB ASC Topic Investments - Debt and Equity Securities. |
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 (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 gains and losses on investments and net other-than-temporary impairments on fixed maturity investments available for sale. 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 investment portfolio, which is not considered by management to be a relevant indicator of its business operations. 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 - annualized”. 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 - annualized to operating return on average common equity - annualized:
| Three months ended | Nine months ended | |||||||||||||||||
| (in thousands of United States Dollars, except for per share amounts) | September 30, 2009 | September 30, 2008 | September 30, 2009 | September 30, 2008 | ||||||||||||||
| Net income (loss) available (attributable) to RenaissanceRe common shareholders | $ | 258,628 | $ | (230,974 | ) | $ | 627,091 | $ | 41,912 | |||||||||
| Adjustment for net realized gains on investments | (16,794 | ) | (11,198 | ) | (57,809 | ) | (28,322 | ) | ||||||||||
| Adjustment for net other-then-temporary impairments | 346 | 98,808 | 21,201 | 150,763 | ||||||||||||||
| Operating income (loss) available (attributable) to RenaissanceRe common shareholders | $ | 242,180 | $ | (143,364 | ) | $ | 590,483 | $ | 164,353 | |||||||||
| Net income (loss) available (attributable) to RenaissanceRe common shareholders | ||||||||||||||||||
| per common share - diluted (1) | $ | 4.12 | $ | (3.79 | ) | $ | 10.03 | $ | 0.65 | |||||||||
| Adjustment for net realized gains on investments | (0.27 | ) | (0.18 | ) | (0.94 | ) | (0.44 | ) | ||||||||||
| Adjustment for net other-then-temporary impairments | - | 1.62 | 0.34 | 2.35 | ||||||||||||||
| Operating income (loss) available (attributable) to RenaissanceRe common shareholders | ||||||||||||||||||
| per common share - diluted (1) | $ | 3.85 | $ | (2.35 | ) | $ | 9.43 | $ | 2.56 | |||||||||
| Return on average common equity - annualized | 35.5 | % | (36.1 | %) | 31.3 | % | 2.1 | % | ||||||||||
| Adjustment for net realized gains on investments | (2.2 | %) | (1.8 | %) | (2.8 | %) | (1.4 | %) | ||||||||||
| Adjustment for net other-then-temporary impairments | - | 15.5 | % | 1.0 | % | 7.5 | % | |||||||||||
| Operating return on average common equity - annualized | 33.3 | % | (22.4 | %) | 29.5 | % | 8.2 | % | ||||||||||
| (1) | Earnings per share calculations use average common shares outstanding - basic, when in a net loss position, as required by FASB ASC Topic Earnings Per Share. |
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, excluding catastrophe premiums assumed from the Company''s Individual Risk segment. “Managed catastrophe premiums” differ from total catastrophe premiums, which the Company believes is the most directly comparable GAAP measure, due to the inclusion of catastrophe premiums written on behalf of the Company''s joint venture Top Layer Re, which is accounted for under the equity method of accounting, and the exclusion of catastrophe premiums assumed from the Company''s Individual Risk 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 reinsurance premiums assumed by the Company through its consolidated subsidiaries and related joint ventures.
Contacts:
INVESTOR:
RenaissanceRe Holdings Ltd.
Rohan Pai, 441-295-4513
Director
of Investor Relations
or
MEDIA:
Kekst and Company
David
Lilly or Dawn Dover
212-521-4800
