Quarterly Operating Income Available to
Common Shareholders of $20.6 Million, or $0.52 Per Diluted Common
Share
RenaissanceRe Holdings Ltd. (NYSE: RNR) (the “Company” or
“RenaissanceRe”) today reported net income available to
RenaissanceRe common shareholders of $32.7 million, or $0.82 per
diluted common share, in the third quarter of 2018, compared to a
net loss attributable to RenaissanceRe common shareholders of
$504.8 million, or $12.75 per diluted common share, in the third
quarter of 2017. Operating income available to RenaissanceRe common
shareholders was $20.6 million, or $0.52 per diluted common share,
in the third quarter of 2018, compared to an operating loss
attributable to RenaissanceRe common shareholders of $544.2
million, or $13.74 per diluted common share, in the third quarter
of 2017. The Company reported an annualized return on average
common equity of 3.1% and an annualized operating return on average
common equity of 1.9% in the third quarter of 2018, compared to
negative 47.2% and negative 50.8%, respectively, in the third
quarter of 2017. Book value per common share increased $0.65, or
0.6%, to $105.21 in the third quarter of 2018, compared to an 11.6%
decrease in the third quarter of 2017. Tangible book value per
common share plus accumulated dividends increased $1.04, or 1.1%,
to $117.57 in the third quarter of 2018, compared to a 12.0%
decrease in the third quarter of 2017.
Kevin J. O’Donnell, President and Chief Executive Officer of
RenaissanceRe, commented: “Once again this quarter, our industry
experienced multiple large catastrophic events around the world. It
is a strong testament to our strategy that we were able to support
our customers by promptly paying their claims while still recording
positive net and operating income, as well as growth in tangible
book value per share plus accumulated dividends. Our track
record of sourcing large, one of a kind opportunities to provide
bespoke solutions to key customers remains unparalleled in the
industry. We remain confident in our strategy and our ability to
deliver long-term shareholder value.”
THIRD QUARTER 2018
SUMMARY
- Net negative impact on the Company’s
net income available to RenaissanceRe common shareholders of $151.9
million from Typhoons Jebi, Mangkut and Trami, Hurricane Florence
and the wildfires in California during the third quarter of 2018
(collectively, the “Q3 2018 Catastrophe Events”).
- Underwriting loss of $29.0 million and
a combined ratio of 105.5% in the third quarter of 2018, compared
to an underwriting loss of $793.2 million and a combined ratio of
244.8% in the third quarter of 2017. Principally impacting the
Company’s underwriting results in the third quarter of 2018 were
the Q3 2018 Catastrophe Events which resulted in an underwriting
loss of $178.0 million and added 34.4 percentage points to the
combined ratio. The third quarter of 2017 underwriting loss
included the impacts of Hurricanes Harvey, Irma and Maria, the
Mexico City Earthquake and certain losses associated with aggregate
loss contracts (collectively, the “Q3 2017 Large Loss Events”),
which resulted in an underwriting loss of $838.7 million and added
156.0 percentage points to the combined ratio in the third quarter
of 2017.
- Gross premiums written decreased by
$14.6 million, or 2.3%, to $625.7 million, in the third quarter of
2018, compared to the third quarter of 2017, driven by a decrease
of $24.0 million in the Property segment, partially offset by an
increase of $9.4 million in the Casualty and Specialty segment.
Included in gross premiums written in the third quarter of 2018 was
$16.9 million of reinstatement premiums written associated with the
Q3 2018 Catastrophe Events, and $102.3 million of gross premiums
written associated with certain large, non-recurring reinsurance
transactions noted below, each within the Company’s Property
segment. Included in the gross premiums written in the third
quarter of 2017 was $169.8 million of reinstatement premiums
written associated with the Q3 2017 Large Loss Events.
- Net premiums earned and net income
available to RenaissanceRe common shareholders increased by $54.2
million and $41.9 million, respectively, as a result of certain
large, non-recurring reinsurance transactions which are reflected
in the Property segment. These transactions highlight the
Company’s differentiated strategy and capability to provide bespoke
or large solutions for its clients.
- Total investment result was a gain of
$94.3 million in the third quarter of 2018, generating an
annualized total investment return of 3.3%. The Company’s portfolio
of fixed maturity and short term investments had a yield to
maturity of 3.1% at September 30, 2018.
Net Negative Impact
Net negative impact includes the sum of estimates of net claims
and claim expenses incurred, earned reinstatement premiums assumed
and ceded, lost profit commissions and redeemable noncontrolling
interest. The Company’s estimates of net negative impact are based
on a review of its potential exposures, preliminary discussions
with certain counterparties and catastrophe modeling techniques.
The Company’s actual net negative impact, both individually and in
the aggregate, will vary from these estimates, perhaps materially.
Changes in these estimates will be recorded in the period in which
they occur.
Meaningful uncertainty remains regarding the estimates and the
nature and extent of the losses associated with the Q3 2018
Catastrophe Events, driven by the magnitude and recent occurrence
of each event, relatively limited claims data received to date, the
contingent nature of business interruption and other exposures,
potential uncertainties relating to reinsurance recoveries and
other factors inherent in loss estimation, among other things.
The financial data below provides additional information
detailing the net negative impact on the Company’s consolidated
financial statements in the third quarter of 2018 resulting from
the Q3 2018 Catastrophe Events.
Three months
ended September 30, 2018
TyphoonJebi
HurricaneFlorence
Other
Q32018CatastropheEvents (1)
Total
Q32018CatastropheEvents
(in thousands, except percentages) Net claims and claims expenses
incurred $ (90,228 ) $ (74,040 ) $ (32,763 ) $ (197,031 ) Assumed
reinstatement premiums earned 6,997 9,067 866 16,930 Ceded
reinstatement premiums earned — (112 ) — (112 ) Lost profit
commissions 1,973 313 (109 ) 2,177 Net
negative impact on underwriting result (81,258 ) (64,772 ) (32,006
) (178,036 ) Redeemable noncontrolling interest - DaVinciRe 13,507
8,593 3,987 26,087
Net negative impact on net income
available toRenaissanceRe common shareholders
$ (67,751 ) $ (56,179 ) $ (28,019 ) $ (151,949 ) Percentage
point impact on consolidated combined ratio 15.5 12.3 6.1 34.4
Net negative impact on Property segment underwriting result
$ (80,258 ) $ (64,772 ) $ (32,006 ) $ (177,036 )
Net negative impact on Casualty and
Specialty segmentunderwriting result
(1,000 ) — — (1,000 ) Net negative impact on
underwriting result $ (81,258 ) $ (64,772 ) $ (32,006 ) $
(178,036 ) (1) Other Q3 2018 Catastrophe Events includes
Typhoons Mangkhut and Trami and the wildfires in California during
the third quarter of 2018.
Underwriting Results by Segment
Property Segment
Gross premiums written in the Property segment were $301.4
million in the third quarter of 2018, a decrease of $24.0 million,
or 7.4%, compared to $325.4 million in the third quarter of
2017.
Gross premiums written in the catastrophe class of business were
$212.3 million in the third quarter of 2018, a decrease of $31.2
million, or 12.8%, compared to the third quarter of 2017. Included
in the catastrophe class of business in the third quarter of 2018
was $102.3 million of gross premiums written associated with the
large, non-recurring reinsurance transactions noted above and $16.8
million of reinstatement premiums written associated with the Q3
2018 Catastrophe Events, as compared to the third quarter of 2017
which included $162.2 million of reinstatement premiums written
associated with the Q3 2017 Large Loss Events. Excluding the
reinstatement premiums written in each period associated with the
respective catastrophe events, gross premiums written in the
catastrophe class of business would have increased by $114.3
million, or 140.6%, which was primarily a result of expanded
participation on existing transactions and certain new transactions
we believe have comparably attractive risk-return attributes,
including the large, non-recurring reinsurance transactions noted
above.
Gross premiums written in the other property class of business
were $89.1 million in the third quarter of 2018, an increase of
$7.2 million, or 8.8%, compared to the third quarter of 2017. The
increase in gross premiums written in the other property class of
business was primarily driven by growth in the Lloyd’s underwriting
platform, both from existing relationships and through new
opportunities.
Ceded premiums written in the Property segment were $68.8
million in the third quarter of 2018, an increase of $12.8 million,
or 22.8%, compared to the third quarter of 2017. The increase in
ceded premiums written was principally due to additional purchases
of retrocessional reinsurance as part of the management of the
Company’s risk portfolio.
The Property segment incurred an underwriting loss of $43.9
million and had a combined ratio of 115.0% in the third quarter of
2018, compared to an underwriting loss of $750.2 million and a
combined ratio of 322.7% in the third quarter of 2017. Principally
impacting the Property segment underwriting result and combined
ratio in the third quarter of 2018 were the Q3 2018 Catastrophe
Events, which resulted in a net negative impact on the underwriting
result of $177.0 million and added 63.2 percentage points to the
combined ratio. In addition, the underwriting results in the third
quarter of 2018 were positively impacted by $52.9 million of
underwriting income associated with the large, non-recurring
reinsurance transactions noted above. In comparison, the third
quarter of 2017 was impacted by the Q3 2017 Large Loss Events which
resulted in a net negative impact on the underwriting result of
$808.6 million and added 252.0 percentage points to the Property
segment combined ratio.
Casualty and Specialty Segment
Gross premiums written in the Casualty and Specialty segment
were $324.3 million in the third quarter of 2018, an increase of
$9.4 million, or 3.0%, compared to the third quarter of 2017. The
increase was principally due to continued and selective growth from
new business opportunities within certain classes of business.
The Casualty and Specialty segment generated underwriting income
of $14.9 million and had a combined ratio of 93.8% in the third
quarter of 2018, compared to an underwriting loss of $43.1 million
and a combined ratio of 120.4%, in the third quarter of 2017. The
improvement in the Casualty and Specialty segment combined ratio
was principally driven by a 23.5 percentage point decrease in the
net claims and claim expense ratio, primarily the result of
significant net claims and claim expenses associated with the Q3
2017 Large Loss Events in the third quarter of 2017. In addition,
the Casualty and Specialty segment was favorably impacted by a 3.1
percentage point decrease in the underwriting expense ratio, as a
result of decreases in both the net acquisition ratio and operating
expense ratio.
During the third quarter of 2018, the Casualty and Specialty
segment experienced net favorable development on prior accident
years net claims and claim expenses of $7.2 million, or 3.0
percentage points, compared to net adverse development of $4.8
million, or 2.2 percentage points, in the third quarter of 2017.
The net favorable development during the third quarter of 2018 was
principally driven by reported losses generally coming in lower
than expected on attritional net claims and claim expenses across a
number of lines of business.
Other Items
- The Company’s total investment result,
which includes the sum of net investment income and net realized
and unrealized gains and losses on investments, was a gain of $94.3
million in the third quarter of 2018, compared to a gain of $82.3
million in the third quarter of 2017, an increase of $12.0 million.
The increase in the total investment result was principally due to
an increase in net investment income, which was partially offset by
lower realized and unrealized gains on investments. The increase in
net investment income was principally driven by higher average
invested assets and higher interest rates within the Company’s
fixed maturity and short term investments portfolios, combined with
higher returns in the Company’s catastrophe bond portfolio included
in other investments. Conversely, net realized and unrealized gains
were lower in the third quarter of 2018, compared to the third
quarter of 2017, as a result of the higher interest rates
experienced during the current quarter, generating both realized
and unrealized losses in the Company’s fixed maturity investments
portfolio.
- Net income attributable to redeemable
noncontrolling interests in the third quarter of 2018 was $6.4
million, compared to a net loss attributable to redeemable
noncontrolling interests of $204.3 million in the third quarter of
2017. The improvement was principally due to DaVinciRe generating
underwriting income in the third quarter of 2018, compared to
significant underwriting losses in the third quarter of 2017 driven
by the Q3 2017 Large Loss Events. The Company’s ownership in
DaVinciRe was 22.1% at September 30, 2018, compared to 23.5%
at September 30, 2017. The Company expects its noncontrolling
economic ownership in DaVinciRe to fluctuate over time.
- The Company recognized income tax
expense of $1.5 million in the third quarter of 2018, compared to
an income tax benefit of $19.0 million in the third quarter of
2017, which was principally driven by the underwriting losses
associated with the Q3 2017 Large Loss Events.
- The Company currently estimates, on a
preliminary basis, that losses from Hurricane Michael will have an
estimated net negative impact on net income (loss) available
(attributable) to RenaissanceRe common shareholders of
approximately $100.0 million on its fourth quarter 2018 results of
operations.
This Press Release includes certain non-GAAP financial measures
including “operating income (loss) available (attributable) to
RenaissanceRe common shareholders”, “operating income (loss)
available (attributable) to RenaissanceRe common shareholders per
common share - diluted”, “operating return on average common equity
- annualized”, “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 “Investors - 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 will host a conference call on Wednesday, October
31, 2018 at 10:00 a.m. ET to discuss this release. Live broadcast
of the conference call will be available through the “Investors -
Webcasts & Presentations” section of the Company’s website at
www.renre.com.
About RenaissanceRe
RenaissanceRe is a global provider of reinsurance and insurance
that specializes in matching well-structured risks with efficient
sources of capital. The Company provides property, casualty and
specialty reinsurance and certain insurance solutions to customers,
principally through intermediaries. Established in 1993, the
Company has offices in Bermuda, Ireland, Singapore, Switzerland,
the United Kingdom and the United States.
Cautionary Statement Regarding Forward-Looking
Statements
Any forward-looking statements made in this Press Release
reflect RenaissanceRe’s current views with respect to future events
and financial performance and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These statements are subject to numerous factors that could cause
actual results to differ materially from those set forth in or
implied by such forward-looking statements, including the
following: the failure to obtain regulatory approvals or satisfy
other conditions to completion of the proposed Tokio Millennium Re
transaction; risks that the proposed Tokio Millennium Re
transaction disrupts current plans and operations; the ability to
recognize the benefits of the proposed Tokio Millenium Re
transaction; the amount of the costs, fees, expenses and charges
related to the proposed Tokio Millennium Re transaction; the
frequency and severity of catastrophic and other events that the
Company covers; the effectiveness of the Company’s claims and claim
expense reserving process; the Company’s ability to maintain its
financial strength ratings; the effect of climate change on the
Company’s business; collection on claimed retrocessional coverage,
and new retrocessional reinsurance being available on acceptable
terms and providing the coverage that we intended to obtain; the
effects of U.S. tax reform legislation and possible future tax
reform legislation and regulations, including changes to the tax
treatment of the Company’s shareholders or investors in the
Company’s joint ventures or other entities the Company manages; the
effect of emerging claims and coverage issues; continued soft
reinsurance underwriting market conditions; the Company’s reliance
on a small and decreasing number of reinsurance brokers and other
distribution services for the preponderance of its revenue; the
Company’s exposure to credit loss from counterparties in the normal
course of business; the effect of continued challenging economic
conditions throughout the world; a contention by the Internal
Revenue Service that Renaissance Reinsurance Ltd., or any of the
Company’s other Bermuda subsidiaries, is subject to taxation in the
U.S.; the success of any of the Company’s strategic investments or
acquisitions, including the Company’s ability to manage its
operations as its product and geographical diversity increases; the
Company’s ability to retain key senior officers and to attract or
retain the executives and employees necessary to manage its
business; the performance of the Company’s investment portfolio;
losses that the Company could face from terrorism, political unrest
or war; the effect of cybersecurity risks, including technology
breaches or failure on the Company’s business; the Company’s
ability to successfully implement its business strategies and
initiatives; the Company’s ability to determine the impairments
taken on investments; the effect of inflation; the ability of the
Company’s ceding companies and delegated authority counterparties
to accurately assess the risks they underwrite; the effect of
operational risks, including system or human failures; the
Company’s ability to effectively manage capital on behalf of
investors in joint ventures or other entities it manages; foreign
currency exchange rate fluctuations; the Company’s ability to raise
capital if necessary; the Company’s ability to comply with
covenants in its debt agreements; changes to the regulatory systems
under which the Company operates, including as a result of
increased global regulation of the insurance and reinsurance
industry; changes in Bermuda laws and regulations and the political
environment in Bermuda; the Company’s dependence on the ability of
its operating subsidiaries to declare and pay dividends; aspects of
the Company’s corporate structure that may discourage third-party
takeovers or other transactions; the cyclical nature of the
reinsurance and insurance industries; adverse legislative
developments that reduce the size of the private markets the
Company serves or impede their future growth; consolidation of
competitors, customers and insurance and reinsurance brokers; the
effect on the Company’s business of the highly competitive nature
of its industry, including the effect of new entrants to, competing
products for and consolidation in the (re)insurance industry; other
political, regulatory or industry initiatives adversely impacting
the Company; increasing barriers to free trade and the free flow of
capital; international restrictions on the writing of reinsurance
by foreign companies and government intervention in the natural
catastrophe market; the effect of Organisation for Economic
Co-operation and Development or European Union (“EU”) measures to
increase the Company’s taxes and reporting requirements; the effect
of the vote by the U.K. to leave the EU; changes in regulatory
regimes and accounting rules that may impact financial results
irrespective of business operations; the Company’s need to make
many estimates and judgments in the preparation of its financial
statements; and other factors affecting future results disclosed in
RenaissanceRe’s filings with the Securities and Exchange
Commission, including its Annual Reports on Form 10-K and Quarterly
Reports on Form 10-Q.
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, 2018 September 30,
2017 September 30, 2018 September
30, 2017 Revenues Gross premiums written $
625,677 $ 640,269 $ 2,762,672 $ 2,389,774
Net premiums written $ 453,255 $ 483,221 $ 1,720,808 $
1,583,102 Decrease (increase) in unearned premiums 78,594
64,571 (319,292 ) (287,000 ) Net premiums earned 531,849
547,792 1,401,516 1,296,102 Net investment income 80,696 40,257
208,528 148,745 Net foreign exchange (losses) gains (4,566 ) (156 )
(11,496 ) 11,118 Equity in earnings of other ventures 7,648 1,794
14,331 5,830 Other income 497 2,996 480 7,053 Net realized and
unrealized gains (losses) on investments 13,630 42,052
(86,415 ) 143,538
Total revenues 629,754
634,735 1,526,944 1,612,386
Expenses Net claims and claim expenses incurred 410,510
1,221,696 642,380 1,557,364 Acquisition expenses 109,761 76,761
312,524 248,294 Operational expenses 40,593 42,537 119,408 131,586
Corporate expenses 6,841 4,413 21,875 14,335 Interest expense
11,769 11,799 35,304 32,416
Total
expenses 579,474 1,357,206 1,131,491
1,983,995 Income (loss) before taxes 50,280 (722,471 )
395,453 (371,609 ) Income tax (expense) benefit (1,451 ) 18,977
(2,550 ) 14,739
Net income (loss) 48,829
(703,494 ) 392,903 (356,870 ) Net (income) loss attributable to
noncontrolling interests (6,440 ) 204,277 (90,822 ) 132,338
Net income (loss) attributable to RenaissanceRe
42,389 (499,217 ) 302,081 (224,532 ) Dividends on preference shares
(9,708 ) (5,595 ) (20,899 ) (16,786 )
Net income (loss) available
(attributable) toRenaissanceRe common shareholders
$ 32,681 $ (504,812 ) $ 281,182 $ (241,318 )
Net income (loss) available (attributable)
to RenaissanceRecommon shareholders per common share - basic
$ 0.82 $ (12.75 ) $ 7.02 $ (6.04 )
Net income (loss) available (attributable)
to RenaissanceRecommon shareholders per common share - diluted
$ 0.82 $ (12.75 ) $ 7.02 $ (6.04 )
Operating income (loss) available
(attributable) toRenaissanceRe common shareholders per common share
-diluted (1)
$ 0.52 $ (13.74 ) $ 9.15 $ (9.35 ) Average shares
outstanding - basic 39,624 39,591 39,606 39,979 Average shares
outstanding - diluted 39,637 39,591 39,627 39,979 Net claims
and claim expense ratio 77.2 % 223.0 % 45.8 % 120.2 % Underwriting
expense ratio 28.3 % 21.8 % 30.9 % 29.3 % Combined ratio 105.5 %
244.8 % 76.7 % 149.5 % Return on average common equity -
annualized 3.1 % (47.2 )% 9.1 % (7.4 )% Operating return on average
common equity - annualized (1) 1.9 % (50.8 )% 11.8 % (11.4 )% (1)
See Comments on Regulation G for a reconciliation of
non-GAAP financial measures.
RenaissanceRe Holdings Ltd.
Summary Consolidated Balance Sheets (in thousands of United
States Dollars, except per share amounts)
September 30, 2018
December 31, 2017
Assets (Unaudited) (Audited) Fixed maturity investments
trading, at fair value $ 7,814,779 $ 7,426,555 Short term
investments, at fair value 2,461,415 991,863 Equity investments
trading, at fair value 413,271 388,254 Other investments, at fair
value 738,919 594,793 Investments in other ventures, under equity
method 117,307 101,974 Total investments 11,545,691
9,503,439 Cash and cash equivalents 453,041 1,361,592 Premiums
receivable 1,787,095 1,304,622 Prepaid reinsurance premiums 795,496
533,546 Reinsurance recoverable 1,204,059 1,586,630 Accrued
investment income 46,690 42,235 Deferred acquisition costs 497,733
426,551 Receivable for investments sold 406,062 103,145 Other
assets 121,724 121,226 Goodwill and other intangibles 238,803
243,145
Total assets $ 17,096,394 $ 15,226,131
Liabilities, Noncontrolling Interests and Shareholders’
Equity Liabilities Reserve for claims and claim expenses
$ 4,952,498 $ 5,080,408 Unearned premiums 2,058,851 1,477,609 Debt
990,749 989,623 Reinsurance balances payable 1,970,913 989,090
Payable for investments purchased 555,556 208,749 Other liabilities
147,328 792,771
Total liabilities 10,675,895
9,538,250 Redeemable noncontrolling interest 1,533,978 1,296,506
Shareholders’ Equity Preference shares 650,000 400,000
Common shares 40,266 40,024 Additional paid-in capital 42,395
37,355 Accumulated other comprehensive (loss) income (1,483 ) 224
Retained earnings 4,155,343 3,913,772
Total shareholders’
equity attributable to RenaissanceRe 4,886,521 4,391,375
Total liabilities, noncontrolling interests and shareholders’
equity $ 17,096,394 $ 15,226,131
Book value
per common share $ 105.21 $ 99.72
RenaissanceRe
Holdings Ltd. Supplemental Financial Data - Segment
Information (in thousands of United States Dollars, except
percentages) (Unaudited)
Three months ended September 30,
2018 Property
Casualty andSpecialty
Other Total Gross premiums written $
301,413 $ 324,264 $ — $ 625,677 Net
premiums written $ 232,632 $ 220,623 $ — $
453,255 Net premiums earned $ 293,059 $ 238,791 $ (1 ) $
531,849 Net claims and claim expenses incurred 265,857 144,671 (18
) 410,510 Acquisition expenses 45,524 64,238 (1 ) 109,761
Operational expenses 25,577 14,976 40 40,593
Underwriting (loss) income $ (43,899 ) $ 14,906 $ (22
) (29,015 ) Net investment income 80,696 80,696 Net foreign
exchange losses (4,566 ) (4,566 ) Equity in earnings of other
ventures 7,648 7,648 Other income 497 497 Net realized and
unrealized gains on investments 13,630 13,630 Corporate expenses
(6,841 ) (6,841 ) Interest expense (11,769 ) (11,769 ) Income
before taxes and redeemable noncontrolling interests 50,280 Income
tax expense (1,451 ) (1,451 ) Net income attributable to redeemable
noncontrolling interests (6,440 ) (6,440 ) Dividends on preference
shares (9,708 ) (9,708 ) Net income attributable to RenaissanceRe
common shareholders $ 32,681 Net claims and claim
expenses incurred – current accident year $ 268,022 $ 151,904 $ — $
419,926 Net claims and claim expenses incurred – prior accident
years (2,165 ) (7,233 ) (18 ) (9,416 ) Net claims and claim
expenses incurred – total $ 265,857 $ 144,671 $ (18 )
$ 410,510 Net claims and claim expense ratio –
current accident year 91.5 % 63.6 % 79.0 % Net claims and claim
expense ratio – prior accident years (0.8 )% (3.0 )% (1.8 )% Net
claims and claim expense ratio – calendar year 90.7 % 60.6 % 77.2 %
Underwriting expense ratio 24.3 % 33.2 % 28.3 % Combined ratio
115.0 % 93.8 % 105.5 %
Three months ended September 30,
2017 Property
Casualty andSpecialty
Other Total Gross premiums written $ 325,395 $
314,881 $ (7 ) $ 640,269 Net premiums written $
269,393 $ 213,835 $ (7 ) $ 483,221 Net
premiums earned $ 336,838 $ 210,961 $ (7 ) $ 547,792 Net claims and
claim expenses incurred 1,044,418 177,433 (155 ) 1,221,696
Acquisition expenses 17,514 59,248 (1 ) 76,761 Operational expenses
25,123 17,389 25 42,537 Underwriting
(loss) income $ (750,217 ) $ (43,109 ) $ 124 (793,202 ) Net
investment income 40,257 40,257 Net foreign exchange losses (156 )
(156 ) Equity in earnings of other ventures 1,794 1,794 Other
income 2,996 2,996 Net realized and unrealized gains on investments
42,052 42,052 Corporate expenses (4,413 ) (4,413 ) Interest expense
(11,799 ) (11,799 ) Loss before taxes and redeemable noncontrolling
interests (722,471 ) Income tax benefit 18,977 18,977 Net loss
attributable to redeemable noncontrolling interests 204,277 204,277
Dividends on preference shares (5,595 ) (5,595 ) Net loss
attributable to RenaissanceRe common shareholders $ (504,812 )
Net claims and claim expenses incurred – current accident
year $ 1,036,586 $ 172,675 $ — $ 1,209,261 Net claims and claim
expenses incurred – prior accident years 7,832 4,758
(155 ) 12,435 Net claims and claim expenses incurred – total
$ 1,044,418 $ 177,433 $ (155 ) $ 1,221,696
Net claims and claim expense ratio – current accident year
307.7 % 81.9 % 220.8 % Net claims and claim expense ratio – prior
accident years 2.4 % 2.2 % 2.2 % Net claims and claim expense ratio
– calendar year 310.1 % 84.1 % 223.0 % Underwriting expense ratio
12.6 % 36.3 % 21.8 % Combined ratio 322.7 % 120.4 % 244.8 %
RenaissanceRe Holdings Ltd. Supplemental Financial Data -
Segment Information (in thousands of United States Dollars,
except percentages) (Unaudited)
Nine months ended
September 30, 2018 Property
Casualty andSpecialty
Other Total Gross premiums written $
1,561,008 $ 1,201,664 $ — $ 2,762,672
Net premiums written $ 884,541 $ 836,267 $ — $
1,720,808 Net premiums earned $ 722,246 $ 679,271 $ (1 ) $
1,401,516 Net claims and claim expenses incurred 222,195 420,273
(88 ) 642,380 Acquisition expenses 127,095 185,429 — 312,524
Operational expenses 75,933 43,121 354 119,408
Underwriting income (loss) $ 297,023 $ 30,448
$ (267 ) 327,204 Net investment income 208,528 208,528 Net foreign
exchange losses (11,496 ) (11,496 ) Equity in earnings of other
ventures 14,331 14,331 Other income 480 480 Net realized and
unrealized losses on investments (86,415 ) (86,415 ) Corporate
expenses (21,875 ) (21,875 ) Interest expense (35,304 ) (35,304 )
Income before taxes and redeemable noncontrolling interests 395,453
Income tax expense (2,550 ) (2,550 ) Net income attributable to
redeemable noncontrolling interests (90,822 ) (90,822 ) Dividends
on preference shares (20,899 ) (20,899 ) Net income attributable to
RenaissanceRe common shareholders $ 281,182 Net
claims and claim expenses incurred – current accident year $
395,067 $ 444,293 $ — $ 839,360 Net claims and claim expenses
incurred – prior accident years (172,872 ) (24,020 ) (88 ) (196,980
) Net claims and claim expenses incurred – total $ 222,195 $
420,273 $ (88 ) $ 642,380 Net claims and claim
expense ratio – current accident year 54.7 % 65.4 % 59.9 % Net
claims and claim expense ratio – prior accident years (23.9 )% (3.5
)% (14.1 )% Net claims and claim expense ratio – calendar year 30.8
% 61.9 % 45.8 % Underwriting expense ratio 28.1 % 33.6 % 30.9 %
Combined ratio 58.9 % 95.5 % 76.7 %
Nine months ended
September 30, 2017 Property
Casualty andSpecialty
Other Total Gross premiums written $ 1,345,271
$ 1,044,510 $ (7 ) $ 2,389,774 Net premiums written $
895,728 $ 687,381 $ (7 ) $ 1,583,102 Net
premiums earned $ 716,024 $ 580,085 $ (7 ) $ 1,296,102 Net claims
and claim expenses incurred 1,116,273 441,801 (710 ) 1,557,364
Acquisition expenses 75,117 173,179 (2 ) 248,294 Operational
expenses 76,841 54,708 37 131,586
Underwriting (loss) income $ (552,207 ) $ (89,603 ) $ 668
(641,142 ) Net investment income 148,745 148,745 Net foreign
exchange gains 11,118 11,118 Equity in earnings of other ventures
5,830 5,830 Other income 7,053 7,053 Net realized and unrealized
gains on investments 143,538 143,538 Corporate expenses (14,335 )
(14,335 ) Interest expense (32,416 ) (32,416 ) Loss before taxes
and redeemable noncontrolling interests (371,609 ) Income tax
benefit 14,739 14,739 Net loss attributable to redeemable
noncontrolling interests 132,338 132,338 Dividends on preference
shares (16,786 ) (16,786 ) Net loss attributable to RenaissanceRe
common shareholders $ (241,318 ) Net claims and claim
expenses incurred – current accident year $ 1,133,241 $ 427,786 $ —
$ 1,561,027 Net claims and claim expenses incurred – prior accident
years (16,968 ) 14,015 (710 ) (3,663 ) Net claims and claim
expenses incurred – total $ 1,116,273 $ 441,801 $
(710 ) $ 1,557,364 Net claims and claim expense ratio
– current accident year 158.3 % 73.7 % 120.4 % Net claims and claim
expense ratio – prior accident years (2.4 )% 2.5 % (0.2 )% Net
claims and claim expense ratio – calendar year 155.9 % 76.2 % 120.2
% Underwriting expense ratio 21.2 % 39.2 % 29.3 % Combined ratio
177.1 % 115.4 % 149.5 %
RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Gross Premiums Written (in
thousands of United States Dollars) (Unaudited)
Three months ended Nine months ended
September 30, 2018
September 30, 2017 September 30,
2018 September 30, 2017
Property
Segment
Catastrophe $ 212,330 $ 243,514 $ 1,240,387 $ 1,069,438 Other
property 89,083 81,881 320,621 275,833
Property segment gross premiums written $ 301,413 $ 325,395
$ 1,561,008 $ 1,345,271
Casualty and
Specialty Segment
General casualty (1) $ 97,026 $ 107,055 $ 377,300 $ 337,342
Professional liability (2) 111,536 101,482 366,460 335,235
Financial lines (3) 69,253 66,186 250,735 220,643 Other (4) 46,449
40,158 207,169 151,290 Casualty and Specialty
segment gross premiums written $ 324,264 $ 314,881 $
1,201,664 $ 1,044,510 (1) Includes automobile
liability, casualty clash, employer’s liability, umbrella or excess
casualty, workers’ compensation and general liability (2) Includes
directors and officers, medical malpractice, and professional
indemnity. (3) Includes financial guaranty, mortgage guaranty,
political risk, surety and trade credit. (4) Includes accident and
health, agriculture, aviation, cyber, energy, marine, satellite and
terrorism. Lines of business such as regional multi-line and whole
account may have characteristics of various other classes of
business, and are allocated accordingly.
RenaissanceRe Holdings
Ltd. Supplemental Financial Data - Total Investment
Result (in thousands of United States Dollars, except
percentages) (Unaudited)
Three
months ended Nine months ended September 30,
2018 September 30, 2017 September 30,
2018 September 30, 2017 Fixed maturity
investments $ 55,725 $ 45,305 $ 151,784 $ 133,080 Short term
investments 9,403 2,771 22,340 7,476 Equity investments trading 903
930 3,091 2,630 Other investments Private equity investments 8,723
6,371 12,149 20,784 Other 8,665 (11,491 ) 27,346 (4,520 ) Cash and
cash equivalents 1,104 352 2,708 836
84,523 44,238 219,418 160,286 Investment expenses (3,827 ) (3,981 )
(10,890 ) (11,541 )
Net investment income 80,696
40,257 208,528 148,745 Gross realized
gains 5,229 16,343 14,945 43,053 Gross realized losses (15,327 )
(6,126 ) (67,699 ) (29,902 ) Net realized (losses) gains on fixed
maturity investments (10,098 ) 10,217 (52,754 ) 13,151
Net unrealized (losses) gains on fixed
maturity investmentstrading
(8,730 ) 5,545 (73,522 ) 48,940
Net realized and unrealized gains (losses)
on investments-related derivatives
2,563 (4,020 ) (763 ) (4,344 ) Net realized gains on equity
investments trading 21,259 13,675 21,841 49,736 Net unrealized
gains on equity investments trading 8,636 16,635
18,783 36,055
Net realized and unrealized gains
(losses) on investments 13,630 42,052 (86,415 )
143,538
Total investment result $ 94,326 $
82,309 $ 122,113 $ 292,283
Total
investment return - annualized 3.3 % 3.4 % 1.5 % 4.1 %
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 within the meaning of Regulation G. The Company has
provided these financial measures in previous investor
communications and the Company’s management believes that these
measures 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 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 investments and the associated
income tax expense or benefit. 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, equity
investments trading and investments-related derivatives and the
associated income tax expense or benefit of those fluctuations. 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 per share amounts andpercentages)
September 30, 2018 September 30,
2017 September 30, 2018 September
30, 2017
Net income (loss) available (attributable)
to RenaissanceRecommon shareholders
$ 32,681 $ (504,812 ) $ 281,182 $ (241,318 )
Adjustment for net realized and unrealized
(gains) losses oninvestments
(13,630 ) (42,052 ) 86,415 (143,538 ) Adjustment for income tax
expense (benefit) (1) 1,536 2,711 (2,170 ) 11,203
Operating income (loss) available
(attributable) toRenaissanceRe common shareholders
$ 20,587 $ (544,153 ) $ 365,427 $ (373,653 )
Net income (loss) available (attributable)
to RenaissanceRecommon shareholders per common share - diluted
$ 0.82 $ (12.75 ) $ 7.02 $ (6.04 )
Adjustment for net realized and unrealized
(gains) losses oninvestments
(0.34 ) (1.06 ) 2.18 (3.59 ) Adjustment for income tax expense
(benefit) (1) 0.04 0.07 (0.05 ) 0.28
Operating income (loss) available
(attributable) toRenaissanceRe common shareholders per common share
-diluted
$ 0.52 $ (13.74 ) $ 9.15 $ (9.35 ) Return on
average common equity - annualized 3.1 % (47.2 )% 9.1 % (7.4 )%
Adjustment for net realized and unrealized
(gains) losses oninvestments
(1.3 )% (3.9 )% 2.8 % (4.3 )% Adjustment for income tax expense
(benefit) (1) 0.1 % 0.3 % (0.1 )% 0.3 % Operating return on average
common equity - annualized 1.9 % (50.8 )% 11.8 % (11.4 )% (1)
Adjustment for income tax expense (benefit) represents the
income tax expense (benefit) associated with the adjustment for net
realized and unrealized (gains) losses on investments. The income
tax impact is estimated by applying the statutory rates of
applicable jurisdictions, after consideration of other relevant
factors.
The Company has 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. 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, 2018 June
30, 2018 March 31, 2018
December 31, 2017 September 30,
2017 Book value per common share $ 105.21 $ 104.56 $ 100.29
$ 99.72 $ 100.00
Adjustment for goodwill and
otherintangibles (1)
(6.63 ) (6.69 ) (6.66 ) (6.49 ) (6.55 ) Tangible book value per
common share 98.58 97.87 93.63 93.23 93.45 Adjustment for
accumulated dividends 18.99 18.66 18.33 18.00
17.68
Tangible book value per common share
plusaccumulated dividends
$ 117.57 $ 116.53 $ 111.96 $ 111.23 $
111.13
Quarterly change in book value per
commonshare
0.6 % 4.3 % 0.6 % (0.3 )% (11.6 )%
Quarterly change in tangible book value
percommon share plus change in accumulateddividends
1.1 % 4.9 % 0.8 % 0.1 % (12.0 )%
Year to date change in book value
percommon share
5.5 % 4.9 % 0.6 % (8.0 )% (7.8 )%
Year to date change in tangible book value
percommon share plus change inaccumulated dividends
6.8 % 5.7 % 0.8 % (7.2 )% (7.3 )% (1) At September 30, 2018,
June 30, 2018, March 31, 2018, December 31, 2017 and September 30,
2017, goodwill and other intangibles included $28.4 million, $29.1
million, $26.3 million, $16.7 million and $17.4 million,
respectively, of goodwill and other intangibles included in
investments in other ventures, under equity method.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181030006143/en/
INVESTOR:Keith McCueSenior Vice President, Finance &
Investor RelationsRenaissanceRe Holdings Ltd.(441)
239-4830orMEDIA:Keil GuntherVice President, Marketing &
CommunicationsRenaissanceRe Holdings Ltd.(441) 239-4932orKekst and
CompanyPeter Hill or Dawn Dover(212) 521-4800
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