RenaissanceRe Holdings Ltd. (NYSE: RNR) (the “Company” or
“RenaissanceRe”) today reported net income available to
RenaissanceRe common shareholders of $367.9 million, or $8.35 per
diluted common share, in the second quarter of 2019, compared to
$191.8 million, or $4.78 per diluted common share, in the second
quarter of 2018. Operating income available to RenaissanceRe common
shareholders was $212.6 million, or $4.78 per diluted common share,
in the second quarter of 2019, compared to $204.3 million, or $5.10
per diluted common share, in the second quarter of 2018. The
Company reported an annualized return on average common equity of
28.9% and an annualized operating return on average common equity
of 16.7% in the second quarter of 2019, compared to 18.6% and
19.8%, respectively, in the second quarter of 2018. Book value per
common share increased $8.12, or 7.3%, to $119.17 in the second
quarter of 2019, compared to a 4.3% increase in the second quarter
of 2018. Tangible book value per common share plus accumulated
dividends increased $8.52, or 8.2%, to $132.57 in the second
quarter of 2019, compared to a 4.9% increase in the second quarter
of 2018.
Kevin J. O’Donnell, President and Chief Executive Officer of
RenaissanceRe, commented: “I am pleased with our performance in the
second quarter, where we achieved annualized operating return on
average common equity of 16.7% and growth in tangible book value
per common share plus accumulated dividends of 8.2%. This strong
performance was due to the diligent execution of our differentiated
strategy, resulting in solid profits, material growth and improved
operational efficiency. The portfolio of risks we have constructed
is larger, more diverse and increasingly efficient, and poised to
drive superior long-term returns for our shareholders.”
Second Quarter of 2019 Summary
- Gross premiums written increased by $499.6 million, or 51.1%,
to $1.5 billion, in the second quarter of 2019, compared to the
second quarter of 2018, driven by an increase of $286.6 million in
the Property segment and an increase of $213.0 million in the
Casualty and Specialty segment.
- Underwriting income of $170.8 million and a combined ratio of
81.3% in the second quarter of 2019, compared to $226.6 million and
47.2%, respectively, in the second quarter of 2018. The Property
segment generated underwriting income of $151.7 million and had a
combined ratio of 64.3%. The Casualty and Specialty segment
generated underwriting income of $19.0 million and had a combined
ratio of 96.1%. Underwriting income decreased in the second quarter
of 2019 compared to the second quarter of 2018, primarily as a
result of changes in the estimates of the net negative impact of
the 2017 Large Loss Events (as defined herein) during the second
quarter of 2018, resulting in a net positive impact on the
underwriting result in the second quarter of 2018, partially offset
by higher net earned premium in the second quarter of 2019 as a
result of growth across all business lines.
- Total investment result was a gain of $309.8 million in the
second quarter of 2019, generating an annualized total investment
return of 8.0%, driven by net realized and unrealized gains on
investments of $194.0 million, comprised of $143.3 million from
fixed maturity investments and $50.7 million from equity
investments and investments-related derivatives.
- Over $700.0 million of capital raised through the Company’s
third-party vehicles, including DaVinciRe Holdings Ltd.
(“DaVinciRe”), Upsilon RFO Re Ltd. (“Upsilon RFO”), Vermeer
Reinsurance Ltd. (“Vermeer”) and RenaissanceRe Medici Fund
Ltd.
Acquisition of Tokio Millennium Re
As previously announced, on March 22, 2019, the Company
completed its acquisition of Tokio Millennium Re AG (now known as
RenaissanceRe Europe AG), Tokio Millennium Re (UK) Limited (now
known as RenaissanceRe (UK) Limited) and their subsidiaries
(collectively, the “TMR Group Entities”). The operating activities
of the TMR Group Entities for the period from the acquisition date,
March 22, 2019, through June 30, 2019 are included in the Company’s
consolidated statements of operations for the three and six months
ended June 30, 2019. The Company accounted for the acquisition of
the TMR Group Entities under the acquisition method of accounting
in accordance with Financial Accounting Standards Board Accounting
Standards Codification Topic Business Combinations.
The second quarter of 2019 was the first full quarter that
reflected the results of the TMR Group Entities on the Company’s
results of operations. As such, the results of operations for the
three months ended June 30, 2019, compared to the three months
ended June 30, 2018, should be viewed in that context. In addition,
the results of operations for the three months ended June 30, 2019
may not be reflective of the ultimate ongoing business of the
combined entities.
Underwriting Results by Segment
Property Segment
Gross premiums written in the Property segment were $839.2
million in the second quarter of 2019, an increase of $286.6
million, or 51.9%, compared to $552.6 million in the second quarter
of 2018.
Gross premiums written in the catastrophe class of business were
$602.7 million in the second quarter of 2019, an increase of $164.9
million, or 37.7%, compared to the second quarter of 2018. The
increase in gross premiums written in the catastrophe class of
business in the second quarter of 2019 was driven by expanded
participation on existing transactions and certain new
transactions, in addition to the impact of the acquisition of the
TMR Group Entities.
Gross premiums written in the other property class of business
were $236.5 million in the second quarter of 2019, an increase of
$121.6 million, or 105.9%, compared to the second quarter of 2018.
The increase in gross premiums written in the other property class
of business was primarily driven by growth across a number of the
Company’s underwriting platforms, from existing relationships, new
opportunities, as well as the business acquired in connection with
the acquisition of the TMR Group Entities.
Ceded premiums written in the Property segment were $295.1
million in the second quarter of 2019, an increase of $40.3
million, or 15.8%, compared to the second quarter of 2018. The
increase in ceded premiums written in the second quarter of 2019
was principally due to a portion of the increase in gross premiums
written in the catastrophe class of business noted above being
ceded to third-party investors in the Company’s managed vehicles,
as well as an overall increase in ceded purchases.
The Property segment generated underwriting income of $151.7
million and had a combined ratio of 64.3% in the second quarter of
2019, compared to $213.7 million and negative 4.7%, respectively,
in the second quarter of 2018. During the second quarter of 2019,
the Property segment underwriting result included a lower current
accident year net claims and claim expense ratio driven by a
relatively lower level of insured catastrophe events, compared to
the second quarter of 2018, partially offset by net adverse
development on prior accident years net claims and claim expenses
of $10.8 million, or an increase in the combined ratio of 2.6
percentage points, primarily driven by higher than expected losses
in the other property class of business.
As previously reported, the second quarter of 2018 results, in
particular the underwriting result and combined ratio of the
Company’s Property segment, were favorably impacted by changes in
the estimates of the net negative impact associated with Hurricanes
Harvey, Irma and Maria, the Mexico City Earthquake, and the
wildfires in California during the fourth quarter of 2017
(collectively, the “2017 Large Loss Events”), resulting in a net
positive impact on the Property segment underwriting result of
$86.1 million, and a corresponding reduction in the Property
segment combined ratio of 50.1 percentage points. 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, 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.
Casualty and Specialty Segment
Gross premiums written in the Casualty and Specialty segment
were $637.7 million in the second quarter of 2019, an increase of
$213.0 million, or 50.1%, compared to the second quarter of 2018.
The increase was due to business acquired in connection with the
acquisition of the TMR Group Entities, as well as growth from new
and existing business opportunities written in the current and
prior periods across various classes of business within the
segment.
The Casualty and Specialty segment generated underwriting income
of $19.0 million and had a combined ratio of 96.1% in the second
quarter of 2019, compared to $13.0 million and 94.2%, respectively,
in the second quarter of 2018. The increase in underwriting income
was primarily due to the growth in net premiums earned as a result
of the business acquired in connection with the acquisition of the
TMR Group Entities. The increase in the Casualty and Specialty
segment combined ratio was driven by an increase of 3.3 percentage
points in the net claims and claim expense ratio, principally the
result of less net favorable development on prior accident years
net claims and claim expenses in the second quarter of 2019
compared to the second quarter of 2018. Partially offsetting the
increase in the net claims and claim expense ratio was a 1.4
percentage point decrease in the underwriting expense ratio
primarily the result of a decrease in the operating expense ratio
due to improved operating leverage as a result of the business
acquired in connection with the acquisition of the TMR Group
Entities.
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 $309.8 million in the second
quarter of 2019, compared to a gain of $53.5 million in the second
quarter of 2018, an increase of $256.4 million. The increase in the
total investment result was principally due to significant net
realized and unrealized gains from the Company’s fixed maturity,
public equity and investments-related derivative portfolios,
combined with higher net investment income primarily driven by the
Company’s fixed maturity, short term and private equity investment
portfolios. Also driving the investment result for the second
quarter of 2019 were higher average invested assets primarily
resulting from the acquisition of the TMR Group Entities, combined
with capital raised in certain of the Company’s consolidated
third-party capital vehicles, namely DaVinciRe, Vermeer and Upsilon
RFO, and the subsequent investment of those funds as part of the
Company’s consolidated investment portfolio.
- Net income attributable to redeemable noncontrolling interests
in the second quarter of 2019 was $71.8 million, compared to $54.5
million in the second quarter of 2018. The increase was primarily
driven by the results of operations of Vermeer being included in
net income attributable to redeemable noncontrolling interests in
the second quarter of 2019, combined with DaVinciRe generating
higher underwriting income and higher total investment
results.
- During the second quarter of 2019, the Company recorded $14.5
million of corporate expenses associated with the acquisition of
the TMR Group Entities, comprised of $9.2 million of
compensation-related costs, $3.4 million of integration-related
costs and $1.9 million of transaction-related costs.
- On April 2, 2019, the Company issued $400.0 million of its
3.600% Senior Notes due April 15, 2029. A portion of the net
proceeds were used to repay, in full, the $200.0 million
outstanding under the Company’s revolving credit facility, which
was drawn on March 20, 2019 in connection with the acquisition of
the TMR Group Entities. The remainder of the net proceeds will be
used for general corporate purposes.
- In the second quarter of 2019, total fee income increased $7.5
million, to $40.2 million, compared to $32.7 million in the second
quarter of 2018, primarily driven by an increase in the dollar
value of capital being managed, combined with improved underlying
performance.
- Income tax expense was $9.5 million in the second quarter of
2019, compared to $4.5 million in the second quarter of 2018,
principally driven by investment gains in our U.S.-based
operations.
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”, “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, July 24,
2019 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, Australia, 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 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, including the trend towards
increasingly frequent and severe climate events; collection on
claimed retrocessional coverage, and new retrocessional reinsurance
being available on acceptable terms and providing the coverage that
we intended to obtain; the effect of emerging claims and coverage
issues; 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;
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 effects 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
industries; 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; the Company’s ability to comply with applicable
sanctions and foreign corrupt practices laws; 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; risks that the ongoing
integration of the TMR Group Entities disrupts or distracts from
current plans and operations; the Company’s ability to recognize
the benefits of the acquisition of the TMR Group Entities; 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
Six months ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Revenues
Gross premiums written
$
1,476,908
$
977,343
$
3,041,203
$
2,136,995
Net premiums written
$
1,022,965
$
604,509
$
1,951,996
$
1,267,553
Increase in unearned premiums
(111,463
)
(175,124
)
(490,466
)
(397,886
)
Net premiums earned
911,502
429,385
1,461,530
869,667
Net investment income
115,832
71,356
197,294
127,832
Net foreign exchange gains (losses)
9,309
(10,687
)
6,463
(6,930
)
Equity in earnings of other ventures
6,812
5,826
11,473
6,683
Other income (loss)
922
1,225
4,093
(17
)
Net realized and unrealized gains (losses)
on investments
194,003
(17,901
)
364,648
(100,045
)
Total revenues
1,238,380
479,204
2,045,501
897,190
Expenses
Net claims and claim expenses incurred
453,373
60,167
680,408
231,870
Acquisition expenses
227,482
105,052
351,433
202,763
Operational expenses
59,814
37,543
104,747
78,815
Corporate expenses
23,847
8,301
62,636
15,034
Interest expense
15,534
11,768
27,288
23,535
Total expenses
780,050
222,831
1,226,512
552,017
Income before taxes
458,330
256,373
818,989
345,173
Income tax expense
(9,475
)
(4,506
)
(17,006
)
(1,099
)
Net income
448,855
251,867
801,983
344,074
Net income attributable to noncontrolling
interests
(71,812
)
(54,483
)
(142,034
)
(84,382
)
Net income attributable to
RenaissanceRe
377,043
197,384
659,949
259,692
Dividends on preference shares
(9,189
)
(5,596
)
(18,378
)
(11,191
)
Net income available to RenaissanceRe
common shareholders
$
367,854
$
191,788
$
641,571
$
248,501
Net income available to RenaissanceRe
common shareholders per common share - basic
$
8.36
$
4.78
$
14.82
$
6.21
Net income available to RenaissanceRe
common shareholders per common share - diluted
$
8.35
$
4.78
$
14.81
$
6.21
Operating income available to
RenaissanceRe common shareholders per common share - diluted
(1)
$
4.78
$
5.10
$
8.39
$
8.18
Average shares outstanding - basic
43,483
39,641
42,774
39,597
Average shares outstanding - diluted
43,521
39,654
42,806
39,622
Net claims and claim expense ratio
49.7
%
14.0
%
46.6
%
26.7
%
Underwriting expense ratio
31.6
%
33.2
%
31.2
%
32.3
%
Combined ratio
81.3
%
47.2
%
77.8
%
59.0
%
Return on average common equity -
annualized
28.9
%
18.6
%
26.4
%
12.2
%
Operating return on average common equity
- annualized (1)
16.7
%
19.8
%
15.1
%
16.0
%
(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)
June 30, 2019
December 31, 2018
Assets
(Unaudited)
(Audited)
Fixed maturity investments trading, at
fair value
$
10,479,666
$
8,088,870
Short term investments, at fair value
4,579,171
2,586,520
Equity investments trading, at fair
value
273,646
310,252
Other investments, at fair value
955,437
784,933
Investments in other ventures, under
equity method
100,396
115,172
Total investments
16,388,316
11,885,747
Cash and cash equivalents
670,626
1,107,922
Premiums receivable
3,140,688
1,537,188
Prepaid reinsurance premiums
1,158,534
616,185
Reinsurance recoverable
2,865,150
2,372,221
Accrued investment income
76,949
51,311
Deferred acquisition costs and value of
business acquired
780,756
476,661
Receivable for investments sold
395,787
256,416
Other assets
344,938
135,127
Goodwill and other intangibles
265,217
237,418
Total assets
$
26,086,961
$
18,676,196
Liabilities, Noncontrolling Interests
and Shareholders’ Equity
Liabilities
Reserve for claims and claim expenses
$
8,484,848
$
6,076,271
Unearned premiums
3,362,520
1,716,021
Debt
1,382,890
991,127
Reinsurance balances payable
3,280,048
1,902,056
Payable for investments purchased
554,696
380,332
Other liabilities
396,651
513,609
Total liabilities
17,461,653
11,579,416
Redeemable noncontrolling interest
2,712,466
2,051,700
Shareholders’ Equity
Preference shares
650,000
650,000
Common shares
44,162
42,207
Additional paid-in capital
552,210
296,099
Accumulated other comprehensive loss
(3,869
)
(1,433
)
Retained earnings
4,670,339
4,058,207
Total shareholders’ equity attributable
to RenaissanceRe
5,912,842
5,045,080
Total liabilities, noncontrolling
interests and shareholders’ equity
$
26,086,961
$
18,676,196
Book value per common share
$
119.17
$
104.13
RenaissanceRe Holdings
Ltd.
Supplemental Financial Data -
Segment Information
(in thousands of United States
Dollars, except percentages)
(Unaudited)
Three months ended June 30,
2019
Property
Casualty and Specialty
Other
Total
Gross premiums written
$
839,200
$
637,708
$
—
$
1,476,908
Net premiums written
$
544,115
$
478,850
$
—
$
1,022,965
Net premiums earned
$
425,013
$
486,489
$
—
$
911,502
Net claims and claim expenses incurred
146,874
306,501
(2
)
453,373
Acquisition expenses
89,711
137,963
(192
)
227,482
Operational expenses
36,764
23,016
34
59,814
Underwriting income (loss)
$
151,664
$
19,009
$
160
170,833
Net investment income
115,832
115,832
Net foreign exchange gains
9,309
9,309
Equity in earnings of other ventures
6,812
6,812
Other income
922
922
Net realized and unrealized gains on
investments
194,003
194,003
Corporate expenses
(23,847
)
(23,847
)
Interest expense
(15,534
)
(15,534
)
Income before taxes and redeemable
noncontrolling interests
458,330
Income tax expense
(9,475
)
(9,475
)
Net income attributable to redeemable
noncontrolling interests
(71,812
)
(71,812
)
Dividends on preference shares
(9,189
)
(9,189
)
Net income available to RenaissanceRe
common shareholders
$
367,854
Net claims and claim expenses incurred –
current accident year
$
136,111
$
317,029
$
—
$
453,140
Net claims and claim expenses incurred –
prior accident years
10,763
(10,528
)
(2
)
233
Net claims and claim expenses incurred –
total
$
146,874
$
306,501
$
(2
)
$
453,373
Net claims and claim expense ratio –
current accident year
32.0
%
65.2
%
49.7
%
Net claims and claim expense ratio – prior
accident years
2.6
%
(2.2)
%
—
%
Net claims and claim expense ratio –
calendar year
34.6
%
63.0
%
49.7
%
Underwriting expense ratio
29.7
%
33.1
%
31.6
%
Combined ratio
64.3
%
96.1
%
81.3
%
Three months ended June 30,
2018
Property
Casualty and Specialty
Other
Total
Gross premiums written
$
552,627
$
424,716
$
—
$
977,343
Net premiums written
$
297,832
$
306,677
$
—
$
604,509
Net premiums earned
$
204,138
$
225,247
$
—
$
429,385
Net claims and claim expenses incurred
(74,269
)
134,524
(88
)
60,167
Acquisition expenses
40,850
64,201
1
105,052
Operational expenses
23,810
13,552
181
37,543
Underwriting income (loss)
$
213,747
$
12,970
$
(94
)
226,623
Net investment income
71,356
71,356
Net foreign exchange losses
(10,687
)
(10,687
)
Equity in earnings of other ventures
5,826
5,826
Other income
1,225
1,225
Net realized and unrealized losses on
investments
(17,901
)
(17,901
)
Corporate expenses
(8,301
)
(8,301
)
Interest expense
(11,768
)
(11,768
)
Income before taxes and redeemable
noncontrolling interests
256,373
Income tax expense
(4,506
)
(4,506
)
Net income attributable to redeemable
noncontrolling interests
(54,483
)
(54,483
)
Dividends on preference shares
(5,596
)
(5,596
)
Net income available to RenaissanceRe
common shareholders
$
191,788
Net claims and claim expenses incurred –
current accident year
$
68,876
$
147,520
$
—
$
216,396
Net claims and claim expenses incurred –
prior accident years
(143,145
)
(12,996
)
(88
)
(156,229
)
Net claims and claim expenses incurred –
total
$
(74,269
)
$
134,524
$
(88
)
$
60,167
Net claims and claim expense ratio –
current accident year
33.7
%
65.5
%
50.4
%
Net claims and claim expense ratio – prior
accident years
(70.1
)%
(5.8
)%
(36.4
)%
Net claims and claim expense ratio –
calendar year
(36.4
)%
59.7
%
14.0
%
Underwriting expense ratio
31.7
%
34.5
%
33.2
%
Combined ratio
(4.7
)%
94.2
%
47.2
%
RenaissanceRe Holdings
Ltd.
Supplemental Financial Data -
Segment Information
(in thousands of United States
Dollars, except percentages)
(Unaudited)
Six months ended June 30,
2019
Property
Casualty and Specialty
Other
Total
Gross premiums written
$
1,871,584
$
1,169,619
$
—
$
3,041,203
Net premiums written
$
1,108,345
$
843,651
$
—
$
1,951,996
Net premiums earned
$
715,758
$
745,772
$
—
$
1,461,530
Net claims and claim expenses incurred
202,957
477,434
17
680,408
Acquisition expenses
143,450
208,175
(192
)
351,433
Operational expenses
65,308
39,405
34
104,747
Underwriting income (loss)
$
304,043
$
20,758
$
141
324,942
Net investment income
197,294
197,294
Net foreign exchange gains
6,463
6,463
Equity in earnings of other ventures
11,473
11,473
Other income
4,093
4,093
Net realized and unrealized gains on
investments
364,648
364,648
Corporate expenses
(62,636
)
(62,636
)
Interest expense
(27,288
)
(27,288
)
Income before taxes and redeemable
noncontrolling interests
818,989
Income tax expense
(17,006
)
(17,006
)
Net income attributable to redeemable
noncontrolling interests
(142,034
)
(142,034
)
Dividends on preference shares
(18,378
)
(18,378
)
Net income attributable to RenaissanceRe
common shareholders
$
641,571
Net claims and claim expenses incurred –
current accident year
$
190,317
$
494,164
$
—
$
684,481
Net claims and claim expenses incurred –
prior accident years
12,640
(16,730
)
17
(4,073
)
Net claims and claim expenses incurred –
total
$
202,957
$
477,434
$
17
$
680,408
Net claims and claim expense ratio –
current accident year
26.6
%
66.3
%
46.8
%
Net claims and claim expense ratio – prior
accident years
1.8
%
(2.3
)%
(0.2
)%
Net claims and claim expense ratio –
calendar year
28.4
%
64.0
%
46.6
%
Underwriting expense ratio
29.1
%
33.2
%
31.2
%
Combined ratio
57.5
%
97.2
%
77.8
%
Six months ended June 30,
2018
Property
Casualty and Specialty
Other
Total
Gross premiums written
$
1,259,595
$
877,400
$
—
$
2,136,995
Net premiums written
$
651,909
$
615,644
$
—
$
1,267,553
Net premiums earned
$
429,187
$
440,480
$
—
$
869,667
Net claims and claim expenses incurred
(43,662
)
275,602
(70
)
231,870
Acquisition expenses
81,571
121,191
1
202,763
Operational expenses
50,356
28,145
314
78,815
Underwriting income (loss)
$
340,922
$
15,542
$
(245
)
356,219
Net investment income
127,832
127,832
Net foreign exchange losses
(6,930
)
(6,930
)
Equity in earnings of other ventures
6,683
6,683
Other loss
(17
)
(17
)
Net realized and unrealized losses on
investments
(100,045
)
(100,045
)
Corporate expenses
(15,034
)
(15,034
)
Interest expense
(23,535
)
(23,535
)
Income before taxes and redeemable
noncontrolling interests
345,173
Income tax expense
(1,099
)
(1,099
)
Net income attributable to redeemable
noncontrolling interests
(84,382
)
(84,382
)
Dividends on preference shares
(11,191
)
(11,191
)
Net income available to RenaissanceRe
common shareholders
$
248,501
Net claims and claim expenses incurred –
current accident year
$
127,045
$
292,389
$
—
$
419,434
Net claims and claim expenses incurred –
prior accident years
(170,707
)
(16,787
)
(70
)
(187,564
)
Net claims and claim expenses incurred –
total
$
(43,662
)
$
275,602
$
(70
)
$
231,870
Net claims and claim expense ratio –
current accident year
29.6
%
66.4
%
48.2
%
Net claims and claim expense ratio – prior
accident years
(39)
%
(3.8)
%
(21.5)
%
Net claims and claim expense ratio –
calendar year
(10.2)
%
62.6
%
26.7
%
Underwriting expense ratio
30.8
%
33.9
%
32.3
%
Combined ratio
20.6
%
96.5
%
59.0
%
RenaissanceRe Holdings
Ltd.
Supplemental Financial Data -
Gross Premiums Written
(in thousands of United States
Dollars)
(Unaudited)
Three months ended
Six months ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Property Segment
Catastrophe
$
602,656
$
437,720
$
1,447,869
$
1,028,057
Other property
236,544
114,907
423,715
231,538
Property segment gross premiums
written
$
839,200
$
552,627
$
1,871,584
$
1,259,595
Casualty and Specialty Segment
General casualty (1)
$
258,357
$
153,648
411,691
280,274
Professional liability (2)
167,206
97,811
316,583
254,924
Financial lines (3)
91,202
88,215
218,558
181,482
Other (4)
120,943
85,042
222,787
160,720
Casualty and Specialty segment gross
premiums written
$
637,708
$
424,716
$
1,169,619
$
877,400
(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
Six months ended
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Fixed maturity investments
$
88,106
$
50,416
$
149,589
$
96,059
Short term investments
17,807
7,633
29,651
12,937
Equity investments trading
916
1,490
1,943
2,188
Other investments
Private equity investments
10,309
3,860
12,763
3,426
Other
630
10,658
7,875
18,681
Cash and cash equivalents
2,306
1,039
3,823
1,604
120,074
75,096
205,644
134,895
Investment expenses
(4,242
)
(3,740
)
(8,350
)
(7,063
)
Net investment income
115,832
71,356
197,294
127,832
Gross realized gains
28,512
5,133
52,885
9,716
Gross realized losses
(7,217
)
(26,519
)
(30,160
)
(52,372
)
Net realized gains (losses) on fixed
maturity investments
21,295
(21,386
)
22,725
(42,656
)
Net unrealized gains (losses) on fixed
maturity investments trading
121,991
(9,420
)
225,913
(64,792
)
Net realized and unrealized gains (losses)
on investments-related derivatives
37,173
1,038
50,969
(3,326
)
Net realized gains on equity investments
trading
31,899
348
30,738
582
Net unrealized (losses) gains on equity
investments trading
(18,355
)
11,519
34,303
10,147
Net realized and unrealized gains
(losses) on investments
194,003
(17,901
)
364,648
(100,045
)
Total investment result
$
309,835
$
53,455
$
561,942
$
27,787
Total investment return -
annualized
8.0
%
2.0
%
7.3
%
0.5
%
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 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 attributable to RenaissanceRe common shareholders,
transaction and integration expenses associated with the
acquisition of the TMR Group Entities and the income tax expense or
benefit associated with these exclusions to “net income available
to RenaissanceRe common shareholders". The Company’s management
believes that “operating income available 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; certain transaction
and integration expenses associated with the acquisition of the TMR
Group Entities; and the associated income tax expense or benefit of
these adjustments. 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
Six months ended
(in thousands of United States Dollars,
except per share amounts and percentages)
June 30, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Net income available to RenaissanceRe
common shareholders
$
367,854
$
191,788
$
641,571
$
248,501
Adjustment for net realized and unrealized
(gains) losses on investments attributable to RenaissanceRe common
shareholders (1)
(177,418
)
12,562
(330,582
)
81,590
Adjustment for transaction and integration
expenses associated with the acquisition of the TMR Group
Entities
14,483
—
40,003
—
Adjustment for income tax expense
(benefit) (2)
7,653
(58
)
15,940
(3,706
)
Operating income available to
RenaissanceRe common shareholders
$
212,572
$
204,292
$
366,932
$
326,385
Net income available to RenaissanceRe
common shareholders per common share - diluted
$
8.35
$
4.78
$
14.81
$
6.21
Adjustment for net realized and unrealized
(gains) losses on investments attributable to RenaissanceRe common
shareholders (1)
(4.08
)
0.32
(7.72
)
2.06
Adjustment for transaction and integration
expenses associated with the acquisition of the TMR Group
Entities
0.33
—
0.93
—
Adjustment for income tax expense
(benefit) (2)
0.18
—
0.37
(0.09
)
Operating income available to
RenaissanceRe common shareholders per common share - diluted
$
4.78
$
5.10
$
8.39
$
8.18
Return on average common equity -
annualized
28.9
%
18.6
%
26.4
%
12.2
%
Adjustment for net realized and unrealized
(gains) losses on investments attributable to RenaissanceRe common
shareholders (1)
(13.9
)%
1.2
%
(13.6
)%
4.0
%
Adjustment for transaction and integration
expenses associated with the acquisition of the TMR Group
Entities
1.1
%
—
%
1.6
%
—
%
Adjustment for income tax expense
(benefit) (2)
0.6
%
—
%
0.7
%
(0.2
)%
Operating return on average common equity
- annualized
16.7
%
19.8
%
15.1
%
16.0
%
(1)
Adjustment for net realized and unrealized
(gains) losses on investments attributable to RenaissanceRe common
shareholders represents: net realized and unrealized gains (losses)
on investments as set forth in the Company's consolidated statement
of operations less net realized and unrealized gains (losses)
attributable to redeemable noncontrolling interests, which is
included in net income attributable to redeemable noncontrolling
interests in the Company's consolidated statement of operations.
Comparative information for all prior periods has been updated to
conform to the current methodology and presentation.
(2)
Adjustment for income tax expense
(benefit) represents the income tax expense (benefit) associated
with the adjustments to net income (loss) available (attributable)
to RenaissanceRe common shareholders. 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
June 30, 2019
March 31, 2019
December 31, 2018
September 30, 2018
June 30, 2018
Book value per common share
$
119.17
$
111.05
$
104.13
$
105.21
$
104.56
Adjustment for goodwill and other
intangibles (1) (2)
(6.60
)
(6.66
)
(6.28
)
(6.63
)
(6.69
)
Tangible book value per common share
112.57
104.39
97.85
98.58
97.87
Adjustment for accumulated dividends
20.00
19.66
19.32
18.99
18.66
Tangible book value per common share plus
accumulated dividends
$
132.57
$
124.05
$
117.17
$
117.57
$
116.53
Quarterly change in book value per common
share
7.3
%
6.6
%
(1.0
)%
0.6
%
4.3
%
Quarterly change in tangible book value
per common share plus change in accumulated dividends
8.2
%
7.0
%
(0.4
)%
1.1
%
4.9
%
Year to date change in book value per
common share
14.4
%
6.6
%
4.4
%
5.5
%
4.9
%
Year to date change in tangible book value
per common share plus change in accumulated dividends
15.7
%
7.0
%
6.4
%
6.8
%
5.7
%
(1)
At June 30, 2019, March 31, 2019, December
31, 2018, September 30, 2018 and June 30, 2018, goodwill and other
intangibles included $26.3 million, $27.0 million, $27.7 million,
$28.4 million and $29.1 million, respectively, of goodwill and
other intangibles included in investments in other ventures, under
equity method.
(2)
At June 30, 2019 and March 31, 2019,
goodwill and other intangibles included $30.8 million and $31.1
million, respectively, of goodwill and other intangibles recognized
by the Company in connection with the acquisition of the TMR Group
Entities on March 22, 2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190723005928/en/
INVESTORS: Senior Vice President, Finance & Investor
Relations RenaissanceRe Holdings Ltd. (441) 239-4830
MEDIA: Keil Gunther Vice President, Marketing &
Communications RenaissanceRe Holdings Ltd. (441) 239-4932 or Kekst
CNC Dawn Dover (212) 521-4800
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