RenaissanceRe Holdings Ltd. (NYSE: RNR) (the “Company” or
“RenaissanceRe”) today reported net income available to
RenaissanceRe common shareholders of $273.7 million, or $6.43 per
diluted common share, in the first quarter of 2019, compared to
$56.7 million, or $1.42 per diluted common share, in the first
quarter of 2018. Operating income available to RenaissanceRe common
shareholders was $154.4 million, or $3.60 per diluted common share,
in the first quarter of 2019, compared to $122.1 million, or $3.07
per diluted common share, in the first quarter of 2018. The Company
reported an annualized return on average common equity of 23.5% and
an annualized operating return on average common equity of 13.3% in
the first quarter of 2019, compared to 5.7% and 12.2%,
respectively, in the first quarter of 2018. Book value per common
share increased $6.92, or 6.6%, to $111.05 in the first quarter of
2019, compared to a 0.6% increase in the first quarter of 2018.
Tangible book value per common share plus accumulated dividends
increased $6.88, or 7.0%, to $124.05 in the first quarter of 2019,
compared to a 0.8% increase in the first quarter of 2018.
Kevin J. O’Donnell, President and Chief Executive Officer of
RenaissanceRe, commented: “Our strong first quarter was
distinguished by solid profits, material growth and strategic
advancement. We achieved an annualized operating return on average
common equity of 13.3% and growth in tangible book value per common
share plus accumulated dividends of 7.0%. At the same time, we grew
our business materially by leveraging into an improving rate
environment. The purchase of Tokio Millennium Re advanced our
strategy, and we have moved from planning to execution on what we
are optimistic will be a quick and successful integration.”
Acquisition of Tokio Millennium Re
On March 22, 2019, the Company's wholly owned subsidiary
RenaissanceRe Specialty Holdings (UK) Limited completed its
previously announced purchase of all the share capital 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 “TMR Stock Purchase”). The operating activities of
the TMR Group Entities from the acquisition date, March 22, 2019,
through March 31, 2019 were not material and as a result were not
included in the Company’s consolidated statements of operations for
the first quarter of 2019. At March 31, 2019, the Company’s
consolidated balance sheet reflects the combined entities.
During the first quarter of 2019, the Company recorded $25.5
million of corporate expenses associated with the acquisition,
comprised of $12.9 million of transaction-related costs, $5.9
million of integration-related costs, and $6.7 million of
compensation-related costs. In addition, the Company recognized
$18.0 million of net identifiable intangible assets and $13.1
million of goodwill in connection with the acquisition, further
detailed in the table below, or a total of $0.74 per diluted common
share in the first quarter of 2019.
March 31, 2019 Top broker relationships $
10,000 Renewal rights 1,200 Insurance licenses 6,800 Net
identifiable intangible assets at March 31, 2019 related to the
acquisition of the TMR Group Entities 18,000 Excess purchase price
over the fair value of net assets acquired assigned to goodwill
13,094 Total net identifiable intangible assets and goodwill
recognized related to the acquisition of the TMR Group Entities $
31,094
First Quarter of 2019 Summary
- Underwriting income of $154.1 million
and a combined ratio of 72.0% in the first quarter of 2019,
compared to $129.6 million and 70.6%, respectively, in the first
quarter of 2018. The Property segment generated underwriting income
of $152.4 million and had a combined ratio of 47.6%. The Casualty
and Specialty segment generated underwriting income of $1.7 million
and had a combined ratio of 99.3%.
- Gross premiums written increased by
$404.6 million, or 34.9%, to $1.6 billion, in the first quarter of
2019, compared to the first quarter of 2018, driven by an increase
of $325.4 million in the Property segment and an increase of $79.2
million in the Casualty and Specialty segment.
- Total investment result was a gain of
$252.1 million in the first quarter of 2019, generating an
annualized total investment return of 8.0%.
Underwriting Results by Segment
Property Segment
Gross premiums written in the Property segment were $1.0 billion
in the first quarter of 2019, an increase of $325.4 million, or
46.0%, compared to $707.0 million in the first quarter of 2018.
Gross premiums written in the catastrophe class of business were
$845.2 million in the first quarter of 2019, an increase of $254.9
million, or 43.2%, compared to the first quarter of 2018. The
increase in gross premiums written in the catastrophe class of
business in the first quarter of 2019 was driven primarily by
expanded participation on existing transactions and certain new
transactions.
Gross premiums written in the other property class of business
were $187.2 million in the first quarter of 2019, an increase of
$70.5 million, or 60.5%, compared to the first 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, both from existing relationships
and through new opportunities.
Ceded premiums written in the Property segment were $468.2
million in the first quarter of 2019, an increase of $115.3
million, or 32.7%, compared to the first quarter of 2018. The
increase in ceded premiums written in the first quarter of 2019 was
principally due to a significant 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 joint
venture, Upsilon RFO.
The Property segment generated underwriting income of $152.4
million and had a combined ratio of 47.6% in the first quarter of
2019, compared to $127.2 million and 43.5%, respectively, in the
first quarter of 2018. Principally impacting the Property segment
underwriting result and combined ratio in the first quarter of 2019
was lower current accident year net claims and claim expenses
driven by a relatively lower level of insured catastrophe events,
compared to the first quarter of 2018. Partially offsetting this
was net adverse development on prior accident years net claims and
claim expenses of $1.9 million, or 0.7% percentage points, during
the first quarter of 2019, primarily driven by higher than expected
losses in the other property class of business.
Casualty and Specialty Segment
Gross premiums written in the Casualty and Specialty segment
were $531.9 million in the first quarter of 2019, an increase of
$79.2 million, or 17.5%, compared to the first quarter of 2018. The
increase was due to continued growth from new and existing business
opportunities across various classes of business within the
segment.
The Casualty and Specialty segment generated underwriting income
of $1.7 million and had a combined ratio of 99.3% in the first
quarter of 2019, compared to $2.6 million and 98.8%, respectively,
in the first quarter of 2018.
During the first quarter of 2019, the Casualty and Specialty
segment experienced net favorable development on prior accident
years net claims and claim expenses of $6.2 million, or 2.4
percentage points, compared to net favorable development of $3.8
million, or 1.8 percentage points, in the first quarter of 2018.
The net favorable development during the first quarter of 2019 was
principally driven by reported losses generally coming in lower
than expected on attritional net claims and claim expenses from
various lines of business within the segment.
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
$252.1 million in the first quarter of 2019, compared to a loss of
$25.7 million in the first quarter of 2018, an increase of $277.8
million. The increase in the total investment result was
principally due to significant net unrealized gains from the
Company’s fixed maturity and public equity portfolios and higher
net investment income primarily driven by the Company’s fixed
maturity, short term and private equity investments.
- Net income attributable to redeemable
noncontrolling interests in the first quarter of 2019 was $70.2
million, compared to $29.9 million in the first quarter of 2018.
The result for the first quarter of 2019 was primarily driven by
DaVinciRe generating net income of $80.3 million in the first
quarter of 2019, compared to $26.9 million in the first quarter of
2018. The Company’s ownership in DaVinciRe was 22.1% at both
March 31, 2019 and March 31, 2018. The Company expects
its noncontrolling economic ownership in DaVinciRe to fluctuate
over time.
- In connection with the TMR Stock
Purchase, the Company issued 1,739,071 of its common shares to
Tokio Marine & Nichido Fire Insurance Co. Ltd.
- 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, $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.
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, May 8,
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; risks that the TMR
Stock Purchase disrupts or distracts from current plans and
operations; the ability to recognize the benefits of the TMR Stock
Purchase; the amount of the costs, fees, expenses and charges
related to the TMR Stock Purchase; 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;
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; 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 March 31, 2019
March 31, 2018 Revenues Gross premiums
written $ 1,564,295 $ 1,159,652 Net premiums written
$ 929,031 $ 663,044 Increase in unearned premiums (379,003 )
(222,762 ) Net premiums earned 550,028 440,282 Net investment
income 81,462 56,476 Net foreign exchange (losses) gains (2,846 )
3,757 Equity in earnings of other ventures 4,661 857 Other income
(loss) 3,171 (1,242 ) Net realized and unrealized gains (losses) on
investments 170,645 (82,144 )
Total revenues 807,121
417,986
Expenses Net claims and claim expenses
incurred 227,035 171,703 Acquisition expenses 123,951 97,711
Operational expenses 44,933 41,272 Corporate expenses 38,789 6,733
Interest expense 11,754 11,767
Total expenses
446,462 329,186 Income before taxes 360,659 88,800
Income tax (expense) benefit (7,531 ) 3,407
Net
income 353,128 92,207 Net income attributable to noncontrolling
interests (70,222 ) (29,899 )
Net income attributable to
RenaissanceRe 282,906 62,308 Dividends on preference shares
(9,189 ) (5,595 )
Net income available to RenaissanceRe common
shareholders $ 273,717 $ 56,713 Net income
available to RenaissanceRe common shareholders per common share -
basic $ 6.43 $ 1.42 Net income available to RenaissanceRe common
shareholders per common share - diluted $ 6.43 $ 1.42 Operating
income available to RenaissanceRe common shareholders per common
share - diluted (1) $ 3.60 $ 3.07 Average shares outstanding
- basic 42,065 39,552 Average shares outstanding - diluted 42,091
39,599 Net claims and claim expense ratio 41.3 % 39.0 %
Underwriting expense ratio 30.7 % 31.6 % Combined ratio 72.0 % 70.6
% Return on average common equity - annualized 23.5 % 5.7 %
Operating return on average common equity - annualized (1) 13.3 %
12.2 % (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)
March 31, 2019 December 31,
2018 Assets (Unaudited) (Audited) Fixed maturity
investments trading, at fair value $ 9,473,160 $ 8,088,870 Short
term investments, at fair value 4,012,815 2,586,520 Equity
investments trading, at fair value 389,937 310,252 Other
investments, at fair value 878,373 784,933 Investments in other
ventures, under equity method 98,563 115,172 Total
investments 14,852,848 11,885,747 Cash and cash equivalents
1,021,275 1,107,922 Premiums receivable 2,753,098 1,537,188 Prepaid
reinsurance premiums 1,086,027 616,185 Reinsurance recoverable
2,908,343 2,372,221 Accrued investment income 64,615 51,311
Deferred acquisition costs and value of business acquired 841,528
476,661 Receivable for investments sold 411,172 256,416 Other
assets 353,543 135,127 Goodwill and other intangibles 267,151
237,418
Total assets $ 24,559,600 $
18,676,196
Liabilities, Noncontrolling Interests and
Shareholders’ Equity Liabilities Reserve for claims and
claim expenses $ 8,391,484 $ 6,076,271 Unearned premiums 3,188,678
1,716,021 Debt 1,191,499 991,127 Reinsurance balances payable
3,009,492 1,902,056 Payable for investments purchased 679,596
380,332 Other liabilities 435,418 513,609
Total
liabilities 16,896,167 11,579,416 Redeemable
noncontrolling interest 2,109,400 2,051,700
Shareholders’
Equity Preference shares 650,000 650,000 Common shares 44,159
42,207 Additional paid-in capital 543,889 296,099 Accumulated other
comprehensive loss (1,470 ) (1,433 ) Retained earnings 4,317,455
4,058,207
Total shareholders’ equity attributable
to RenaissanceRe 5,554,033 5,045,080
Total
liabilities, noncontrolling interests and shareholders’ equity
$ 24,559,600 $ 18,676,196
Book value per
common share $ 111.05 $ 104.13
RenaissanceRe Holdings Ltd. Supplemental Financial Data -
Segment Information (in thousands of United States Dollars,
except percentages) (Unaudited)
Three months ended March
31, 2019 Property
Casualty and Specialty
Other Total Gross premiums written $
1,032,384 $ 531,911 $ — $ 1,564,295 Net
premiums written $ 564,230 $ 364,801 $ — $
929,031 Net premiums earned $ 290,745 $ 259,283 $ — $
550,028 Net claims and claim expenses incurred 56,083 170,933 19
227,035 Acquisition expenses 53,739 70,212 — 123,951 Operational
expenses 28,544 16,389 — 44,933
Underwriting income (loss) $ 152,379 $ 1,749 $ (19 )
154,109 Net investment income 81,462 81,462 Net foreign exchange
losses (2,846 ) (2,846 ) Equity in earnings of other ventures 4,661
4,661 Other income 3,171 3,171 Net realized and unrealized gains on
investments 170,645 170,645 Corporate expenses (38,789 ) (38,789 )
Interest expense (11,754 ) (11,754 ) Income before taxes and
redeemable noncontrolling interests 360,659 Income tax expense
(7,531 ) (7,531 ) Net income attributable to redeemable
noncontrolling interests (70,222 ) (70,222 ) Dividends on
preference shares (9,189 ) (9,189 ) Net income available to
RenaissanceRe common shareholders $ 273,717 Net
claims and claim expenses incurred – current accident year $ 54,206
$ 177,135 $ — $ 231,341 Net claims and claim expenses incurred –
prior accident years 1,877 (6,202 ) 19 (4,306 ) Net
claims and claim expenses incurred – total $ 56,083 $
170,933 $ 19 $ 227,035 Net claims and
claim expense ratio – current accident year 18.6 % 68.3 % 42.1 %
Net claims and claim expense ratio – prior accident years 0.7 %
(2.4 )% (0.8 )% Net claims and claim expense ratio – calendar year
19.3 % 65.9 % 41.3 % Underwriting expense ratio 28.3 % 33.4 % 30.7
% Combined ratio 47.6 % 99.3 % 72.0 %
Three months ended
March 31, 2018 Property
Casualty and Specialty
Other Total Gross premiums written $ 706,968 $
452,684 $ — $ 1,159,652 Net premiums written $
354,077 $ 308,967 $ — $ 663,044 Net
premiums earned $ 225,049 $ 215,233 $ — $ 440,282 Net claims and
claim expenses incurred 30,607 141,078 18 171,703 Acquisition
expenses 40,721 56,990 — 97,711 Operational expenses 26,546
14,593 133 41,272 Underwriting income (loss) $
127,175 $ 2,572 $ (151 ) 129,596 Net investment
income 56,476 56,476 Net foreign exchange gains 3,757 3,757 Equity
in earnings of other ventures 857 857 Other loss (1,242 ) (1,242 )
Net realized and unrealized losses on investments (82,144 ) (82,144
) Corporate expenses (6,733 ) (6,733 ) Interest expense (11,767 )
(11,767 ) Income before taxes and redeemable noncontrolling
interests 88,800 Income tax benefit 3,407 3,407 Net income
attributable to redeemable noncontrolling interests (29,899 )
(29,899 ) Dividends on preference shares (5,595 ) (5,595 ) Net
income available to RenaissanceRe common shareholders $ 56,713
Net claims and claim expenses incurred – current
accident year $ 58,169 $ 144,869 $ — $ 203,038 Net claims and claim
expenses incurred – prior accident years (27,562 ) (3,791 ) 18
(31,335 ) Net claims and claim expenses incurred – total $
30,607 $ 141,078 $ 18 $ 171,703
Net claims and claim expense ratio – current accident year 25.8 %
67.3 % 46.1 % Net claims and claim expense ratio – prior accident
years (12.2 )% (1.8 )% (7.1 )% Net claims and claim expense ratio –
calendar year 13.6 % 65.5 % 39.0 % Underwriting expense ratio 29.9
% 33.3 % 31.6 % Combined ratio 43.5 % 98.8 % 70.6 %
RenaissanceRe Holdings Ltd. Supplemental Financial Data -
Gross Premiums Written (in thousands of United States Dollars)
(Unaudited)
Three months ended March
31, 2019 March 31, 2018
Property
Segment
Catastrophe $ 845,213 $ 590,337 Other property 187,171
116,631 Property segment gross premiums written $ 1,032,384
$ 706,968
Casualty and
Specialty Segment
General casualty (1) $ 153,334 $ 126,626 Professional liability (2)
149,377 157,113 Financial lines (3) 127,356 93,267 Other (4)
101,844 75,678 Casualty and Specialty segment gross premiums
written $ 531,911 $ 452,684 (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 March 31, 2019 March 31, 2018
Fixed maturity investments $ 61,483 $ 45,643 Short term investments
11,844 5,304 Equity investments trading 1,027 698 Other investments
Private equity investments 2,454 (434 ) Other 7,245 8,023 Cash and
cash equivalents 1,517 565 85,570 59,799 Investment
expenses (4,108 ) (3,323 )
Net investment income 81,462
56,476 Gross realized gains 24,373 4,583 Gross
realized losses (22,943 ) (25,853 ) Net realized gains (losses) on
fixed maturity investments 1,430 (21,270 ) Net unrealized gains
(losses) on fixed maturity investments trading 103,922 (55,372 )
Net realized and unrealized gains (losses) on investments-related
derivatives 13,796 (4,364 ) Net realized (losses) gains on equity
investments trading (1,161 ) 234 Net unrealized gains (losses) on
equity investments trading 52,658 (1,372 )
Net realized
and unrealized gains (losses) on investments 170,645
(82,144 )
Total investment result $ 252,107 $ (25,668
)
Total investment return - annualized (1) 8.0 % (1.0
)% (1) Total investment return for the three months ended
March 31, 2019 does not include the investment results related to
the invested assets of the TMR Group Entities, which were acquired
on March 22, 2019.
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 (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
attributable to RenaissanceRe common shareholders, transaction and
integration expenses associated with the acquisition of Tokio
Millennium Re and the income tax expense or benefit associated with
net realized and unrealized gains and losses on investments
attributable 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 and the
associated income tax expense or benefit of those fluctuations; and
certain transaction and integration expenses associated with the
acquisition of Tokio Millennium Re. 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 (loss) available
(attributable) to RenaissanceRe common shareholders to operating
income available to RenaissanceRe common shareholders; 2) net
income (loss) available (attributable) 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 (in thousands of United States
Dollars, except per share amounts and percentages)
March 31,
2019 March 31, 2018 Net income
available to RenaissanceRe common shareholders $ 273,717 $ 56,713
Adjustment for net realized and unrealized (gains) losses on
investments attributable to RenaissanceRe common shareholders (1)
(153,164 ) 69,028 Adjustment for transaction and integration
expenses associated with the acquisition of Tokio Millennium Re (2)
25,520 — Adjustment for income tax expense (benefit) (3) 8,287
(3,648 ) Operating income available to RenaissanceRe common
shareholders $ 154,360 $ 122,093 Net income
available to RenaissanceRe common shareholders per common share -
diluted $ 6.43 $ 1.42 Adjustment for net realized and unrealized
(gains) losses on investments attributable to RenaissanceRe common
shareholders (1) (3.64 ) 1.74 Adjustment for transaction and
integration expenses associated with the acquisition of Tokio
Millennium Re (2) 0.61 — Adjustment for income tax expense
(benefit) (3) 0.20 (0.09 ) Operating income available to
RenaissanceRe common shareholders per common share - diluted $ 3.60
$ 3.07 Return on average common equity -
annualized 23.5 % 5.7 % Adjustment for net realized and unrealized
(gains) losses on investments attributable to RenaissanceRe common
shareholders (1) (13.2 )% 6.9 % Adjustment for transaction and
integration expenses associated with the acquisition of Tokio
Millennium Re (2) 2.2 % — % Adjustment for income tax expense
(benefit) (3) 0.8 % (0.4 )% Operating return on average common
equity - annualized 13.3 % 12.2 % (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 transaction and integration
expenses associated with the acquisition of Tokio Millennium Re for
the three months ended March 31, 2019 represents $25.5 million of
corporate expenses associated with the acquisition, comprised of
$12.9 million of transaction-related costs, $5.9 million of
integration-related costs, and $6.7 million of compensation-related
costs. Comparative information for all prior periods has been
updated to conform to the current methodology and presentation.
(3) 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 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 March 31, 2019 December
31, 2018 September 30, 2018
June 30, 2018 March 31, 2018
Book value per common share $ 111.05 $ 104.13 $ 105.21 $ 104.56 $
100.29 Adjustment for goodwill and other intangibles (1) (2) (6.66
) (6.28 ) (6.63 ) (6.69 ) (6.66 ) Tangible book value per common
share 104.39 97.85 98.58 97.87 93.63 Adjustment for accumulated
dividends 19.66 19.32 18.99 18.66 18.33
Tangible book value per common share plus accumulated
dividends $ 124.05 $ 117.17 $ 117.57 $ 116.53
$ 111.96 Quarterly change in book value per
common share 6.6 % (1.0 )% 0.6 % 4.3 % 0.6 % Quarterly change in
tangible book value per common share plus change in accumulated
dividends 7.0 % (0.4 )% 1.1 % 4.9 % 0.8 % Year to date change in
book value per common share 6.6 % 4.4 % 5.5 % 4.9 % 0.6 % Year to
date change in tangible book value per common share plus change in
accumulated dividends 7.0 % 6.4 % 6.8 % 5.7 % 0.8 % (1) At
March 31, 2019, December 31, 2018, September 30, 2018, June 30,
2018 and March 31, 2018, goodwill and other intangibles included
$27.0 million, $27.7 million, $28.4 million, $29.1 million and
$26.3 million, respectively, of goodwill and other intangibles
included in investments in other ventures, under equity method. (2)
At March 31, 2019, goodwill and other intangibles included $18.0
million of identifiable intangible assets and $13.1 million of
goodwill, respectively, 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/20190507006081/en/
INVESTOR CONTACT:Keith McCueSenior Vice President,
Finance & Investor RelationsRenaissanceRe Holdings Ltd.(441)
239-4830MEDIA CONTACT:Keil GuntherVice President, Marketing
& CommunicationsRenaissanceRe Holdings Ltd.(441)
239-4932orKekst CNCDawn Dover(212) 521-4800
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