Annual Net Income Available to Common
Shareholders of $197.3 million for 2018, or $4.91 Per Diluted
Common Share; Annual Operating Income Available to Common
Shareholders of $366.6 million, or $9.17 Per Diluted Common
Share
RenaissanceRe Holdings Ltd. (NYSE: RNR) (the “Company” or
“RenaissanceRe”) today reported a net loss attributable to
RenaissanceRe common shareholders of $83.9 million, or $2.10 per
diluted common share, in the fourth quarter of 2018, compared to a
net loss attributable to RenaissanceRe common shareholders of $3.5
million, or $0.09 per diluted common share, in the fourth quarter
of 2017. Operating income available to RenaissanceRe common
shareholders was $1.2 million, or $0.02 per diluted common share,
in the fourth quarter of 2018, compared to operating income
available to RenaissanceRe common shareholders of $41.4 million, or
$1.05 per diluted common share, in the fourth quarter of 2017. The
Company reported an annualized return on average common equity of
negative 7.8% and an annualized operating return on average common
equity of positive 0.1% in the fourth quarter of 2018, compared to
negative 0.3% and positive 4.2%, respectively, in the fourth
quarter of 2017. Book value per common share decreased $1.08, or
1.0%, to $104.13 in the fourth quarter of 2018, compared to a 0.3%
decrease in the fourth quarter of 2017. Tangible book value per
common share plus accumulated dividends decreased $0.40, or 0.4%,
to $117.17 in the fourth quarter of 2018, compared to a 0.1%
increase in the fourth quarter of 2017.
For 2018, the Company reported net income available to
RenaissanceRe common shareholders of $197.3 million, or $4.91 per
diluted common share, compared to a net loss attributable to
RenaissanceRe common shareholders of $244.8 million, or $6.15 per
diluted common share, in 2017. Operating income available to
RenaissanceRe common shareholders was $366.6 million, or $9.17 per
diluted common share, in 2018, compared to an operating loss
attributable to RenaissanceRe common shareholders of $332.3
million, or $8.35 per diluted common share, in 2017. The Company
reported a return on average common equity of 4.7% and an operating
return on average common equity of 8.8% in 2018, compared to
negative 5.7% and negative 7.7%, respectively, in 2017. Book value
per common share increased $4.41, or 4.4%, in 2018, to $104.13,
compared to an 8.0% decrease in 2017. Tangible book value per
common share plus accumulated dividends increased $5.94, or 6.4%,
to $117.17 in 2018, compared to a 7.2% decrease in 2017.
Kevin J. O’Donnell, President and Chief Executive Officer of
RenaissanceRe, commented: “Once again in 2018, we benefited from
our industry leading ability to construct efficient portfolios of
risk through superior underwriting and the application of our
gross-to-net strategy. In the quarter, we reported positive
operating income, while rapidly paying claims to customers facing
significant losses from Category 4 Hurricane Michael and a second
consecutive year of record breaking wildfires in
California. For the year, we outperformed on multiple metrics,
posting a strong operating ROE, delivering robust top line growth,
and executing effectively on a number of key initiatives, including
the formation of our latest innovative joint venture, Vermeer and
our pending acquisition of Tokio Millennium Re. Looking ahead, at
the recent January 1 renewal we laid the foundation for a
successful 2019 and ongoing shareholder value creation.”
FOURTH QUARTER 2018
SUMMARY
- During the fourth quarter of 2018,
Hurricane Michael, the wildfires in California during the fourth
quarter of 2018 (the “Q4 2018 California Wildfires”) and changes in
certain losses associated with aggregate loss contracts (the “2018
Aggregate Losses”) resulted in a net negative impact on the net
loss attributable to RenaissanceRe common shareholders of $104.1
million. Also impacting results in the fourth quarter of 2018 was
the net positive impact of changes in the Company’s estimates of
the net negative impact of the Q3 2018 Catastrophe Events (as
defined herein) and the 2017 Large Loss Events (as defined herein)
of $49.3 million and $19.4 million, respectively.
- Underwriting loss of $82.3 million and
a combined ratio of 114.3% in the fourth quarter of 2018, compared
to an underwriting loss of $10.4 million and a combined ratio of
102.5% in the fourth quarter of 2017. Impacting the Company’s
underwriting results in the fourth quarter of 2018 were Hurricane
Michael, the Q4 2018 California Wildfires and changes in the 2018
Aggregate Losses, which had a net negative impact on the
underwriting result of $205.7 million within the Company’s property
segment and added 38.3 percentage points to the Company’s combined
ratio. In addition, as a result of the Q4 2018 California
Wildfires, the Company’s underwriting result was negatively
impacted by certain casualty liability exposures within the
Casualty and Specialty segment.
- Gross premiums written increased by
$140.0 million, or 34.3%, to $547.8 million, in the fourth quarter
of 2018, compared to the fourth quarter of 2017, driven by an
increase of $104.8 million in the Property segment and an increase
of $35.2 million in the Casualty and Specialty segment. Included in
gross premiums written in the fourth quarter of 2018 was $102.5
million of reinstatement premiums written primarily associated with
Hurricane Michael and the Q4 2018 California Wildfires. Included in
the gross premiums written in the fourth quarter of 2017 was $10.4
million of reinstatement premiums written primarily associated with
the wildfires in California during the fourth quarter of 2017.
- Total investment result was a loss of
$35.3 million in the fourth quarter of 2018, generating an
annualized total investment return of negative 1.2%.
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 Hurricane Michael,
the Q4 2018 California Wildfires, the 2018 Aggregate Losses, the Q3
2018 Catastrophe Events (as defined herein) and the 2017 Large Loss
Events (as defined herein) driven by the magnitude and recent
occurrence of each event, the 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 of Hurricane Michael, the Q4 2018
California Wildfires and changes in the 2018 Aggregate Losses, and
the net positive impact of changes in estimates of the net negative
impact of the Q3 2018 Catastrophe Events (as defined herein) and
changes in estimates of the 2017 Large Loss Events (as defined
herein) on the Company’s consolidated financial statements in the
fourth quarter of 2018.
Three months
ended December 31, 2018
HurricaneMichael
Q4
2018CaliforniaWildfires
Changesin
the2018AggregateLosses (1)
Changes inEstimatesof the
Q32018CatastropheEvents (2)
ChangesinEstimatesof the
2017LargeLossEvents (3)
Total (in thousands, except percentages) (Increase)
decrease in net claims and claims expenses incurred $ (152,695 ) $
(80,007 ) $ (43,054 ) $ 44,359 $ 29,023 $ (202,374 ) Net
reinstatement premiums earned 31,747 27,913 — 10,138 5,842 75,640
Lost (earned) profit commissions 3,400 8,571 (1,610 )
102 (4,778 ) 5,685 Net (negative) positive impact on
underwriting result (117,548 ) (43,523 ) (44,664 ) 54,599 30,087
(121,049 ) Redeemable noncontrolling interest - DaVinciRe 45,515
41,730 14,387 (5,272 ) (10,699 ) 85,661
Net (negative) positive impact on net loss attributable to
RenaissanceRe common shareholders $ (72,033 ) $ (1,793 ) $ (30,277
) $ 49,327 $ 19,388 $ (35,388 ) Percentage point
impact on consolidated combined ratio 20.8 7.2 7.7 (10.0 ) (5.5 )
22.1 Net (negative) positive impact on Property segment
underwriting result $ (117,548 ) $ (43,523 ) $ (44,664 ) $ 55,161 $
24,829 $ (125,745 ) Net (negative) positive impact on Casualty and
Specialty segment underwriting result (4) — —
— (562 ) 5,258 4,696 Net (negative)
positive impact on underwriting result $ (117,548 ) $ (43,523 ) $
(44,664 ) $ 54,599 $ 30,087 $ (121,049 ) (1)
Certain of the Company’s aggregate loss contracts were
triggered during the third quarter of 2018 primarily as a result of
losses associated with the Q3 2018 Catastrophe Events, and
accordingly, the Company incurred losses under certain of its
aggregate loss reinsurance contracts during the third quarter of
2018. Changes in 2018 Aggregate Losses in the table above reflects
additional losses under certain of the Company’s aggregate loss
reinsurance contracts recorded in the fourth quarter of 2018,
primarily reflecting additional catastrophe loss activity occurring
in the fourth quarter of 2018, principally Hurricane Michael, and
the Q4 2018 California Wildfires. (2) An initial estimate of
the net negative impact of Typhoons Jebi, Mangkhut and Trami,
Hurricane Florence and the wildfires in California during the third
quarter of 2018 (collectively, the “Q3 2018 Catastrophe Events”)
was recorded in the Company’s consolidated financial statements
during the third quarter of 2018. The amounts noted in the table
above reflect changes in the estimates of the net negative impact
of the Q3 2018 Catastrophe Events recorded in the fourth quarter of
2018. (3) An initial estimate of the net negative impact of
the Hurricanes Harvey, Irma and Maria, the Mexico City Earthquake,
the wildfires in California during the fourth quarter of 2017 and
certain losses associated with aggregate loss contracts
(collectively, the “2017 Large Loss Events”) was recorded in the
Company’s consolidated financial statements during 2017. The
amounts noted in the table above reflect changes in the estimates
of the net negative impact of the 2017 Large Loss Events recorded
in the fourth quarter of 2018. (4) Impact on Casualty and
Specialty segment result includes loss estimates from catastrophe
exposed contracts within certain specialty lines of business (i.e.,
energy, marine, and regional multi-line business). Amounts shown
for the Q4 2018 California Wildfires do not reflect impacts from
certain casualty liability exposures within the Casualty and
Specialty segment as different actuarial techniques are used to
estimate losses related to such exposures.
Underwriting Results by Segment
Property Segment
Gross premiums written in the Property segment were $199.9
million in the fourth quarter of 2018, an increase of $104.8
million, or 110.1%, compared to $95.2 million in the fourth quarter
of 2017. Included in gross premiums written in the Property segment
in the fourth quarter of 2018 was $102.7 million of reinstatement
premiums written primarily associated with Hurricane Michael and
the Q4 2018 California Wildfires. Included in the gross premiums
written in the Property segment in the fourth quarter of 2017 was
$10.4 million of reinstatement premiums written primarily
associated with the wildfires in California during the fourth
quarter of 2017 (the “Q4 2017 California Wildfires”). Excluding the
reinstatement premiums written in each period associated with the
respective catastrophe events, gross premiums written in the
Property segment would have increased $12.4 million, or 14.7%, in
the fourth quarter of 2018, compared to the fourth quarter of
2017.
Gross premiums written in the catastrophe class of business were
$108.9 million in the fourth quarter of 2018, an increase of $73.9
million, or 211.1%, compared to the fourth quarter of 2017.
Included in the catastrophe class of business in the fourth quarter
of 2018 was $102.8 million of reinstatement premiums written
primarily associated with Hurricane Michael and the Q4 2018
California Wildfires, as compared to the fourth quarter of 2017
which included $10.2 million of reinstatement premiums written
primarily associated with the Q4 2017 California Wildfires.
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 decreased
by $18.7 million, or 75.4%, principally due to the non-renewal of
certain bespoke transactions the Company entered into during the
fourth quarter of 2017. The Company does not typically have
significant gross premiums written in the catastrophe class of
business during the fourth quarter outside of bespoke transactions
or catastrophe event related reinstatement premiums or back up
covers.
Gross premiums written in the other property class of business
were $91.0 million in the fourth quarter of 2018, an increase of
$30.8 million, or 51.2%, compared to the fourth quarter of 2017.
The increase in gross premiums written in the other property class
of business was primarily driven by the continued growth in the
Lloyd’s underwriting platform, both from existing relationships and
through new opportunities.
Ceded premiums written in the Property segment were $29.3
million in the fourth quarter of 2018, an increase of $16.4
million, or 127.3%, compared to the fourth quarter of 2017.
Included in ceded premiums written in the fourth quarter of 2018
was $26.0 million of reinstatement premiums primarily associated
with Hurricane Michael and the Q4 2018 California Wildfires as
compared to the fourth quarter of 2017, which included $5.4 million
of reinstatement premiums written associated with the 2017 Large
Loss Events.
The Property segment incurred an underwriting loss of $35.0
million and had a combined ratio of 110.6% in the fourth quarter of
2018, compared to an underwriting loss of $22.7 million and a
combined ratio of 110.6% in the fourth quarter of 2017. Principally
impacting the Property segment underwriting result and combined
ratio in the fourth quarter of 2018 were Hurricane Michael, the Q4
2018 California Wildfires and changes in the 2018 Aggregate Losses,
which resulted in a net negative impact on the underwriting result
of $205.7 million and added 74.1 percentage points to the combined
ratio. In addition, the underwriting results in the fourth quarter
of 2018 were positively impacted by changes in the estimates of the
net negative impact of the Q3 2018 Catastrophe Events and 2017
Large Loss Events of $55.2 million and $24.8 million, respectively,
reducing the Property segment combined ratio by 17.7 and 7.9
percentage points, respectively. In comparison, the fourth quarter
of 2017 was impacted by the Q4 2017 California Wildfires, which
resulted in an underwriting loss of $154.4 million and added 75.3
percentage points to the Property segment combined ratio. Also
impacting the Property segment underwriting result in the fourth
quarter of 2017 was a $52.9 million decrease in underwriting losses
associated with Hurricanes Harvey, Irma and Maria and the Mexico
City Earthquake, partially offset by $49.6 million of underwriting
losses associated with changes in estimates of aggregate loss
contracts recorded during the fourth quarter of 2017.
Casualty and Specialty Segment
Gross premiums written in the Casualty and Specialty segment
were $347.8 million in the fourth quarter of 2018, an increase of
$35.2 million, or 11.3%, compared to the fourth quarter of 2017.
The increase was principally due to continued and selective growth
from new business opportunities primarily within our financial
lines and other classes of business.
The Casualty and Specialty segment incurred an underwriting loss
of $47.4 million and had a combined ratio of 119.3% in the fourth
quarter of 2018, compared to underwriting income of $11.5 million
and a combined ratio of 94.5%, in the fourth quarter of 2017. The
underwriting loss in the fourth quarter of 2018 was the result of
increases in its estimate of the reserve for claims and claim
expenses within the Company’s casualty book of business driven by
liability exposures associated with the Q4 2018 California
Wildfires. The Company utilizes standard actuarial techniques by
class and line of business within its casualty classes of business
and has taken into account these exposures in selecting its best
estimate of its reserve for claims and claim expenses for the
classes of business impacted.
During the fourth quarter of 2018, the Casualty and Specialty
segment experienced net favorable development on prior accident
years net claims and claim expenses of $25.2 million, or 10.3
percentage points, compared to net favorable development of $7.8
million, or 3.8 percentage points, in the fourth quarter of 2017.
The net favorable development during the fourth 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 loss of $35.3
million in the fourth quarter of 2018, compared to a gain of $65.7
million in the fourth quarter of 2017, a decrease of $101.1
million. The decrease in the total investment result was
principally due to an increase in the net realized and unrealized
losses on investments of $80.9 million, primarily driven by
unrealized losses and lower realized gains on the Company’s equity
investments trading portfolio, partially offset by unrealized gains
on the Company’s portfolio of fixed maturity investments trading.
In addition, net investment income decreased by $20.1 million,
primarily driven by losses on the Company’s portfolio of private
equity and catastrophe bond investments, partially offset by higher
returns on the Company’s fixed maturity and short term investment
portfolios.
- Net loss attributable to redeemable
noncontrolling interests in the fourth quarter of 2018 was $49.3
million, compared to net income attributable to redeemable
noncontrolling interests of $0.1 million in the fourth quarter of
2017. The result for the fourth quarter of 2018 was primarily
driven by more significant losses in DaVinciRe associated with
Hurricane Michael, the Q4 2018 California Wildfires and changes in
the 2018 Aggregate Losses as compared to the Q4 2017 California
Wildfires during the fourth quarter of 2017. The Company’s
ownership in DaVinciRe was 22.1% at both December 31, 2018 and
December 31, 2017. The Company expects its noncontrolling
economic ownership in DaVinciRe to fluctuate over time.
- The Company recognized an income tax
benefit of $8.9 million in the fourth quarter of 2018, compared to
an income tax expense of $41.2 million in the fourth quarter of
2017. In the fourth quarter of 2018, the income tax benefit was
principally driven by underwriting losses in the U.S. associated
with Hurricane Michael, the Q4 2018 California Wildfires and
changes in the 2018 Aggregate Losses, and unrealized losses on
investments in the Company’s U.S. investment portfolio. In
comparison, income tax expense in the fourth quarter of 2017, was
principally driven by a write-down of a portion of the Company’s
deferred tax asset of $36.7 million as a result of the reduction in
the U.S. corporate tax rate from 35% to 21% pursuant to the Tax
Cuts and Jobs Act of 2017, which was enacted on December 22, 2017
and effective on January 1, 2018.
FULL YEAR 2018 SUMMARY
- Gross premiums written increased by
$512.9 million, or 18.3%, to $3.3 billion, in 2018, compared to
2017, driven primarily by increases of $320.5 million in the
Property segment and $192.4 million in the Casualty and Specialty
segment. Included in gross premiums written in 2018 was $94.5
million of reinstatement premiums written associated with the 2018
Large Loss Events and changes in the estimates of the 2017 Large
Loss Events, and $102.3 million of gross premiums written
associated with a large, non-recurring reinsurance transaction,
each principally within the Property segment. Included in the gross
premiums written in 2017 was $180.2 million of reinstatement
premiums written associated with the 2017 Large Loss Events.
- Underwriting income of $244.9 million
and a combined ratio of 87.6% in 2018, compared to an underwriting
loss of $651.5 million and a combined ratio of 137.9%, in 2017.
Underwriting income was comprised of $262.1 million of underwriting
income in the Property segment, partially offset by a $17.0 million
underwriting loss in the Casualty and Specialty segment. Impacting
the underwriting result for 2018 was the 2018 Large Loss Events,
which had a net negative impact on the Company’s underwriting
result of $340.2 million and added 18.6 percentage points to the
combined ratio, partially offset by changes in the estimates of the
2017 Large Loss Events, which had a positive impact on the
underwriting result of $157.8 million and reduced the combined
ratio by 8.0 percentage points. In addition, as a result of the Q4
2018 California Wildfires, the Company’s underwriting result was
negatively impacted by certain casualty liability exposures within
the Casualty and Specialty segment.
- Net income available to RenaissanceRe
common shareholders of $197.3 million in 2018 included total net
negative impact on the Company’s net income available to
RenaissanceRe common shareholders of $86.4 million from the 2018
Large Loss Events and changes in estimates of the net negative
impact of the 2017 Large Loss Events.
- Total investment result was a gain of
$86.8 million in 2018, generating an annualized total investment
return of 0.8%. The Company’s portfolio of fixed maturity and short
term investments had a yield to maturity of 3.2% at
December 31, 2018, contributing positively to the $261.9
million of net investment income to the total investment result in
2018.
Net Negative Impact
The financial data below provides additional information
detailing the net negative impact of the Q3 2018 Catastrophe
Events, the Q4 2018 Catastrophe Events (as defined herein) and the
2018 Aggregate Losses (the “2018 Large Loss Events”) and the net
positive impact of changes in estimates of the net negative impact
of the 2017 Large Loss Events on the Company’s consolidated
financial statements in 2018.
Year ended
December 31, 2018
Q3 2018CatastropheEvents
(1)
Q4 2018CatastropheEvents
(2)
2018AggregateLosses
Total 2018Large
LossEvents
Changes inEstimatesof the
2017Large LossEvents (3)
Total (in thousands, except percentages) (Increase)
decrease in net claims and claims expenses incurred $ (152,672 ) $
(232,702 ) $ (54,818 ) $ (440,192 ) $ 187,484 $ (252,708 ) Net
reinstatement premiums earned 26,956 59,660 2 86,618 (18,376 )
68,242 Lost (earned) profit commissions 2,279 11,971
(900 ) 13,350 (11,355 ) 1,995 Net (negative) positive
impact on underwriting result (123,437 ) (161,071 ) (55,716 )
(340,224 ) 157,753 (182,471 ) Redeemable noncontrolling interest -
DaVinciRe 20,815 87,245 16,035 124,095
(27,983 ) 96,112 Net (negative) positive impact on net
income available to RenaissanceRe common shareholders $ (102,622 )
$ (73,826 ) $ (39,681 ) $ (216,129 ) $ 129,770 $ (86,359 )
Percentage point impact on consolidated combined ratio 6.5 8.8 2.8
18.6 (8.0 ) 10.0 Net (negative) positive impact on Property
segment underwriting result $ (121,875 ) $ (161,071 ) $ (55,716 ) $
(338,662 ) $ 145,724 $ (192,938 ) Net (negative) positive impact on
Casualty and Specialty segment underwriting result (4) (1,562 ) —
— (1,562 ) 12,029 10,467 Net
(negative) positive impact on underwriting result $ (123,437 ) $
(161,071 ) $ (55,716 ) $ (340,224 ) $ 157,753 $ (182,471 )
(1) Q3 2018 Catastrophe Events includes Typhoons
Jebi, Mangkhut and Trami, Hurricane Florence and the wildfires in
California during the third quarter of 2018. (2) Q4 2018
Catastrophe Events includes Hurricane Michael and the wildfires in
California during the fourth quarter of 2018. (3) An initial
estimate of the net negative impact of the 2017 Large Loss Events
was recorded in the Company’s consolidated financial statements
during 2017. The amounts noted in the table above reflect changes
in the estimates of the net negative impact of the 2017 Large Loss
Events recorded in 2018. (4) Impact on Casualty and
Specialty segment result includes loss estimates from catastrophe
exposed contracts within certain specialty lines of business (i.e.,
energy, marine, and regional multi-line business). Amounts shown
for the Q4 2018 Catastrophe Events, which includes the Q4 2018
California Wildfires, do not reflect impacts from certain casualty
liability exposures within the Casualty and Specialty segment
associated with the Q4 2018 California Wildfires, as different
actuarial techniques are used to estimate losses related to such
exposures.
Underwriting Results by Segment
Property Segment
In 2018, gross premiums written in the Property segment
increased by $320.5 million, or 22.2%, to $1.8 billion, compared to
$1.4 billion in 2017. Included in gross premiums written in the
Property segment in 2018 was $95.5 million of reinstatement
premiums written primarily associated with the 2018 Large Loss
Events and changes in the estimates of the net negative impact of
the 2017 Large Loss Events. Included in the gross premiums written
in the Property segment in 2017 was $175.1 million of reinstatement
premiums written primarily associated with the 2017 Large Loss
Events. Excluding the reinstatement premiums written in each period
associated with the respective catastrophe events, gross premiums
written in the Property segment would have increased $400.1
million, or 31.6%, in 2018, compared to 2017.
Gross premiums written in the catastrophe class of business were
$1.3 billion in 2018, an increase of $244.9 million, or 22.2%,
compared to 2017. Included in the catastrophe class of business in
2018 were $102.3 million of gross premiums written associated with
large, non-recurring reinsurance transactions and $95.5 million of
reinstatement premiums written primarily associated with the 2018
Large Loss Events and changes in the estimates of the net negative
impact of the 2017 Large Loss Events. In comparison, 2017 included
$172.4 million of reinstatement premiums written associated with
the 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 $321.8 million, or 34.5%, 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 $411.6 million in 2018, an increase of $75.6 million, or
22.5%, compared to 2017. The increase in gross premiums written in
the other property class of business was primarily driven by growth
across the Company’s underwriting platforms, both from existing
relationships and through new opportunities the Company believes
have comparably attractive risk-return attributes.
The Company’s Property segment generated underwriting income of
$262.1 million in 2018, compared to an underwriting loss of $574.9
million in 2017, an improvement of $837.0 million. In 2018, the
Property segment generated a net claims and claim expense ratio of
47.4%, an underwriting expense ratio of 27.7% and a combined ratio
of 75.1%, compared to 139.4%, 22.3% and 161.7%, respectively, in
2017.
Principally impacting the Property segment underwriting result
and combined ratio in 2018 were the 2018 Large Loss Events, which
resulted in a net negative impact on the underwriting result of
$338.7 million, and a corresponding increase in the combined ratio
of 37.4 percentage points. This was partially offset by a net
positive impact on the underwriting result associated with changes
in the estimates of the net negative impact on the underwriting
result of the 2017 Large Loss Events of $145.7 million, and a
corresponding decrease in the combined ratio of 14.0 percentage
points. In comparison, 2017 was impacted by the 2017 Large Loss
Events which resulted in a net negative impact on the underwriting
result of $959.8 million and added 110.5 percentage points to the
Property segment combined ratio.
Primarily as a result of changes in the estimates of the net
negative impact of the 2017 Large Loss Events noted above, the
Property segment experienced net favorable development on prior
accident years net claims and claim expenses of $221.3 million, or
21.0 percentage points, during 2018, compared to $45.6 million, or
4.9%, in 2017.
Casualty and Specialty Segment
In 2018, gross premiums written in the Casualty and Specialty
segment increased by $192.4 million, or 14.2%, to $1.5 billion,
compared to $1.4 billion in 2017. The increase was principally due
to selective growth from new business opportunities across various
classes of business in the Company’s Casualty and Specialty
segment. Much of this growth is a result of the Company’s
differentiated strategy to provide bespoke customer solutions,
which may be non-recurring.
The Company’s Casualty and Specialty segment incurred an
underwriting loss of $17.0 million in 2018, compared to an
underwriting loss of $78.2 million in 2017. In 2018, the Casualty
and Specialty segment generated a net claims and claim expense
ratio of 67.3%, an underwriting expense ratio of 34.5% and a
combined ratio of 101.8%, compared to 71.8%, 38.1% and 109.9%,
respectively, in 2017.
The decrease in the Company’s Casualty and Specialty segment’s
combined ratio was driven by decreases of 4.5 percentage points in
the net claims and claim expense ratio and 3.6 percentage points in
the underwriting expense ratio, in 2018, compared to 2017.
The decrease in the Company’s Casualty and Specialty segment net
claims and claim expense ratio was principally due to favorable
development of prior accident year losses of $49.3 million, or 5.3
percentage points during 2018, as compared to net adverse
development of $6.2 million, or 0.7 percentage points, in 2017. The
net favorable development during 2018 was principally driven by
reported losses coming in lower than expected, compared to 2017
which experienced adverse development associated with the decrease
in the Ogden Rate during the period.
The underwriting expense ratio in the Company’s Casualty and
Specialty segment decreased 3.6 percentage points to 34.5% in 2018,
compared to 38.1% in 2017, due to a decrease in both the net
acquisition ratio and the operating expense ratio, with the latter
being due to improved operating leverage.
Other Items
- Net income attributable to redeemable
noncontrolling interests in 2018 was $41.6 million, compared to net
loss attributable to redeemable noncontrolling interests of $132.3
million in 2017, a change of $173.8 million, principally due to
DaVinciRe generating underwriting income in 2018, compared to
significant underwriting losses in 2017 driven by the 2017 Large
Loss Events.
- 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 $86.8 million
in 2018, compared to $358.0 million in 2017, a decrease of $271.2
million. The decrease was primarily driven by net realized and
unrealized losses on investments of $175.1 million in 2018,
compared to net realized and unrealized gains on investments of
$135.8 million in 2017. The net realized and unrealized losses on
investments in 2018 were driven by net realized and unrealized
losses on the fixed maturity investments portfolio, and net
realized and unrealized losses on the equity investments trading
portfolio. Partially offsetting these items was higher net
investment income from the Company’s portfolios of fixed maturity
investments trading and short term investments, primarily driven by
higher average invested assets and the impact of interest rate
increases during recent periods.
- On December 18, 2018, the Company and
Dutch pension fund manager PGGM announced the creation
of Vermeer Reinsurance Ltd. (“Vermeer”) to provide
capacity focused on risk remote layers in the U.S. property
catastrophe market. Vermeer was initially capitalized
with $600.0 million of equity from PGGM, the sole
investor in Vermeer, with up to a further $400.0
million available to pursue growth opportunities in 2019, for
a total of $1.0 billion of capital. Vermeer has received
an “A” financial strength rating from A.M. Best and has
obtained approval in principle to be licensed and regulated by
the Bermuda Monetary Authority as a Class 3B reinsurer.
Vermeer will be managed by Renaissance Underwriting Managers,
Ltd. and is consolidated into the Company’s consolidated
financial statements and all significant inter-company transactions
have been eliminated. Redeemable noncontrolling interest – Vermeer
represents the interests of external parties with respect to the
net income and shareholders’ equity of Vermeer.
- On October 30, 2018, the Company
entered into a Stock Purchase Agreement by and among the Company,
Tokio Marine & Nichido Fire Insurance Co. Ltd. and, with
respect to certain sections only, Tokio Marine Holdings, Inc. (the
“TMR Stock Purchase Agreement”), pursuant to which the Company has
agreed, subject to the terms and conditions therein, to cause its
wholly owned subsidiary RenaissanceRe Specialty Holdings (UK)
Limited to purchase all of the share capital of Tokio Millennium Re
AG and Tokio Millennium Re (UK) Limited, together with their
respective subsidiaries (the “TMR Group Entities”). This
transaction is expected to close in the first half of 2019, subject
to the closing conditions set forth in the TMR Stock Purchase
Agreement, including receipt of required regulatory approvals.
- On December 20, 2018, State Farm Mutual
Automobile Insurance Company (“State Farm”) purchased 1,947,496
Common Shares of the Company in exchange for $250.0 million in a
private placement pursuant to an Investment Agreement the Company
and State Farm entered into on October 30, 2018.
- Effective January 1, 2019, Upsilon RFO
issued $456.8 million of non-voting preference shares to investors,
including $100.0 million to the Company. Of the total amount,
$400.0 million was received by the Company prior to December 31,
2018. At December 31, 2018, $300.0 million was included in other
liabilities on the Company’s consolidated balance sheet. Effective
January 1, 2019, the Company’s participation in the risks assumed
by Upsilon RFO was 16.9%.
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, January
30, 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, 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 Year ended
December 31, 2018 December 31,
2017 December 31, 2018 December
31, 2017 Revenues Gross premiums written $
547,755 $ 407,766 $ 3,310,427 $ 2,797,540
Net premiums written $ 411,094 $ 288,223 $ 2,131,902 $
1,871,325 Decrease (increase) in unearned premiums 163,519
133,250 (155,773 ) (153,750 ) Net premiums earned 574,613
421,473 1,976,129 1,717,575 Net investment income 53,338 73,464
261,866 222,209 Net foreign exchange (losses) gains (932 ) (490 )
(12,428 ) 10,628 Equity in earnings of other ventures 4,143 2,200
18,474 8,030 Other income 5,489 2,362 5,969 9,415 Net realized and
unrealized (losses) gains on investments (88,654 ) (7,716 )
(175,069 ) 135,822
Total revenues 547,997
491,293 2,074,941 2,103,679
Expenses
Net claims and claim expenses incurred 477,638 304,064 1,120,018
1,861,428 Acquisition expenses 120,465 98,598 432,989 346,892
Operational expenses 58,859 29,192 178,267 160,778 Corporate
expenses 12,108 4,237 33,983 18,572 Interest expense 11,765
11,777 47,069 44,193
Total expenses
680,835 447,868 1,812,326 2,431,863
(Loss) income before taxes (132,838 ) 43,425 262,615 (328,184 )
Income tax benefit (expense) 8,852 (41,226 ) 6,302
(26,487 )
Net (loss) income (123,986 ) 2,199 268,917
(354,671 ) Net loss (income) attributable to noncontrolling
interests 49,269 (56 ) (41,553 ) 132,282
Net
(loss) income attributable to RenaissanceRe (74,717 ) 2,143
227,364 (222,389 ) Dividends on preference shares (9,189 ) (5,595 )
(30,088 ) (22,381 )
Net (loss) income (attributable) available
to RenaissanceRe common shareholders $ (83,906 ) $ (3,452 ) $
197,276 $ (244,770 ) Net (loss) income (attributable)
available to RenaissanceRe common shareholders per common share -
basic $ (2.10 ) $ (0.09 ) $ 4.91 $ (6.15 ) Net (loss) income
(attributable) available to RenaissanceRe common shareholders per
common share - diluted $ (2.10 ) $ (0.09 ) $ 4.91 $ (6.15 )
Operating income (loss) available (attributable) to RenaissanceRe
common shareholders per common share - diluted (1) $ 0.02 $ 1.05 $
9.17 $ (8.35 ) Average shares outstanding - basic 40,111
39,478 39,732 39,854 Average shares outstanding - diluted 40,111
39,478 39,755 39,854 Net claims and claim expense ratio 83.1
% 72.1 % 56.7 % 108.4 % Underwriting expense ratio 31.2 % 30.4 %
30.9 % 29.5 % Combined ratio 114.3 % 102.5 % 87.6 % 137.9 %
Return on average common equity - annualized (7.8 )% (0.3 )% 4.7 %
(5.7 )% Operating return on average common equity - annualized (1)
0.1 % 4.2 % 8.8 % (7.7 )% (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)
December
31, 2018 December 31, 2017 Assets
(Unaudited) (Audited) Fixed maturity investments trading, at fair
value $ 8,088,870 $ 7,426,555 Short term investments, at fair value
2,586,520 991,863 Equity investments trading, at fair value 310,252
388,254 Other investments, at fair value 784,933 594,793
Investments in other ventures, under equity method 115,172
101,974 Total investments 11,885,747 9,503,439 Cash and cash
equivalents 1,107,922 1,361,592 Premiums receivable 1,537,188
1,304,622 Prepaid reinsurance premiums 616,185 533,546 Reinsurance
recoverable 2,372,221 1,586,630 Accrued investment income 51,311
42,235 Deferred acquisition costs 476,661 426,551 Receivable for
investments sold 256,416 103,145 Other assets 135,127 121,226
Goodwill and other intangibles 237,418 243,145
Total
assets $ 18,676,196 $ 15,226,131
Liabilities,
Noncontrolling Interests and Shareholders’ Equity
Liabilities Reserve for claims and claim expenses $
6,076,271 $ 5,080,408 Unearned premiums 1,716,021 1,477,609 Debt
991,127 989,623 Reinsurance balances payable 1,902,056 989,090
Payable for investments purchased 380,332 208,749 Other liabilities
513,609 792,771
Total liabilities 11,579,416
9,538,250 Redeemable noncontrolling interest 2,051,700 1,296,506
Shareholders’ Equity Preference shares 650,000 400,000
Common shares 42,207 40,024 Additional paid-in capital 296,099
37,355 Accumulated other comprehensive (loss) income (1,433 ) 224
Retained earnings 4,058,207 3,913,772
Total shareholders’
equity attributable to RenaissanceRe 5,045,080 4,391,375
Total liabilities, noncontrolling interests and shareholders’
equity $ 18,676,196 $ 15,226,131
Book value
per common share $ 104.13 $ 99.72
RenaissanceRe Holdings Ltd. Supplemental Financial Data -
Segment Information (in thousands of United States Dollars,
except percentages) (Unaudited)
Three months ended
December 31, 2018 Property
Casualty andSpecialty
Other Total Gross premiums written $
199,918 $ 347,837 $ — $ 547,755 Net
premiums written $ 170,647 $ 240,447 $ — $
411,094 Net premiums earned $ 328,585 $ 246,027 $ 1 $
574,613 Net claims and claim expenses incurred 275,700 202,047 (109
) 477,638 Acquisition expenses 50,817 69,650 (2 ) 120,465
Operational expenses 37,021 21,762 76 58,859
Underwriting (loss) income $ (34,953 ) $ (47,432 ) $ 36
(82,349 ) Net investment income 53,338 53,338 Net foreign
exchange losses (932 ) (932 ) Equity in earnings of other ventures
4,143 4,143 Other income 5,489 5,489 Net realized and unrealized
losses on investments (88,654 ) (88,654 ) Corporate expenses
(12,108 ) (12,108 ) Interest expense (11,765 ) (11,765 ) Loss
before taxes and redeemable noncontrolling interests (132,838 )
Income tax benefit 8,852 8,852 Net loss attributable to redeemable
noncontrolling interests 49,269 49,269 Dividends on preference
shares (9,189 ) (9,189 ) Net loss attributable to RenaissanceRe
common shareholders $ (83,906 ) Net claims and claim
expenses incurred – current accident year $ 324,118 $ 227,289 $ — $
551,407 Net claims and claim expenses incurred – prior accident
years (48,418 ) (25,242 ) (109 ) (73,769 ) Net claims and claim
expenses incurred – total $ 275,700 $ 202,047 $ (109
) $ 477,638 Net claims and claim expense ratio –
current accident year 98.6 % 92.4 % 96.0 % Net claims and claim
expense ratio – prior accident years (14.7 )% (10.3 )% (12.9 )% Net
claims and claim expense ratio – calendar year 83.9 % 82.1 % 83.1 %
Underwriting expense ratio 26.7 % 37.2 % 31.2 % Combined ratio
110.6 % 119.3 % 114.3 %
Three months ended December 31,
2017 Property
Casualty andSpecialty
Other Total Gross premiums written $ 95,166 $
312,600 $ — $ 407,766 Net premiums written $
82,286 $ 205,926 $ 11 $ 288,223 Net
premiums earned $ 215,046 $ 206,416 $ 11 $ 421,473 Net claims and
claim expenses incurred 181,712 123,225 (873 ) 304,064 Acquisition
expenses 38,699 59,898 1 98,598 Operational expenses 17,353
11,840 (1 ) 29,192 Underwriting (loss) income $
(22,718 ) $ 11,453 $ 884 (10,381 ) Net investment
income 73,464 73,464 Net foreign exchange losses (490 ) (490 )
Equity in earnings of other ventures 2,200 2,200 Other income 2,362
2,362 Net realized and unrealized losses on investments (7,716 )
(7,716 ) Corporate expenses (4,237 ) (4,237 ) Interest expense
(11,777 ) (11,777 ) Income before taxes and redeemable
noncontrolling interests 43,425 Income tax expense (41,226 )
(41,226 ) Net Income attributable to redeemable noncontrolling
interests (56 ) (56 ) Dividends on preference shares (5,595 )
(5,595 ) Net loss attributable to RenaissanceRe common shareholders
$ (3,452 ) Net claims and claim expenses incurred – current
accident year $ 210,340 $ 131,057 $ — $ 341,397 Net claims and
claim expenses incurred – prior accident years (28,628 ) (7,832 )
(873 ) (37,333 ) Net claims and claim expenses incurred – total $
181,712 $ 123,225 $ (873 ) $ 304,064
Net claims and claim expense ratio – current accident year 97.8 %
63.5 % 81.0 % Net claims and claim expense ratio – prior accident
years (13.3 )% (3.8 )% (8.9 )% Net claims and claim expense ratio –
calendar year 84.5 % 59.7 % 72.1 % Underwriting expense ratio 26.1
% 34.8 % 30.4 % Combined ratio 110.6 % 94.5 % 102.5 %
RenaissanceRe Holdings Ltd. Supplemental Financial Data -
Segment Information (in thousands of United States Dollars,
except percentages) (Unaudited)
Year ended
December 31, 2018 Property
Casualty andSpecialty
Other Total Gross premiums written $
1,760,926 $ 1,549,501 $ — $ 3,310,427
Net premiums written $ 1,055,188 $ 1,076,714 $ —
$ 2,131,902 Net premiums earned $ 1,050,831 $ 925,298
$ — $ 1,976,129 Net claims and claim expenses incurred 497,895
622,320 (197 ) 1,120,018 Acquisition expenses 177,912 255,079 (2 )
432,989 Operational expenses 112,954 64,883 430
178,267 Underwriting income (loss) $ 262,070 $
(16,984 ) $ (231 ) 244,855 Net investment income 261,866 261,866
Net foreign exchange losses (12,428 ) (12,428 ) Equity in earnings
of other ventures 18,474 18,474 Other income 5,969 5,969 Net
realized and unrealized losses on investments (175,069 ) (175,069 )
Corporate expenses (33,983 ) (33,983 ) Interest expense (47,069 )
(47,069 ) Income before taxes and redeemable noncontrolling
interests 262,615 Income tax benefit 6,302 6,302 Net income
attributable to redeemable noncontrolling interests (41,553 )
(41,553 ) Dividends on preference shares (30,088 ) (30,088 ) Net
income attributable to RenaissanceRe common shareholders $ 197,276
Net claims and claim expenses incurred – current
accident year $ 719,185 $ 671,582 $ — $ 1,390,767 Net claims and
claim expenses incurred – prior accident years (221,290 ) (49,262 )
(197 ) (270,749 ) Net claims and claim expenses incurred – total $
497,895 $ 622,320 $ (197 ) $ 1,120,018
Net claims and claim expense ratio – current accident year 68.4 %
72.6 % 70.4 % Net claims and claim expense ratio – prior accident
years (21.0 )% (5.3 )% (13.7 )% Net claims and claim expense ratio
– calendar year 47.4 % 67.3 % 56.7 % Underwriting expense ratio
27.7 % 34.5 % 30.9 % Combined ratio 75.1 % 101.8 % 87.6 %
Year ended December 31, 2017 Property
Casualty andSpecialty
Other Total Gross premiums written $ 1,440,437
$ 1,357,110 $ (7 ) $ 2,797,540 Net premiums written $
978,014 $ 893,307 $ 4 $ 1,871,325 Net
premiums earned $ 931,070 $ 786,501 $ 4 $ 1,717,575 Net claims and
claim expenses incurred 1,297,985 565,026 (1,583 ) 1,861,428
Acquisition expenses 113,816 233,077 (1 ) 346,892 Operational
expenses 94,194 66,548 36 160,778
Underwriting (loss) income $ (574,925 ) $ (78,150 ) $ 1,552
(651,523 ) Net investment income 222,209 222,209 Net foreign
exchange gains 10,628 10,628 Equity in earnings of other ventures
8,030 8,030 Other income 9,415 9,415 Net realized and unrealized
gains on investments 135,822 135,822 Corporate expenses (18,572 )
(18,572 ) Interest expense (44,193 ) (44,193 ) Loss before taxes
and redeemable noncontrolling interests (328,184 ) Income tax
expense (26,487 ) (26,487 ) Net loss attributable to redeemable
noncontrolling interests 132,282 132,282 Dividends on preference
shares (22,381 ) (22,381 ) Net loss attributable to RenaissanceRe
common shareholders $ (244,770 ) Net claims and claim
expenses incurred – current accident year $ 1,343,581 $ 558,843 $ —
$ 1,902,424 Net claims and claim expenses incurred – prior accident
years (45,596 ) 6,183 (1,583 ) (40,996 ) Net claims and
claim expenses incurred – total $ 1,297,985 $ 565,026
$ (1,583 ) $ 1,861,428 Net claims and claim expense
ratio – current accident year 144.3 % 71.1 % 110.8 % Net claims and
claim expense ratio – prior accident years (4.9 )% 0.7 % (2.4 )%
Net claims and claim expense ratio – calendar year 139.4 % 71.8 %
108.4 % Underwriting expense ratio 22.3 % 38.1 % 29.5 % Combined
ratio 161.7 % 109.9 % 137.9 %
RenaissanceRe
Holdings Ltd. Supplemental Financial Data - Gross Premiums
Written (in thousands of United States Dollars) (Unaudited)
Three months ended Year ended
December 31, 2018 December 31,
2017 December 31, 2018 December
31, 2017
Property
Segment
Catastrophe $ 108,937 $ 35,012 $ 1,349,324 $ 1,104,450 Other
property 90,981 60,154 411,602 335,987
Property segment gross premiums written $ 199,918 $ 95,166
$ 1,760,926 $ 1,440,437
Casualty and
Specialty Segment
Professional liability (1) $ 119,391 $ 117,075 $ 485,851 $ 452,310
General casualty (2) 75,797 80,538 453,097 417,880 Financial lines
(3) 102,167 83,157 352,902 303,800 Other (4) 50,482 31,830
257,651 183,120 Casualty and Specialty segment gross
premiums written $ 347,837 $ 312,600 $ 1,549,501
$ 1,357,110 (1) Includes directors and
officers, medical malpractice, and professional indemnity.
(2) Includes automobile liability, casualty clash, employer’s
liability, umbrella or excess casualty, workers’ compensation and
general liability (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 Year ended December
31, 2018 December 31, 2017 December
31, 2018 December 31, 2017 Fixed maturity
investments $ 60,189 $ 46,544 $ 211,973 $ 179,624 Short term
investments 11,231 3,606 33,571 11,082 Equity investments trading
1,383 998 4,474 3,628 Other investments Private equity investments
(11,672 ) 13,215 477 33,999 Other (4,871 ) 12,587 22,475 8,067 Cash
and cash equivalents 1,102 360 3,810 1,196
57,362 77,310 276,780 237,596 Investment expenses (4,024 )
(3,846 ) (14,914 ) (15,387 )
Net investment income 53,338
73,464 261,866 222,209 Gross
realized gains 6,339 6,068 21,284 49,121 Gross realized losses
(23,399 ) (8,930 ) (91,098 ) (38,832 ) Net realized (losses) gains
on fixed maturity investments (17,060 ) (2,862 ) (69,814 ) 10,289
Net unrealized gains (losses) on fixed maturity investments trading
16,212 (40,461 ) (57,310 ) 8,479 Net realized and unrealized
(losses) gains on investments-related derivatives (8,021 ) 1,854
(8,784 ) (2,490 ) Net realized gains on equity investments trading
5,898 30,291 27,739 80,027 Net unrealized (losses) gains on equity
investments trading (85,683 ) 3,462 (66,900 ) 39,517
Net realized and unrealized (losses) gains on investments
(88,654 ) (7,716 ) (175,069 ) 135,822
Total investment
result $ (35,316 ) $ 65,748 $ 86,797 $ 358,031
Total investment return - annualized (1.2 )%
2.6 % 0.8 % 3.6 %
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 (loss) income (attributable) 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 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 (loss) income (attributable)
available to RenaissanceRe common shareholders to operating income
(loss) available (attributable) to RenaissanceRe common
shareholders; 2) net (loss) income (attributable) available 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 Year ended (in
thousands of United States Dollars, except per share amounts and
percentages)
December 31, 2018 December
31, 2017 December 31, 2018
December 31, 2017 Net (loss) income (attributable)
available to RenaissanceRe common shareholders $ (83,906 ) $ (3,452
) $ 197,276 $ (244,770 ) Adjustment for net realized and unrealized
losses (gains) on investments 88,654 7,716 175,069 (135,822 )
Adjustment for deferred tax asset write-down (1) — 36,705 — 36,705
Adjustment for income tax (benefit) expense (1) (3,580 ) 384
(5,750 ) 11,587 Operating income (loss) available
(attributable) to RenaissanceRe common shareholders $ 1,168
$ 41,353 $ 366,595 $ (332,300 ) Net (loss)
income (attributable) available to RenaissanceRe common
shareholders per common share - diluted $ (2.10 ) $ (0.09 ) $ 4.91
$ (6.15 ) Adjustment for net realized and unrealized losses (gains)
on investments 2.21 0.20 4.40 (3.41 ) Adjustment for deferred tax
asset write-down (1) — 0.93 — 0.92 Adjustment for income tax
(benefit) expense (1) (0.09 ) 0.01 (0.14 ) 0.29
Operating income (loss) available (attributable) to RenaissanceRe
common shareholders per common share - diluted $ 0.02 $ 1.05
$ 9.17 $ (8.35 ) Return on average common
equity - annualized (7.8 )% (0.3 )% 4.7 % (5.7 )% Adjustment for
net realized and unrealized losses (gains) on investments 8.2 % 0.8
% 4.2 % (3.2 )% Adjustment for deferred tax asset write-down (1) —
% 3.7 % — % 0.9 % Adjustment for income tax (benefit) expense (1)
(0.3 )% — % (0.1 )% 0.3 % Operating return on average common equity
- annualized 0.1 % 4.2 % 8.8 % (7.7 )% (1) Adjustment
for income tax (benefit) expense represents the income tax benefit
(expense) associated with the adjustment for net realized and
unrealized losses (gains) 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 December 31, 2018
September 30, 2018 June 30, 2018
March 31, 2018 December 31,
2017 Book value per common share $ 104.13 $ 105.21 $ 104.56
$ 100.29 $ 99.72 Adjustment for goodwill and other intangibles (1)
(6.28 ) (6.63 ) (6.69 ) (6.66 ) (6.49 ) Tangible book value per
common share 97.85 98.58 97.87 93.63 93.23 Adjustment for
accumulated dividends 19.32 18.99 18.66 18.33
18.00 Tangible book value per common share plus
accumulated dividends $ 117.17 $ 117.57 $ 116.53
$ 111.96 $ 111.23 Quarterly change in
book value per common share (1.0 )% 0.6 % 4.3 % 0.6 % (0.3 )%
Quarterly change in tangible book value per common share plus
change in accumulated dividends (0.4 )% 1.1 % 4.9 % 0.8 % 0.1 %
Year to date change in book value per common share 4.4 % 5.5 % 4.9
% 0.6 % (8.0 )% Year to date change in tangible book value per
common share plus change in accumulated dividends 6.4 % 6.8 % 5.7 %
0.8 % (7.2 )% (1) At December 31, 2018, September 30,
2018, June 30, 2018, March 31, 2018 and December 31, 2017, goodwill
and other intangibles included $27.7 million, $28.4 million, $29.1
million, $26.3 million and $16.7 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/20190129005923/en/
INVESTOR CONTACT:Keith McCueSenior Vice President,
Finance & Investor RelationsRenaissanceRe Holdings Ltd.(441)
239-4830
MEDIA CONTACT:Keil GuntherVice President, Marketing &
CommunicationsRenaissanceRe Holdings Ltd.(441) 239-4932orKekst
CNCDawn Dover(212) 521-4800
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