RenaissanceRe Posts $190.5 Million Q1 Net Income; 36.2% Combined Ratio

Bermuda-based RenaissanceRe Holdings Ltd. reported net income available to common shareholders of $190.5 million or $4.23 per diluted common share in the first quarter of 2013, compared to $201.4 million or $3.88 per diluted common share in the first quarter of 2012.

Operating income available to RenRe common shareholders was $176.6 million or $3.92 per diluted common share for the first quarter of 2013, compared to $155.5 million or $2.98, respectively, in the first quarter of 2012.

RenRe also reported an annualized return on average common equity of 24.3 percent and an annualized operating return on average common equity of 22.5 percent in the first quarter of 2013, compared to 25.6 percent and 19.7 percent, respectively, in the first quarter of 2012, as well as an extremely low combined ratio for, the first quarter of 36.2 percent.

Book value per common share increased $2.93, or 4.3 percent, in the first quarter of 2013 to $71.07, compared to a 5.8 percent increase in the first quarter of 2012. Tangible book value per common share plus accumulated dividends increased $3.22, or 4.8 percent, in the first quarter of 2013, compared to a 6.3 percent increase in the first quarter of 2012.

CEO Neill A. Currie commented: “We enjoyed strong first quarter results, with an annualized operating ROE of 22.5 percent and 4.8 percent growth in tangible book value per share plus dividends for the quarter. Our results reflect strong underwriting profits, principally driven by our high-quality portfolio, the absence of significant catastrophe losses in the quarter, and solid total returns in our investment portfolio.”

“We are working with our customers to meet their needs for the upcoming renewal period. Our long-standing customer relationships, experienced underwriting team and superior capital management put us in a strong position to construct an attractive portfolio of risks during this period,” he added.

The earnings report gave the following highlights for the first quarter:
• Underwriting income of $173.0 million and a combined ratio of 36.2 percent, compared to $196.6 million and 29.4 percent, respectively. The decrease in underwriting income was primarily driven by an $11.7 million increase in net claims and claim expenses as a result of lower favorable development occurring during the quarter and a $7.4 million decrease in net premiums earned due to a combination of lower gross premiums written and an increase in ceded premiums written principally within the Company’s catastrophe unit.

• Gross premiums written decreased $28.7 million, or 4.3 percent, to $635.4 million with the decrease being driven by the Company’s catastrophe and specialty units, and partially offset by growth in the Company’s Lloyd’s segment.

• Total investment income of $51.4 million, which includes the sum of net investment income, net realized and unrealized gains on investments and net other-than-temporary impairments, compared to $113.7 million. The decrease was primarily driven by lower total returns in the Company’s fixed maturity investment portfolio, combined with lower returns in the Company’s portfolio of other investments, principally driven by the Company’s private equity investments.

• Other income improved $46.1 million to income of $7.0 million, compared to a loss of $39.1 million, primarily due to $8.7 million of income in the Company’s weather and energy risk management operations, compared to a loss of $35.5 million from such operations as a result of unusually warm weather experienced in parts of the United Kingdom and certain parts of the United States during the first quarter of 2012.

In the section of the report, which examined RenRe’s reinsurance segment the company noted: “Gross premiums written in the Reinsurance segment were $561.1 million, a decrease of $48.6 million, or 8.0 percent, comprised of a $30.4 million decrease in the Company’s catastrophe unit reflecting the non-renewal or renewal at lower rates for a number of contracts during the January 2013 renewals and an $18.2 million decrease in the Company’s specialty unit, primarily due to the timing of certain multi-year contracts in the comparative quarter.

“Managed catastrophe premiums totaled $529.7 million, a decrease of $29.3 million, or 5.2 percent, primarily driven by the reduction in gross premiums written in the catastrophe unit discussed above. The Company’s managed catastrophe premiums are prone to significant volatility due to the timing of contract inception and also due to the business being characterized by a relatively small number of relatively large transactions.

“The Reinsurance segment generated underwriting income of $168.3 million and a combined ratio of 27.9 percent, compared to $194.1 million and 23.5 percent, respectively, primarily as a result of a $20.4 million decrease in net premiums earned due to a decrease in gross premiums written, as discussed above, combined with an increase in ceded premiums written reflecting the inception of several new contracts and the external cession of business in Upsilon Reinsurance II Ltd., a managed joint venture, and a $5.1 million increase in net claims and claim expenses principally due to lower favorable development.”

Gross premiums written in RenRe’s Lloyd’s Segment “were $74.3 million, an increase of $19.5 million, or 35.5 percent, primarily due to continued organic growth within the segment. The Lloyd’s segment generated underwriting income of $4.2 million and a combined ratio of 89.0 percent, compared to underwriting income of $1.1 million and a combined ratio of 95.6 percent, respectively. The increase in underwriting income in the Lloyd’s segment reflects the continued growth in gross premiums written noted above, partially offset by an increase in net claims and claims expenses of $5.5 million, primarily due to attritional loss activity.”

Source: RenaissanceRe Holdings

Topics Catastrophe Profit Loss Excess Surplus Underwriting Reinsurance Lloyd's