Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - RENAISSANCERE HOLDINGS LTD | rnrq220128-kcover.htm |
| EX-99.2 - COPY OF THE COMPANY'S FINANCIAL SUPPLEMENT - RENAISSANCERE HOLDINGS LTD | rnrq22012financialsuppleme.htm |
RenaissanceRe Reports Net Income of $142.3 Million for the Second Quarter of 2012 or $2.75 Per Diluted Common Share; Quarterly Operating Income of $111.5 Million or $2.14 Per Diluted Common Share
Pembroke, Bermuda, July 31, 2012 -- RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported net income available to RenaissanceRe common shareholders of $142.3 million or $2.75 per diluted common share in the second quarter of 2012, compared to $24.8 million or $0.48 per diluted common share in the second quarter of 2011. Operating income available to RenaissanceRe common shareholders was $111.5 million or $2.14 per diluted common share for the second quarter of 2012, compared to an operating loss attributable to RenaissanceRe common shareholders of $10.2 million or $0.21 per diluted common share in the second quarter of 2011. The Company reported an annualized return on average common equity of 17.5% and an annualized operating return on average common equity of 13.7% in the second quarter of 2012, compared to 3.3% and negative 1.4%, respectively, in the second quarter of 2011. Book value per common share increased $2.39, or 3.8%, in the second quarter of 2012 to $65.07, compared to a 0.5% increase in the the second quarter of 2011.
See Comments on Regulation G for a reconciliation of non-GAAP measures.
Neill A. Currie, CEO, commented: "In the second quarter of 2012, we generated an annualized operating ROE of 13.7%. We increased our book value per share by 3.8% for the quarter and almost 10% year to date. Our results benefited from relatively low catastrophe losses, solid investment returns and favorable reserve development."
Mr. Currie, continued: "Although property catastrophe pricing at June 1st was a little lower than we had anticipated, we are pleased with the results of the recent renewal season. We have grown significantly in each unit this year, and have produced an attractive portfolio of risks."
SECOND QUARTER 2012 HIGHLIGHTS (1)
• | Underwriting income of $127.9 million and a combined ratio of 47.7%, compared to $9.7 million and 95.5%, respectively, was primarily driven by a relatively low level of insured catastrophes during the second quarter of 2012, compared to the second quarter of 2011, which was impacted by the U.S. tornadoes which had a net negative impact (2) of $70.8 million and added 51.8 percentage points to the combined ratio. |
• | Gross premiums written increased $25.8 million, or 4.0%, to $667.3 million. Excluding the impact of $30.7 million of negative reinstatement premium adjustments on the 2011 New Zealand and Tohoku earthquakes during the second quarter of 2012, and $23.2 million of reinstatement premiums written from large losses during the second quarter of 2011, respectively, gross premiums written increased $79.7 million, or 12.9%, due to growth in the Company's catastrophe, specialty and Lloyd's units, and inclusive of $37.7 million of gross premiums written on behalf of the Company's most recent fully collateralized joint venture, Timicuan Reinsurance III Limited ("Tim Re III"). |
• | Total investment income of $44.8 million, which includes the sum of net investment income, net realized and unrealized gains on investments and net other-than-temporary impairments, compared to $66.5 million. The decrease in total investment income was primarily due to lower returns in the Company's portfolio of other investments, principally its private equity investments. |
• | Other income of $11.3 million, compared to an other loss of $5.2 million, was primarily due to the Company's weather and energy risk management operations generating income of $5.9 million, compared to incurring a loss of $3.8 million primarily as a result of positive results from its positions in the United Kingdom and its summer positions as at June 30, 2012 in certain regions of the United States and Canada. |
1
Underwriting Results by Segment (1)
Reinsurance Segment
Gross premiums written in the Reinsurance segment were $617.0 million, an increase of $9.6 million, or 1.6%. Excluding the impact of $30.7 million of negative reinstatement premiums adjustments on the 2011 New Zealand and Tohoku earthquakes, as discussed below, and $23.0 million of reinstatement premiums written from large losses in the second quarter of 2012 and 2011, respectively, gross premiums written increased $63.4 million, or 10.9%, primarily due to the catastrophe unit writing more business during the June 2012 renewals, and inclusive of $37.7 million of gross premiums written on behalf of Tim Re III. Managed catastrophe premiums totaled $628.3 million, an increase of $63.3 million, or 10.6%, excluding the impact of the negative reinstatement premiums adjustments in the second quarter of 2012, as discussed below, and the reinstatement premiums written from large losses in the second quarter of 2011. In addition, gross premiums written in the specialty unit were $37.3 million, an increase of $13.1 million, or 54.4%, due to the inception of several new quota share contracts and loss related premiums.
During the second quarter of 2012, the Company's remaining incurred but not reported (“IBNR”) reserves for the 2011 New Zealand and Tohoku earthquakes were allocated to the contract level and in doing so the Company re-estimated its allocation of losses from higher rate on line excess of loss retrocessional reinsurance contracts to lower rate on line excess of loss primary reinsurance contracts resulting in a downward adjustment to its estimate of ultimate reinstatement premiums from these two large events. In addition, the reinstatement premiums were also impacted by changes to the ultimate losses for these two large events. The net negative impact (2) from the movement in the ultimate reinstatement premium and related losses for these two large events was $19.8 million for the second quarter of 2012.
For the first six months of 2012, managed catastrophe premiums totaled $1,187.3 million, an increase of $207.2 million, or 20.5%, compared to the first six months of 2011, excluding the impact of $30.7 million of negative reinstatement premiums adjustments in the first six months of 2012, as discussed above, and $136.6 million of reinstatement premiums written from large losses in the first six months of 2011. Gross premiums written in the specialty unit for the first six months of 2012 were $137.8 million, an increase of $38.7 million, or 39.0%, compared to the first six months of 2011.
The Reinsurance segment generated underwriting income of $128.4 million and a combined ratio of 40.1%, compared to $12.9 million and 93.5%, respectively, primarily the result of a $107.7 million decrease in net claims and claim expenses. The Reinsurance segment experienced a relatively light insured catastrophe loss quarter during the second quarter of 2012, compared to the second quarter of 2011, which was negatively impacted by the U.S. tornadoes which had a net impact on the Reinsurance segment underwriting result of $96.9 million and added 55.5 percentage points to the Reinsurance segment combined ratio. Included in net claims and claim expenses in the second quarter of 2012 is $20.5 million related to the June 29, 2012 derecho (PCS 83) which impacted the Midwest to Mid-Atlantic coast of the U.S.
The Reinsurance segment experienced $41.1 million of favorable development on prior year reserves, compared to $19.2 million, including $33.2 million in the catastrophe unit and $7.9 million in the specialty unit. The favorable development within the catastrophe unit is primarily due to reductions in estimated ultimate losses on certain specific events occurring in prior accident years including the Tohoku earthquake ($10.6 million), the 2011 Thailand floods ($3.9 million), a number of other relatively small catastrophes and $5.9 million of actuarial assumption changes, partially offset by adverse development on the 2011 New Zealand earthquake of $5.9 million.
2
Lloyd's Segment
Gross premiums written in the Lloyd's segment were $50.3 million, an increase of $16.2 million, or 47.4%, primarily due to continued growth within the segment. The Lloyd's segment incurred an underwriting loss of $0.9 million and a combined ratio of 103.0%, compared to $3.3 million and 119.3%, respectively. The decrease in underwriting loss and corresponding improvement in the combined ratio was primarily due to an increase in net earned premiums due to the growth in gross premiums written noted above.
Other Items (1)
• | Net income attributable to redeemable noncontrolling interests of $33.6 million increased from $21.9 million, primarily impacted by an increase in profitability of DaVinciRe and a decrease in the Company's ownership percentage in DaVinciRe from 34.7% at March 31, 2012 to 31.5% at June 30, 2012 and compared to 42.8% at June 30, 2011. |
• | During the second quarter of 2012, the Company repurchased approximately 1.2 million common shares in open market transactions at an aggregate cost of $88.0 million and at an average share price of $74.69. |
• | Subsequent to June 30, 2012 and through the period ending July 30, 2012, the Company repurchased approximately 71 thousand common shares in open market transactions at an aggregate cost of $5.3 million and at an average share price of $74.21. |
3
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” and “managed catastrophe premiums”. 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 “Investor Information - 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 Holdings Ltd. will host a conference call on Wednesday, August 1, 2012 at 10:00 a.m. (ET) to discuss this release. Live broadcast of the conference call will be available through the “Investor Information - Company Webcasts” section of RenaissanceRe's website at www.renre.com.
RenaissanceRe Holdings Ltd. is a global provider of reinsurance and insurance. The Company's business consists of three segments: (i) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain property catastrophe and specialty joint ventures managed by the Company's ventures unit, (ii) Lloyd's, which includes reinsurance and insurance business written through Syndicate 1458, and (iii) Insurance, which principally includes the Company's Bermuda-based insurance operations.
Cautionary Statement under “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995: Statements made in this earnings release contain information about the Company's future business prospects. These statements may be considered “forward-looking.” These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. For further information regarding cautionary statements and factors affecting future results, please refer to RenaissanceRe Holdings Ltd.'s filings with the Securities and Exchange Commission, including its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q.
(1) | All comparisons are with the second quarter of 2011 unless specifically stated. |
(2) | 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 - DaVinci Re. The Company's estimates are based on a review of its potential exposures, preliminary discussions with certain counterparties and catastrophe modeling techniques. Given the magnitude and recent occurrence of these events, delays in receiving claims data, potential uncertainties relating to reinsurance recoveries and other uncertainties inherent in loss estimation, meaningful uncertainty remains regarding losses from these events. Accordingly, the Company's actual net impact from these events will vary from these preliminary estimates, perhaps materially so. Changes in these estimates will be recorded in the period in which they occur. |
INVESTOR CONTACT:
Rohan Pai
Director of Investor Relations
RenaissanceRe Holdings Ltd.
(441) 295-4513
MEDIA CONTACT:
Peter Hill or Dawn Dover
Kekst and Company
(212) 521-4800
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RenaissanceRe Holdings Ltd. | |||||||||||||||
Summary Consolidated Statements of Operations | |||||||||||||||
(in thousands of United States Dollars, except per share amounts and percentages) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three months ended | Six months ended | ||||||||||||||
June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | ||||||||||||
Revenues | |||||||||||||||
Gross premiums written | $ | 667,336 | $ | 641,563 | $ | 1,331,487 | $ | 1,252,068 | |||||||
Net premiums written | $ | 427,630 | $ | 427,995 | $ | 920,205 | $ | 880,570 | |||||||
Increase in unearned premiums | (183,214 | ) | (210,820 | ) | (397,124 | ) | (357,854 | ) | |||||||
Net premiums earned | 244,416 | 217,175 | 523,081 | 522,716 | |||||||||||
Net investment income | 14,743 | 33,328 | 81,714 | 93,609 | |||||||||||
Net foreign exchange gains (losses) | 2,410 | (4,521 | ) | 950 | (3,861 | ) | |||||||||
Equity in earnings (losses) of other ventures | 6,846 | 5,128 | 12,316 | (18,625 | ) | ||||||||||
Other income (loss) | 11,289 | (5,167 | ) | (27,805 | ) | 44,978 | |||||||||
Net realized and unrealized gains on fixed maturity investments | 31,003 | 34,979 | 77,116 | 29,765 | |||||||||||
Total other-than-temporary impairments | (234 | ) | — | (395 | ) | — | |||||||||
Portion recognized in other-than-temporary impairments | 25 | — | 52 | — | |||||||||||
Net other-than-temporary impairments | (209 | ) | — | (343 | ) | — | |||||||||
Total revenues | 310,498 | 280,922 | 667,029 | 668,582 | |||||||||||
Expenses | |||||||||||||||
Net claims and claim expenses incurred | 49,551 | 151,261 | 65,103 | 779,798 | |||||||||||
Acquisition expenses | 25,608 | 13,883 | 49,719 | 46,218 | |||||||||||
Operational expenses | 41,407 | 42,299 | 83,790 | 84,129 | |||||||||||
Corporate expenses | 4,067 | 4,011 | 8,878 | 6,075 | |||||||||||
Interest expense | 5,716 | 5,730 | 11,434 | 11,925 | |||||||||||
Total expenses | 126,349 | 217,184 | 218,924 | 928,145 | |||||||||||
Income (loss) from continuing operations before taxes | 184,149 | 63,738 | 448,105 | (259,563 | ) | ||||||||||
Income tax (expense) benefit | (898 | ) | 1,773 | (861 | ) | 1,825 | |||||||||
Income (loss) from continuing operations | 183,251 | 65,511 | 447,244 | (257,738 | ) | ||||||||||
(Income) loss from discontinued operations | 1,393 | (10,094 | ) | 1,220 | (11,620 | ) | |||||||||
Net income (loss) | 184,644 | 55,417 | 448,464 | (269,358 | ) | ||||||||||
Net (income) loss attributable to noncontrolling interests | (33,624 | ) | (21,903 | ) | (87,265 | ) | 63,589 | ||||||||
Net income (loss) available (attributable) to RenaissanceRe | 151,020 | 33,514 | 361,199 | (205,769 | ) | ||||||||||
Dividends on preference shares | (8,750 | ) | (8,750 | ) | (17,500 | ) | (17,500 | ) | |||||||
Net income (loss) available (attributable) to RenaissanceRe common shareholders | $ | 142,270 | $ | 24,764 | $ | 343,699 | $ | (223,269 | ) | ||||||
Income (loss) from continuing operations available (attributable) to RenaissanceRe common shareholders per common share - basic | $ | 2.75 | $ | 0.68 | $ | 6.70 | $ | (4.16 | ) | ||||||
Income (loss) from discontinued operations available (attributable) to RenaissanceRe common shareholders per common share - basic | 0.03 | (0.20 | ) | 0.02 | (0.23 | ) | |||||||||
Net income (loss) available (attributable) to RenaissanceRe common shareholders per common share - basic | $ | 2.78 | $ | 0.48 | $ | 6.72 | $ | (4.39 | ) | ||||||
Income (loss) from continuing operations available (attributable) to RenaissanceRe common shareholders per common share - diluted (1) | $ | 2.72 | $ | 0.68 | $ | 6.61 | $ | (4.16 | ) | ||||||
Income (loss) from discontinued operations available (attributable) to RenaissanceRe common shareholders per common share - diluted (1) | 0.03 | (0.20 | ) | 0.02 | (0.23 | ) | |||||||||
Net income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted (1) | $ | 2.75 | $ | 0.48 | $ | 6.63 | $ | (4.39 | ) | ||||||
Average shares outstanding - basic (1) | 50,278 | 50,493 | 50,328 | 50,994 | |||||||||||
Average shares outstanding - diluted (1) | 51,012 | 51,050 | 50,997 | 50,994 | |||||||||||
Net claims and claim expense ratio | 20.3 | % | 69.6 | % | 12.4 | % | 149.2 | % | |||||||
Expense ratio | 27.4 | % | 25.9 | % | 25.6 | % | 24.9 | % | |||||||
Combined ratio | 47.7 | % | 95.5 | % | 38.0 | % | 174.1 | % | |||||||
Operating income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted (2) | $ | 2.14 | $ | (0.21 | ) | $ | 5.13 | $ | (4.97 | ) | |||||
Operating return on average common equity - annualized (2) | 13.7 | % | (1.4 | )% | 16.7 | % | (16.3 | )% | |||||||
(1) | Earnings per share calculations use average common shares outstanding - basic, when in a net loss position, as required by FASB ASC Topic Earnings per Share. |
(2) | See Comments on Regulation G for a reconciliation of non-GAAP financial measures. |
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RenaissanceRe Holdings Ltd. | |||||||
Summary Consolidated Balance Sheets | |||||||
(in thousands of United States Dollars, except per share amounts) | |||||||
June 30, 2012 | December 31, 2011 | ||||||
Assets | |||||||
Fixed maturity investments trading, at fair value | $ | 4,948,955 | $ | 4,291,465 | |||
Fixed maturity investments available for sale, at fair value | 108,102 | 142,052 | |||||
Total fixed maturity investments, at fair value | 5,057,057 | 4,433,517 | |||||
Short term investments, at fair value | 654,912 | 905,477 | |||||
Equity investments trading, at fair value | 55,381 | 50,560 | |||||
Other investments, at fair value | 743,568 | 748,984 | |||||
Investments in other ventures, under equity method | 79,692 | 70,714 | |||||
Total investments | 6,590,610 | 6,209,252 | |||||
Cash and cash equivalents | 264,232 | 216,984 | |||||
Premiums receivable | 971,546 | 471,878 | |||||
Prepaid reinsurance premiums | 278,242 | 58,522 | |||||
Reinsurance recoverable | 198,777 | 404,029 | |||||
Accrued investment income | 35,938 | 33,523 | |||||
Deferred acquisition costs | 106,027 | 43,721 | |||||
Receivable for investments sold | 311,658 | 117,117 | |||||
Other assets | 193,798 | 180,992 | |||||
Goodwill and other intangibles | 8,690 | 8,894 | |||||
Total assets | $ | 8,959,518 | $ | 7,744,912 | |||
Liabilities, Noncontrolling Interests and Shareholders' Equity | |||||||
Liabilities | |||||||
Reserve for claims and claim expenses | $ | 1,801,247 | $ | 1,992,354 | |||
Unearned premiums | 964,499 | 347,655 | |||||
Debt | 354,293 | 353,620 | |||||
Reinsurance balances payable | 396,669 | 256,883 | |||||
Payable for investments purchased | 519,619 | 303,264 | |||||
Other liabilities | 173,433 | 211,369 | |||||
Liabilities of discontinued operations held for sale | 1,959 | 13,507 | |||||
Total liabilities | 4,211,719 | 3,478,652 | |||||
Redeemable noncontrolling interest - DaVinciRe | 900,878 | 657,727 | |||||
Shareholders' Equity | |||||||
Preference shares | 550,000 | 550,000 | |||||
Common shares | 50,609 | 51,543 | |||||
Accumulated other comprehensive income | 12,531 | 11,760 | |||||
Retained earnings | 3,229,870 | 2,991,890 | |||||
Total shareholders' equity attributable to RenaissanceRe | 3,843,010 | 3,605,193 | |||||
Noncontrolling interest | 3,911 | 3,340 | |||||
Total shareholders' equity | 3,846,921 | 3,608,533 | |||||
Total liabilities, noncontrolling interests and shareholders' equity | $ | 8,959,518 | $ | 7,744,912 | |||
Book value per common share | $ | 65.07 | $ | 59.27 | |||
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RenaissanceRe Holdings Ltd. | |||||||||||||||||||
Supplemental Financial Data - Segment Information | |||||||||||||||||||
(in thousands of United States Dollars, except percentages) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Three months ended June 30, 2012 | |||||||||||||||||||
Reinsurance | Lloyd’s | Insurance | Other | Total | |||||||||||||||
Gross premiums written | $ | 617,039 | $ | 50,297 | $ | — | $ | — | $ | 667,336 | |||||||||
Net premiums written | $ | 379,369 | $ | 48,510 | $ | (249 | ) | — | $ | 427,630 | |||||||||
Net premiums earned | $ | 214,296 | $ | 30,369 | $ | (249 | ) | — | $ | 244,416 | |||||||||
Net claims and claim expenses incurred | 35,488 | 14,960 | (897 | ) | — | 49,551 | |||||||||||||
Acquisition expenses | 20,098 | 5,510 | — | — | 25,608 | ||||||||||||||
Operational expenses | 30,346 | 10,806 | 255 | — | 41,407 | ||||||||||||||
Underwriting income (loss) | $ | 128,364 | $ | (907 | ) | $ | 393 | — | 127,850 | ||||||||||
Net investment income | 14,743 | 14,743 | |||||||||||||||||
Net foreign exchange gains | 2,410 | 2,410 | |||||||||||||||||
Equity in earnings of other ventures | 6,846 | 6,846 | |||||||||||||||||
Other income | 11,289 | 11,289 | |||||||||||||||||
Net realized and unrealized gains on investments | 31,003 | 31,003 | |||||||||||||||||
Net other-than-temporary impairments | (209 | ) | (209 | ) | |||||||||||||||
Corporate expenses | (4,067 | ) | (4,067 | ) | |||||||||||||||
Interest expense | (5,716 | ) | (5,716 | ) | |||||||||||||||
Income from continuing operations before taxes | 184,149 | ||||||||||||||||||
Income tax expense | (898 | ) | (898 | ) | |||||||||||||||
Income from discontinued operations | 1,393 | 1,393 | |||||||||||||||||
Net income attributable to noncontrolling interests | (33,624 | ) | (33,624 | ) | |||||||||||||||
Dividends on preference shares | (8,750 | ) | (8,750 | ) | |||||||||||||||
Net income available to RenaissanceRe common shareholders | $ | 142,270 | |||||||||||||||||
Net claims and claim expenses incurred – current accident year | $ | 76,631 | $ | 18,366 | $ | — | $ | 94,997 | |||||||||||
Net claims and claim expenses incurred – prior accident years | (41,143 | ) | (3,406 | ) | (897 | ) | (45,446 | ) | |||||||||||
Net claims and claim expenses incurred – total | $ | 35,488 | $ | 14,960 | $ | (897 | ) | $ | 49,551 | ||||||||||
Net claims and claim expense ratio – current accident year | 35.8 | % | 60.5 | % | — | % | 38.9 | % | |||||||||||
Net claims and claim expense ratio – prior accident years | (19.2 | )% | (11.2 | )% | 360.2 | % | (18.6 | )% | |||||||||||
Net claims and claim expense ratio – calendar year | 16.6 | % | 49.3 | % | 360.2 | % | 20.3 | % | |||||||||||
Underwriting expense ratio | 23.5 | % | 53.7 | % | (102.4 | )% | 27.4 | % | |||||||||||
Combined ratio | 40.1 | % | 103.0 | % | 257.8 | % | 47.7 | % | |||||||||||
Three months ended June 30, 2011 | |||||||||||||||||||
Reinsurance | Lloyd’s | Insurance | Other | Total | |||||||||||||||
Gross premiums written | $ | 607,404 | $ | 34,126 | $ | 33 | $ | — | $ | 641,563 | |||||||||
Net premiums written | $ | 395,856 | $ | 32,084 | $ | 55 | — | $ | 427,995 | ||||||||||
Net premiums earned | $ | 199,461 | $ | 17,233 | $ | 481 | — | $ | 217,175 | ||||||||||
Net claims and claim expenses incurred | 143,219 | 8,619 | (577 | ) | — | 151,261 | |||||||||||||
Acquisition expenses | 10,431 | 3,305 | 147 | — | 13,883 | ||||||||||||||
Operational expenses | 32,901 | 8,635 | 763 | — | 42,299 | ||||||||||||||
Underwriting income (loss) | $ | 12,910 | $ | (3,326 | ) | $ | 148 | — | 9,732 | ||||||||||
Net investment income | 33,328 | 33,328 | |||||||||||||||||
Net foreign exchange losses | (4,521 | ) | (4,521 | ) | |||||||||||||||
Equity in earnings of other ventures | 5,128 | 5,128 | |||||||||||||||||
Other loss | (5,167 | ) | (5,167 | ) | |||||||||||||||
Net realized and unrealized gains on investments | 34,979 | 34,979 | |||||||||||||||||
Corporate expenses | (4,011 | ) | (4,011 | ) | |||||||||||||||
Interest expense | (5,730 | ) | (5,730 | ) | |||||||||||||||
Income from continuing operations before taxes | 63,738 | ||||||||||||||||||
Income tax benefit | 1,773 | 1,773 | |||||||||||||||||
Loss from discontinued operations | (10,094 | ) | (10,094 | ) | |||||||||||||||
Net income attributable to redeemable noncontrolling interest – DaVinciRe | (21,903 | ) | (21,903 | ) | |||||||||||||||
Dividends on preference shares | (8,750 | ) | (8,750 | ) | |||||||||||||||
Net income available to RenaissanceRe common shareholders | $ | 24,764 | |||||||||||||||||
Net claims and claim expenses incurred – current accident year | $ | 162,398 | $ | 9,612 | $ | (78 | ) | $ | 171,932 | ||||||||||
Net claims and claim expenses incurred – prior accident years | (19,179 | ) | (993 | ) | (499 | ) | (20,671 | ) | |||||||||||
Net claims and claim expenses incurred – total | $ | 143,219 | $ | 8,619 | $ | (577 | ) | $ | 151,261 | ||||||||||
Net claims and claim expense ratio – current accident year | 81.4 | % | 55.8 | % | (16.2 | )% | 79.2 | % | |||||||||||
Net claims and claim expense ratio – prior accident years | (9.6 | )% | (5.8 | )% | (103.8 | )% | (9.6 | )% | |||||||||||
Net claims and claim expense ratio – calendar year | 71.8 | % | 50.0 | % | (120.0 | )% | 69.6 | % | |||||||||||
Underwriting expense ratio | 21.7 | % | 69.3 | % | 189.2 | % | 25.9 | % | |||||||||||
Combined ratio | 93.5 | % | 119.3 | % | 69.2 | % | 95.5 | % | |||||||||||
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RenaissanceRe Holdings Ltd. | |||||||||||||||||||||||
Supplemental Financial Data - Segment Information | |||||||||||||||||||||||
(in thousands of United States Dollars, except percentages) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Six months ended June 30, 2012 | |||||||||||||||||||||||
Reinsurance | Lloyd’s | Insurance | Eliminations | Other | Total | ||||||||||||||||||
Gross premiums written | $ | 1,226,801 | $ | 105,114 | $ | — | $ | (428 | ) | $ | — | $ | 1,331,487 | ||||||||||
Net premiums written | $ | 838,007 | $ | 82,447 | $ | (249 | ) | — | $ | 920,205 | |||||||||||||
Net premiums earned | $ | 468,114 | $ | 55,191 | $ | (224 | ) | — | $ | 523,081 | |||||||||||||
Net claims and claim expenses incurred | 43,812 | 23,961 | (2,670 | ) | — | 65,103 | |||||||||||||||||
Acquisition expenses | 39,484 | 10,178 | 57 | — | 49,719 | ||||||||||||||||||
Operational expenses | 62,390 | 20,863 | 537 | — | 83,790 | ||||||||||||||||||
Underwriting income | $ | 322,428 | $ | 189 | $ | 1,852 | — | 324,469 | |||||||||||||||
Net investment income | 81,714 | 81,714 | |||||||||||||||||||||
Net foreign exchange gains | 950 | 950 | |||||||||||||||||||||
Equity in earnings of other ventures | 12,316 | 12,316 | |||||||||||||||||||||
Other loss | (27,805 | ) | (27,805 | ) | |||||||||||||||||||
Net realized and unrealized gains on investments | 77,116 | 77,116 | |||||||||||||||||||||
Net other-than-temporary impairments | (343 | ) | (343 | ) | |||||||||||||||||||
Corporate expenses | (8,878 | ) | (8,878 | ) | |||||||||||||||||||
Interest expense | (11,434 | ) | (11,434 | ) | |||||||||||||||||||
Income from continuing operations before taxes | 448,105 | ||||||||||||||||||||||
Income tax expense | (861 | ) | (861 | ) | |||||||||||||||||||
Income from discontinued operations | 1,220 | 1,220 | |||||||||||||||||||||
Net income attributable to noncontrolling interests | (87,265 | ) | (87,265 | ) | |||||||||||||||||||
Dividends on preference shares | (17,500 | ) | (17,500 | ) | |||||||||||||||||||
Net income available to RenaissanceRe common shareholders | $ | 343,699 | |||||||||||||||||||||
Net claims and claim expenses incurred – current accident year | $ | 131,775 | $ | 34,646 | $ | — | $ | 166,421 | |||||||||||||||
Net claims and claim expenses incurred – prior accident years | (87,963 | ) | (10,685 | ) | (2,670 | ) | (101,318 | ) | |||||||||||||||
Net claims and claim expenses incurred – total | $ | 43,812 | $ | 23,961 | $ | (2,670 | ) | $ | 65,103 | ||||||||||||||
Net claims and claim expense ratio – current accident year | 28.2 | % | 62.8 | % | — | % | 31.8 | % | |||||||||||||||
Net claims and claim expense ratio – prior accident years | (18.8 | )% | (19.4 | )% | 1,192.0 | % | (19.4 | )% | |||||||||||||||
Net claims and claim expense ratio – calendar year | 9.4 | % | 43.4 | % | 1,192.0 | % | 12.4 | % | |||||||||||||||
Underwriting expense ratio | 21.7 | % | 56.3 | % | (265.2 | )% | 25.6 | % | |||||||||||||||
Combined ratio | 31.1 | % | 99.7 | % | 926.8 | % | 38.0 | % | |||||||||||||||
Six months ended June 30, 2011 | |||||||||||||||||||||||
Reinsurance | Lloyd’s | Insurance | Eliminations | Other | Total | ||||||||||||||||||
Gross premiums written | $ | 1,181,086 | $ | 70,746 | $ | 313 | $ | (77 | ) | $ | — | $ | 1,252,068 | ||||||||||
Net premiums written | $ | 819,422 | $ | 60,821 | $ | 327 | — | $ | 880,570 | ||||||||||||||
Net premiums earned | $ | 488,890 | $ | 32,907 | $ | 919 | — | $ | 522,716 | ||||||||||||||
Net claims and claim expenses incurred | 738,623 | 39,142 | 2,033 | — | 779,798 | ||||||||||||||||||
Acquisition expenses | 40,223 | 5,766 | 229 | — | 46,218 | ||||||||||||||||||
Operational expenses | 65,264 | 17,607 | 1,258 | — | 84,129 | ||||||||||||||||||
Underwriting loss | $ | (355,220 | ) | $ | (29,608 | ) | $ | (2,601 | ) | — | (387,429 | ) | |||||||||||
Net investment income | 93,609 | 93,609 | |||||||||||||||||||||
Net foreign exchange losses | (3,861 | ) | (3,861 | ) | |||||||||||||||||||
Equity in losses of other ventures | (18,625 | ) | (18,625 | ) | |||||||||||||||||||
Other income | 44,978 | 44,978 | |||||||||||||||||||||
Net realized and unrealized gains on investments | 29,765 | 29,765 | |||||||||||||||||||||
Corporate expenses | (6,075 | ) | (6,075 | ) | |||||||||||||||||||
Interest expense | (11,925 | ) | (11,925 | ) | |||||||||||||||||||
Loss from continuing operations before taxes | (259,563 | ) | |||||||||||||||||||||
Income tax benefit | 1,825 | 1,825 | |||||||||||||||||||||
Loss from discontinued operations | (11,620 | ) | (11,620 | ) | |||||||||||||||||||
Net loss attributable to redeemable noncontrolling interest – DaVinciRe | 63,589 | 63,589 | |||||||||||||||||||||
Dividends on preference shares | (17,500 | ) | (17,500 | ) | |||||||||||||||||||
Net loss attributable to RenaissanceRe common shareholders | $ | (223,269 | ) | ||||||||||||||||||||
Net claims and claim expenses incurred – current accident year | $ | 829,760 | $ | 38,938 | $ | (69 | ) | $ | 868,629 | ||||||||||||||
Net claims and claim expenses incurred – prior accident years | (91,137 | ) | 204 | 2,102 | (88,831 | ) | |||||||||||||||||
Net claims and claim expenses incurred – total | $ | 738,623 | $ | 39,142 | $ | 2,033 | $ | 779,798 | |||||||||||||||
Net claims and claim expense ratio – current accident year | 169.7 | % | 118.3 | % | (7.5 | )% | 166.2 | % | |||||||||||||||
Net claims and claim expense ratio – prior accident years | (18.6 | )% | 0.6 | % | 228.7 | % | (17.0 | )% | |||||||||||||||
Net claims and claim expense ratio – calendar year | 151.1 | % | 118.9 | % | 221.2 | % | 149.2 | % | |||||||||||||||
Underwriting expense ratio | 21.6 | % | 71.1 | % | 161.8 | % | 24.9 | % | |||||||||||||||
Combined ratio | 172.7 | % | 190.0 | % | 383.0 | % | 174.1 | % | |||||||||||||||
(1) Represents $0.4 million of gross premiums ceded from the Reinsurance segment to the Lloyd's segment for the six months ended June 30, 2012 (2011 - $0.1 million).
8
RenaissanceRe Holdings Ltd. | |||||||||||||||
Supplemental Financial Data - Gross Premiums Written and Managed Premiums | |||||||||||||||
(in thousands of United States Dollars) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three months ended | Six months ended | ||||||||||||||
June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | ||||||||||||
Reinsurance Segment | |||||||||||||||
Renaissance catastrophe premiums | $ | 345,094 | $ | 366,929 | $ | 675,521 | $ | 678,571 | |||||||
Renaissance specialty premiums | 35,778 | 23,066 | 135,323 | 97,461 | |||||||||||
Total Renaissance premiums | 380,872 | 389,995 | 810,844 | 776,032 | |||||||||||
DaVinci catastrophe premiums | 234,644 | 216,317 | 413,457 | 403,353 | |||||||||||
DaVinci specialty premiums | 1,523 | 1,092 | 2,500 | 1,701 | |||||||||||
Total DaVinci premiums | 236,167 | 217,409 | 415,957 | 405,054 | |||||||||||
Total catastrophe unit premiums | 579,738 | 583,246 | 1,088,978 | 1,081,924 | |||||||||||
Total specialty unit premiums | 37,301 | 24,158 | 137,823 | 99,162 | |||||||||||
Total Reinsurance segment gross premiums written | $ | 617,039 | $ | 607,404 | $ | 1,226,801 | $ | 1,181,086 | |||||||
Lloyd's Segment | |||||||||||||||
Specialty | $ | 32,925 | $ | 17,546 | $ | 72,254 | $ | 46,781 | |||||||
Catastrophe | 17,372 | 16,580 | 32,860 | 23,965 | |||||||||||
Total Lloyd's segment gross premiums written | $ | 50,297 | $ | 34,126 | $ | 105,114 | $ | 70,746 | |||||||
Insurance Segment | |||||||||||||||
Commercial property | $ | — | $ | 33 | $ | — | $ | 313 | |||||||
Total Insurance segment gross premiums written | $ | — | $ | 33 | $ | — | $ | 313 | |||||||
Managed Premiums (1) | |||||||||||||||
Total catastrophe unit gross premiums written | $ | 579,738 | $ | 583,246 | $ | 1,088,978 | $ | 1,081,924 | |||||||
Catastrophe premiums written on behalf of our joint venture, Top Layer Re (2) | 31,180 | 19,079 | 65,485 | 41,607 | |||||||||||
Catastrophe premiums written in the Lloyd's unit | 17,372 | 16,580 | 32,860 | 23,965 | |||||||||||
Total managed catastrophe premiums (1) | $ | 628,290 | $ | 618,905 | $ | 1,187,323 | $ | 1,147,496 | |||||||
(1) | See Comments on Regulation G for a reconciliation of non-GAAP financial measures. |
(2) | Top Layer Re is accounted for under the equity method of accounting. |
9
RenaissanceRe Holdings Ltd. | |||||||||||||||
Supplemental Financial Data - Total Investment Result | |||||||||||||||
(in thousands of United States Dollars) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three months ended | Six months ended | ||||||||||||||
June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | ||||||||||||
Fixed maturity investments | $ | 22,436 | $ | 24,426 | $ | 48,769 | $ | 52,339 | |||||||
Short term investments | 234 | 433 | 734 | 1,028 | |||||||||||
Equity investments trading | 181 | 112 | 351 | 126 | |||||||||||
Other investments | |||||||||||||||
Hedge funds and private equity investments | (10,413 | ) | 8,230 | 18,060 | 31,737 | ||||||||||
Other | 4,975 | 2,838 | 19,145 | 13,665 | |||||||||||
Cash and cash equivalents | 54 | 45 | 80 | 86 | |||||||||||
17,467 | 36,084 | 87,139 | 98,981 | ||||||||||||
Investment expenses | (2,724 | ) | (2,756 | ) | (5,425 | ) | (5,372 | ) | |||||||
Net investment income | 14,743 | 33,328 | 81,714 | 93,609 | |||||||||||
Gross realized gains | 19,458 | 15,430 | 55,744 | 25,992 | |||||||||||
Gross realized losses | (3,294 | ) | (4,156 | ) | (10,244 | ) | (16,773 | ) | |||||||
Net realized gains on fixed maturity investments | 16,164 | 11,274 | 45,500 | 9,219 | |||||||||||
Net unrealized gains on fixed maturity investments trading | 12,538 | 24,728 | 26,795 | 20,970 | |||||||||||
Net unrealized gains (losses) on equity investments trading | 2,301 | (1,023 | ) | 4,821 | (424 | ) | |||||||||
Net realized and unrealized gains (losses) on investments | 31,003 | 34,979 | 77,116 | 29,765 | |||||||||||
Total other-than-temporary impairments | (234 | ) | — | (395 | ) | — | |||||||||
Portion recognized in other comprehensive income, before taxes | 25 | — | 52 | — | |||||||||||
Net other-than-temporary impairments | (209 | ) | — | (343 | ) | — | |||||||||
Change in net unrealized gains on fixed maturity investments available for sale | (706 | ) | (1,763 | ) | 72 | (1,511 | ) | ||||||||
Total investment income | $ | 44,831 | $ | 66,544 | $ | 158,559 | $ | 121,863 | |||||||
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 in this Press Release within the meaning of Regulation G. The Company has provided these financial measurements in previous investor communications and the Company's management believes that these measurements 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 the comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP measures in assessing the Company's overall financial performance.
The Company uses “operating income (loss) available (attributable) to RenaissanceRe common shareholders” as a measure to evaluate the underlying fundamentals of its operations and believes it to be a useful measure of its corporate performance. “Operating income (loss) available (attributable) to RenaissanceRe common shareholders” as used herein differs from “net income (loss) available (attributable) to RenaissanceRe common shareholders,” which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized and unrealized gains and losses on investments from continuing and discontinued operations and net other-than-temporary impairments from continuing and discontinued operations. 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 and equity investments trading. 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
10
share - diluted” and “operating return on average common equity - annualized”. The following is a reconciliation of: 1) net income (loss) available (attributable) to RenaissanceRe common shareholders to operating income (loss) available (attributable) to RenaissanceRe common shareholders; 2) net income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted to operating income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted; and 3) return on average common equity - annualized to operating return on average common equity - annualized:
Three months ended | Six months ended | ||||||||||||||
(in thousands of United States Dollars, except percentages) | June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | |||||||||||
Net income (loss) available (attributable) to RenaissanceRe common shareholders | $ | 142,270 | $ | 24,764 | $ | 343,699 | $ | (223,269 | ) | ||||||
Adjustment for net realized and unrealized gains on investments of continuing operations | (31,003 | ) | (34,979 | ) | (77,116 | ) | (29,765 | ) | |||||||
Adjustment for net other-than-temporary impairments of continuing operations | 209 | — | 343 | — | |||||||||||
Adjustment for net realized and unrealized gains on fixed maturity investments and net other-than-temporary impairments of discontinued operations | — | — | — | (42 | ) | ||||||||||
Operating income (loss) available (attributable) to RenaissanceRe common shareholders | $ | 111,476 | $ | (10,215 | ) | $ | 266,926 | $ | (253,076 | ) | |||||
Net income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted | $ | 2.75 | $ | 0.48 | $ | 6.63 | $ | (4.39 | ) | ||||||
Adjustment for net realized and unrealized gains on investments of continuing operations | (0.61 | ) | (0.69 | ) | (1.51 | ) | (0.58 | ) | |||||||
Adjustment for net other-than-temporary impairments of continuing operations | — | — | 0.01 | — | |||||||||||
Operating income (loss) available (attributable) to RenaissanceRe common shareholders per common share - diluted | $ | 2.14 | $ | (0.21 | ) | $ | 5.13 | $ | (4.97 | ) | |||||
Return on average common equity - annualized | 17.5 | % | 3.3 | % | 21.5 | % | (14.4 | )% | |||||||
Adjustment for net realized and unrealized gains on investments of continuing operations | (3.8 | )% | (4.7 | )% | (4.8 | )% | (1.9 | )% | |||||||
Adjustment for net other-than-temporary impairments of continuing operations | — | % | — | % | — | % | — | % | |||||||
Operating return on average common equity - annualized | 13.7 | % | (1.4 | )% | 16.7 | % | (16.3 | )% | |||||||
The Company has also included in this Press Release “managed catastrophe premiums”. “Managed catastrophe premiums” is defined as gross catastrophe premiums written by Renaissance Reinsurance and its related joint ventures. “Managed catastrophe premiums” differs from total catastrophe unit gross premiums written, which the Company believes is the most directly comparable GAAP measure, due to the inclusion of catastrophe premiums written on behalf of the Company's joint venture Top Layer Re, which is accounted for under the equity method of accounting and the inclusion of catastrophe premiums written on behalf of the Company's Lloyd's segment. The Company's management believes “managed catastrophe premiums” is useful to investors and other interested parties because it provides a measure of total catastrophe premiums, as applicable, assumed by the Company through its consolidated subsidiaries and related joint ventures.
11