RenaissanceRe: “A Strong First Quarter”
Bermuda-based RenaissanceRe Holdings Ltd. yesterday [May 1] 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 RenaissanceRe 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.
The company reported an annualised return on average common equity of 24.3% and an annualised operating return on average common equity of 22.5% in the first quarter of 2013, compared to 25.6% and 19.7%, respectively, in the first quarter of 2012. Book value per common share increased $2.93, or 4.3%, in the first quarter of 2013 to $71.07, compared to a 5.8% increase in the first quarter of 2012. Tangible book value per common share plus accumulated dividends increased $3.22, or 4.8%, in the first quarter of 2013, compared to a 6.3% increase in the first quarter of 2012.
Neill A. Currie, CEO, commented: “We enjoyed strong first quarter results, with an annualised operating ROE of 22.5% and 4.8% 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.”
Mr. Currie added: “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.”
FIRST QUARTER 2013 HIGHLIGHTS
Underwriting income of $173.0 million and a combined ratio of 36.2%, compared to $196.6 million and 29.4%, 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%, 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.
Underwriting Results by Segment
Reinsurance Segment
Gross premiums written in the Reinsurance segment were $561.1 million, a decrease of $48.6 million, or 8.0%, 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%, 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%, compared to $194.1 million and 23.5%, 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.
The Reinsurance segment experienced $33.6 million of favorable development on prior years reserves, compared to $46.8 million, including $18.5 million and $15.2 million of favorable development in the catastrophe and specialty units, respectively. Favorable development on prior years reserves within the catastrophe unit was primarily due to a number of relatively small reductions in estimated ultimate losses on prior period events. The specialty unit experienced prior accident years favorable development of $15.2 million principally due to the Company’s annual actuarial assumption review which resulted in net reductions to prior accident years reserves of $10.4 million.
Lloyd’s Segment
Gross premiums written in the Lloyd’s segment were $74.3 million, an increase of $19.5 million, or 35.5%, 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%, compared to underwriting income of $1.1 million and a combined ratio of 95.6%, 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.
Other Items
During the first quarter of 2013, the company repurchased 1.4 million common shares in open market transactions at an aggregate cost of $111.3 million and at an average share price of $81.29.
Net income attributable to redeemable noncontrolling interests of $38.6 million decreased from $53.6 million, primarily impacted by a decrease in profitability of DaVinciRe, partially offset by a decrease in the company’s ownership percentage in DaVinciRe from 34.7% at March 31, 2012 to 32.9% at March 31, 2013.
During January 2013, DaVinciRe redeemed shares from certain DaVinciRe shareholders, including the company, while certain other existing DaVinciRe shareholders purchased additional shares in DaVinciRe. The net redemption as a result of these transactions was $150.0 million. The company’s ownership in DaVinciRe was 32.9% at March 31, 2013.
RenaissanceRe Holdings Ltd., together with its subsidiaries, provides reinsurance and insurance coverages and related services in the United States and internationally.
The company offers property catastrophe reinsurance products, including catastrophe excess of loss reinsurance, excess of loss retrocessional reinsurance, and insurance-linked securities; and specialty reinsurance products, such as catastrophe exposed workers compensation, surety, terrorism, energy, aviation, crop, political risk, trade credit, financial, mortgage guarantee, catastrophe-exposed personal lines property, casualty clash, other casualty lines, and other specialty lines of reinsurance.
It also provides various insurance products consisting of commercial property, including catastrophe-exposed commercial property products; commercial multi-line comprising commercial property and liability coverage, such as general liability, automobile liability and physical damage, building and contents, and professional liability; and personal lines property, including homeowners personal lines property coverage and catastrophe exposed personal lines property coverage. The company distributes its products and services primarily through intermediaries.
RenaissanceRe Holdings Ltd. was founded in 1993 and is headquartered in Pembroke, Bermuda.
