RenaissanceRe Reports Net Income of $190.5 Million for the First Quarter of 2013 or $4.23 Per Dilute

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RenaissanceRe Reports Net Income of $190.5 Million for the First Quarter of 2013 or $4.23 Per Diluted Common Share; Quarterly Operating Income of $176.6 Million or $3.92 Per Diluted Common Share

PEMBROKE, Bermuda--(BUSINESS WIRE)-- RenaissanceRe Holdings Ltd. (NYS: RNR) today reported net income available to RenaissanceRe 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 annualized return on average common equity of 24.3% and an annualized 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.

See Comments on Regulation G for a reconciliation of non-GAAP measures.


Neill A. Currie, CEO, commented: "We enjoyed strong first quarter results, with an annualized 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(1)

  • 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, as discussed below.
  • 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(1)

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(1)

  • 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.
  • The Company repaid the full $100.0 million of its outstanding 5.875% Senior Notes upon their scheduled maturity of February 15, 2013 using available cash and investments.

This Press Release includes certain non-GAAP financial measures including "operating income available to RenaissanceRe common shareholders", "operating income available to RenaissanceRe common shareholders per common share - diluted", "operating return on average common equity - annualized", "managed catastrophe premiums", "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 "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 Thursday, May 2, 2013 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 two reportable segments: (i) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain property catastrophe and specialty joint ventures managed by the Company's ventures unit, and (ii) Lloyd's, which includes reinsurance and insurance business written through Syndicate 1458.

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 first quarter of 2012 unless specifically stated.

RenaissanceRe Holdings Ltd.
Summary Consolidated Statements of Operations
(in thousands of United States Dollars, except per share amounts and percentages)
(Unaudited)
 Three months ended
March 31,
2013
 March 31,
2012
Revenues
Gross premiums written$635,418 $664,151 
Net premiums written$436,813$492,575
Increase in unearned premiums(165,558)(213,910)
Net premiums earned271,255278,665
Net investment income43,61566,971
Net foreign exchange gains (losses)1,756(1,460)
Equity in earnings of other ventures5,8355,470
Other income (loss)7,004(39,094)
Net realized and unrealized gains on investments13,85046,113
Total other-than-temporary impairments(161)
Portion recognized in other comprehensive income, before taxes 27 
Net other-than-temporary impairments (134)
Total revenues343,315 356,531 
Expenses
Net claims and claim expenses incurred27,25115,552
Acquisition expenses25,00924,111
Operational expenses46,01442,383
Corporate expenses4,5294,811
Interest expense5,034 5,718 
Total expenses107,837 92,575 
Income from continuing operations before taxes235,478263,956
Income tax (expense) benefit(122)37 
Income from continuing operations235,356263,993
Loss from discontinued operations (173)
Net income235,356263,820
Net income attributable to noncontrolling interests(38,607)(53,641)
Net income available to RenaissanceRe196,749210,179
Dividends on preference shares(6,275)(8,750)
Net income available to RenaissanceRe common shareholders$190,474 $201,429 
 
Income from continuing operations available to RenaissanceRe common shareholders per common share - basic$4.32$3.93
Income from discontinued operations available to RenaissanceRe common shareholders per common share - basic  
Net income available to RenaissanceRe common shareholders per common share - basic$4.32 $3.93 
Income from continuing operations available to RenaissanceRe common shareholders per common share - diluted$4.23$3.88
Income from discontinued operations available to RenaissanceRe common shareholders per common share - diluted  
Net income available to RenaissanceRe common shareholders per common share - diluted$4.23 $3.88 
 
Average shares outstanding - basic43,46150,377
Average shares outstanding - diluted44,29050,981
 
Net claims and claim expense ratio10.0%5.6%
Underwriting expense ratio26.2%23.8%
Combined ratio36.2%29.4%
Operating income available to RenaissanceRe common shareholders per common share - diluted (1)$3.92$2.98
Operating return on average common equity - annualized (1)22.5%19.7%

(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)
  
March 31,
2013
December 31,
2012
Assets
Fixed maturity investments trading, at fair value$4,511,885$4,665,421
Fixed maturity investments available for sale, at fair value45,254 83,442
Total fixed maturity investments, at fair value4,557,1394,748,863
Short term investments, at fair value997,889821,163
Equity investments trading, at fair value55558,186
Other investments, at fair value652,802644,711
Investments in other ventures, under equity method92,054 87,724
Total investments6,300,4396,360,647
Cash and cash equivalents335,625325,358
Premiums receivable654,368491,365
Prepaid reinsurance premiums170,21677,082
Reinsurance recoverable162,948192,512
Accrued investment income29,92133,478
Deferred acquisition costs77,91452,622
Receivable for investments sold163,584168,673
Other assets193,521218,405
Goodwill and other intangibles8,384 8,486
Total assets$8,096,920 $7,928,628
Liabilities, Noncontrolling Interests and Shareholders' Equity
Liabilities
Reserve for claims and claim expenses$1,755,783$1,879,377
Unearned premiums658,209399,517
Debt254,315351,775
Reinsurance balances payable380,939290,419
Payable for investments purchased397,517278,787
Other liabilities207,535 253,438
Total liabilities3,654,298 3,453,313
Redeemable noncontrolling interest - DaVinciRe875,770968,259
Shareholders' Equity
Preference shares400,000400,000
Common shares44,51045,542
Accumulated other comprehensive income6,05013,622
Retained earnings3,112,545 3,043,901
Total shareholders' equity attributable to RenaissanceRe3,563,1053,503,065
Noncontrolling interest3,747 3,991
Total shareholders' equity3,566,852 3,507,056
Total liabilities, noncontrolling interests and shareholders' equity$8,096,920 $7,928,628
 
Book value per common share$71.07 $68.14
 
RenaissanceRe Holdings Ltd.
Supplemental Financial Data - Segment Information
(in thousands of United States Dollars, except percentages)
(Unaudited)
     
Three months ended March 31, 2013
ReinsuranceLloyd'sOtherEliminationsTotal
Gross premiums written$561,126 $74,292 $ $ $635,418 
Net premiums written$380,872 $55,924 $17 $436,813 
Net premiums earned$233,460$37,779$16$271,255
Net claims and claim expenses incurred13,40014,528(677)27,251
Acquisition expenses18,0596,9163425,009
Operational expenses33,675 12,178 161 46,014 
Underwriting income$168,326 $4,157 $498 172,981
Net investment income43,61543,615
Net foreign exchange gains1,7561,756
Equity in earnings of other ventures5,8355,835
Other income7,0047,004
Net realized and unrealized gains on investments13,85013,850
Corporate expenses(4,529)(4,529)
Interest expense(5,034) Read Full Story

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