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RenaissanceRe Reports Second Quarter 2020 Net Income Available to Common Shareholders of $575.8 Million, or $12.63 Per Diluted Common Share; Operating Income Available to Common Shareholders of $190.1 Million, or $4.06 Per Diluted Common Share

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·22 min read
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RenaissanceRe Holdings Ltd. (NYSE: RNR) (the "Company" or "RenaissanceRe") today reported net income available to RenaissanceRe common shareholders of $575.8 million, or $12.63 per diluted common share, in the second quarter of 2020, compared to net income available to RenaissanceRe common shareholders of $367.9 million, or $8.35 per diluted common share, in the second quarter of 2019. Operating income available to RenaissanceRe common shareholders was $190.1 million, or $4.06 per diluted common share, in the second quarter of 2020, compared to $198.8 million, or $4.47 per diluted common share, in the second quarter of 2019. The Company reported an annualized return on average common equity of 38.5% and an annualized operating return on average common equity of 12.7% in the second quarter of 2020, compared to 28.9% and 15.6%, respectively, in the second quarter of 2019. Book value per common share increased $17.12, or 14.6%, to $134.27 in the second quarter of 2020, compared to a 7.3% increase in the second quarter of 2019. Tangible book value per common share plus accumulated dividends increased $18.37, or 16.6%, to $150.09 in the second quarter of 2020, compared to an 8.2% increase in the second quarter of 2019.

Kevin J. O’Donnell, President and Chief Executive Officer of RenaissanceRe, commented: "I am proud of our team’s performance in the second quarter, where we delivered strong financial results and accomplished several strategic goals. We demonstrated market leadership in both our Property and Casualty and Specialty segments, constructing a larger and more efficient portfolio through disciplined and focused underwriting. While COVID-19 continues to present unprecedented economic and societal challenges, we feel confident with our portfolio and raised over $1 billion of new common equity in anticipation of future opportunities that we believe will deliver long-term value for our shareholders."

Second Quarter of 2020 Summary

  • Gross premiums written increased by $225.0 million, or 15.2%, to $1.7 billion, in the second quarter of 2020 compared to the second quarter of 2019, driven by an increase of $203.3 million in the Property segment and an increase of $21.6 million in the Casualty and Specialty segment.

  • Underwriting income of $217.1 million and a combined ratio of 78.5% in the second quarter of 2020, compared to underwriting income of $170.8 million and a combined ratio of 81.3% in the second quarter of 2019. The Property segment generated underwriting income of $200.6 million and had a combined ratio of 59.1% in the second quarter of 2020. The Casualty and Specialty segment generated underwriting income of $16.5 million and had a combined ratio of 96.8% in the second quarter of 2020.

  • Total investment result was a gain of $537.7 million in the second quarter of 2020, generating an annualized total investment return of 11.8%, compared to a gain of $309.8 million and an annualized total investment return of 8.0% in the second quarter of 2019.

  • On June 5, 2020, the Company issued 6,325,000 of its common shares in an underwritten public offering at a public offering price of $166.00 per share. Concurrently with the public offering, the Company raised $75.0 million through the issuance of 451,807 of its common shares at a price of $166.00 per share to State Farm Mutual Automobile Insurance Company, one of the Company’s existing stockholders, in a private placement. The total net proceeds from the offerings were $1.1 billion. The Company intends to use the net proceeds from these offerings for general corporate purposes, which may include expanding existing business lines, entering new business lines, forming new joint ventures, or acquiring books of business from other companies.

  • Over $250.0 million of gross capital raised in the second quarter of 2020 through the Company’s managed joint ventures and third-party capital vehicles, including Upsilon RFO Re Ltd., Vermeer Reinsurance Ltd. ("Vermeer") and RenaissanceRe Medici Fund Ltd ("Medici").

Underwriting Results by Segment

Property Segment

Gross premiums written in the Property segment were $1.0 billion in the second quarter of 2020, an increase of $203.3 million, or 24.2%, compared to $839.2 million in the second quarter of 2019.

Gross premiums written in the catastrophe class of business were $711.8 million in the second quarter of 2020, an increase of $109.1 million, or 18.1%, compared to the second quarter of 2019. This increase was primarily driven by expanded participation on existing transactions, certain new transactions and rate improvements.

Gross premiums written in the other property class of business were $330.8 million in the second quarter of 2020, an increase of $94.2 million, or 39.8%, compared to the second quarter of 2019. This increase was primarily driven by growth from existing relationships and new opportunities across a number of the Company’s underwriting platforms.

Ceded premiums written in the Property segment were $338.4 million in the second quarter of 2020, an increase of $43.3 million, or 14.7%, compared to the second quarter of 2019. The increase in ceded premiums written was principally due to certain of the gross premiums written in the catastrophe class of business noted above being ceded to third-party investors in the Company’s managed vehicles, primarily RenaissanceRe Upsilon Fund Ltd.

The Property segment generated underwriting income of $200.6 million in the second quarter of 2020, compared to $151.7 million in the second quarter of 2019. In the second quarter of 2020, the Property segment generated a net claims and claim expense ratio of 33.4%, an underwriting expense ratio of 25.7% and a combined ratio of 59.1%, compared to 34.6%, 29.7% and 64.3%, respectively, in the second quarter of 2019. The underwriting result and combined ratio in the second quarter of 2020 improved principally due to a decrease in the underwriting expense ratio of 4.0 percentage points compared to the second quarter of 2019, driven by lower acquisition and operating expense ratios. The decrease in operating expenses was due in part to reduced travel, marketing and office operational expenses as a result of the COVID-19 pandemic. The decrease in the net claims and claim expense ratio was primarily driven by net favorable development on prior accident years net claims and claim expenses of $6.6 million, or 1.3 percentage points, during the second quarter of 2020, resulting from reductions in the estimated ultimate losses associated with a number of small catastrophe events in prior periods. This was partially offset by higher current accident year net claims and claim expenses due to a higher level of attritional losses associated with a larger proportion of the other property class of business being earned in the period compared to the second quarter of 2019. In addition, the underwriting result was impacted by losses related to a number of small weather-related catastrophe events that occurred during the second quarter of 2020.

Casualty and Specialty Segment

Gross premiums written in the Casualty and Specialty segment were $659.3 million in the second quarter of 2020, an increase of $21.6 million, or 3.4%, as compared to the second quarter of 2019. This increase was primarily due to growth from new and existing business opportunities written in the current and prior periods across various classes of business within the segment, substantially offset by non-renewal of a portion of the business acquired in connection with the acquisition of TMR (as defined herein).

The Casualty and Specialty segment generated underwriting income of $16.5 million in the second quarter of 2020, compared to $19.0 million in the second quarter of 2019. In the second quarter of 2020, the Casualty and Specialty segment generated a net claims and claim expense ratio of 66.7%, an underwriting expense ratio of 30.1% and a combined ratio of 96.8%, compared to 63.0%, 33.1% and 96.1%, respectively, in the second quarter of 2019. The increase in the net claims and claim expense ratio of 3.7 percentage points, was principally the result of higher current accident year attritional losses in the second quarter of 2020 compared to the second quarter of 2019 from specialty lines of business. The underwriting expense ratio in the Casualty and Specialty segment decreased 3.0 percentage points, to 30.1%, in the second quarter of 2020 compared to the second quarter of 2019, driven by lower acquisition and operating expense ratios. Operating expenses were impacted by reduced travel, marketing and office operational expenses as a result of the COVID-19 pandemic.

COVID-19

The Company continues to evaluate industry trends and its own potential exposure associated with the ongoing COVID-19 pandemic, and expects historically significant industry losses to emerge over time as the full impact of the pandemic and its effects on the global economy are realized. Among other things, the Company continues to actively monitor information received from or reported by clients, brokers, industry actuaries, regulators, courts, and others, and to assess that information in the context of its own portfolio. Our loss estimates represent our best estimate based on currently available information, and actual losses may vary materially from these estimates.

Other Items

  • The Company’s total investment result, which includes the sum of net investment income and net realized and unrealized gains on investments, was a gain of $537.7 million in the second quarter of 2020, compared to a gain of $309.8 million in the second quarter of 2019, an increase of $227.9 million. The primary driver of the total investment result in the second quarter of 2020 was net realized and unrealized gains on investments of $448.4 million principally within the fixed maturity and equity investments trading portfolios.

  • Net income attributable to redeemable noncontrolling interests in the second quarter of 2020 was $118.7 million, compared to $71.8 million in the second quarter of 2019. The increase was primarily driven by growth and improved performance of DaVinciRe Holdings Ltd., Medici and Vermeer.

  • In the second quarter of 2020, total fee income increased by $5.3 million, to $45.5 million, compared to $40.2 million in the second quarter of 2019, primarily driven by an increase in the dollar value of capital being managed, combined with the improved underlying performance of our joint ventures and managed capital vehicles.

  • In the second quarter of 2020, corporate expenses decreased by $11.9 million, to $11.9 million, compared to $23.8 million in the second quarter of 2019, primarily driven by $14.5 million of expenses incurred in connection with the acquisition of Tokio Millennium Re AG (now known as RenaissanceRe Europe AG), Tokio Millennium Re (UK) Limited (now known as RenaissanceRe (UK) Limited) and their subsidiaries (collectively, "TMR") during the second quarter of 2019 compared to $2.1 million in the second quarter of 2020.

  • Income tax expense was $29.9 million in the second quarter of 2020, compared to $9.5 million in the second quarter of 2019, principally driven by investment gains in our U.S.-based operations.

This Press Release includes certain financial measures that are not calculated in accordance with generally accepted accounting principles in the U.S. ("GAAP") 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," "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, July 29, 2020 at 11:00 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, Australia, 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 uncertainty of the continuing impact of the COVID-19 pandemic and measures taken in response thereto; the effect of legislative, regulatory, judicial or social influences related to the COVID-19 pandemic on the Company’s financial performance, including the emergence of unexpected or un-modeled insurance or reinsurance losses, and the Company’s ability to conduct its business; the impact and potential future impacts of the COVID-19 pandemic on the value of the Company’s investments and its access to capital in the future or the pricing or terms of available financing; the effect that measures taken to mitigate the COVID-19 pandemic have on the Company’s operations and those of its counterparties; the frequency and severity of catastrophic and other events the Company covers; the effectiveness of the Company’s claims and claim expense reserving process; the effect of climate change on the Company’s business, including the trend towards increasingly frequent and severe climate events; the Company’s ability to maintain its financial strength ratings; the effect of emerging claims and coverage issues; collection on claimed retrocessional coverage, and new retrocessional reinsurance being available on acceptable terms and providing the coverage that the Company intended to obtain; 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; the performance of the Company’s investment portfolio; a contention by the U.S. 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 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 its joint ventures or other entities it manages; the effect of cybersecurity risks, including technology breaches or failure, on the Company’s business; the success of any of the Company’s strategic investments or acquisitions, including its ability to manage its operations as its product and geographical diversity increases; the Company’s ability to retain its key senior officers and to attract or retain the executives and employees necessary to manage its business; 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; soft reinsurance underwriting market conditions; changes in the method for determining the London Inter-bank Offered Rate ("LIBOR") and the potential replacement of LIBOR; losses the Company could face from terrorism, political unrest or war; the Company’s ability to successfully implement its business strategies and initiatives; the Company’s ability to determine any impairments taken on its investments; the effects 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 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 industries; 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 and other transactions; difficulties investors may have in servicing process or enforcing judgments against the Company in the U.S.; 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; the Company’s ability to comply with applicable sanctions and foreign corrupt practices laws; 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; 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; the effect of the exit by the United Kingdom from the EU; 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, Quarterly Reports on Form 10-Q and prospectus supplement filed on June 4, 2020.

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,
2020

June 30,
2019

June 30,
2020

June 30,
2019

Revenues

Gross premiums written

$

1,701,872

$

1,476,908

$

3,727,593

$

3,041,203

Net premiums written

$

1,180,803

$

1,022,965

$

2,450,611

$

1,951,996

Increase in unearned premiums

(170,707)

(111,463)

(527,417)

(490,466)

Net premiums earned

1,010,096

911,502

1,923,194

1,461,530

Net investment income

89,305

118,588

188,778

200,682

Net foreign exchange (losses) gains

(7,195)

9,309

(12,923)

6,463

Equity in earnings of other ventures

9,041

6,812

13,605

11,473

Other (loss) income

(1,201)

922

(5,637)

4,093

Net realized and unrealized gains on investments

448,390

191,247

337,683

361,260

Total revenues

1,548,436

1,238,380

2,444,700

2,045,501

Expenses

Net claims and claim expenses incurred

510,272

453,373

1,081,226

680,408

Acquisition expenses

233,610

227,482

444,214

351,433

Operational expenses

49,077

59,814

116,538

104,747

Corporate expenses

11,898

23,847

27,889

62,636

Interest expense

11,842

15,534

26,769

27,288

Total expenses

816,699

780,050

1,696,636

1,226,512

Income before taxes

731,737

458,330

748,064

818,989

Income tax expense

(29,875)

(9,475)

(21,029)

(17,006)

Net income

701,862

448,855

727,035

801,983

Net income attributable to noncontrolling interests

(118,728)

(71,812)

(216,819)

(142,034)

Net income attributable to RenaissanceRe

583,134

377,043

510,216

659,949

Dividends on preference shares

(7,289)

(9,189)

(16,345)

(18,378)

Net income available to RenaissanceRe common shareholders

$

575,845

$

367,854

$

493,871

$

641,571

Net income available to RenaissanceRe common shareholders per common share – basic

$

12.64

$

8.36

$

11.04

$

14.82

Net income available to RenaissanceRe common shareholders per common share – diluted

$

12.63

$

8.35

$

11.02

$

14.81

Operating income available to RenaissanceRe common shareholders per common share - diluted

$

4.06

$

4.47

$

4.91

$

8.05

Average shares outstanding - basic

44,939

43,483

44,190

42,774

Average shares outstanding - diluted

45,003

43,521

44,253

42,806

Net claims and claim expense ratio

50.5

%

49.7

%

56.2

%

46.6

%

Underwriting expense ratio

28.0

%

31.6

%

29.2

%

31.2

%

Combined ratio

78.5

%

81.3

%

85.4

%

77.8

%

Return on average common equity - annualized

38.5

%

28.9

%

17.1

%

26.4

%

Operating return on average common equity - annualized (1)

12.7

%

15.6

%

7.8

%

14.4

%

(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)

June 30,
2020

December 31,
2019

Assets

(Unaudited)

(Audited)

Fixed maturity investments trading, at fair value

$

12,495,135

$

11,171,655

Short term investments, at fair value

5,570,804

4,566,277

Equity investments trading, at fair value

470,087

436,931

Other investments, at fair value

1,093,338

1,087,377

Investments in other ventures, under equity method

94,285

106,549

Total investments

19,723,649

17,368,789

Cash and cash equivalents

1,185,844

1,379,068

Premiums receivable

3,519,965

2,599,896

Prepaid reinsurance premiums

1,266,203

767,781

Reinsurance recoverable

2,774,358

2,791,297

Accrued investment income

70,004

72,461

Deferred acquisition costs and value of business acquired

734,286

663,991

Receivable for investments sold

648,458

78,369

Other assets

298,396

346,216

Goodwill and other intangibles

258,591

262,226

Total assets

$

30,479,754

$

26,330,094

Liabilities, Noncontrolling Interests and Shareholders’ Equity

Liabilities

Reserve for claims and claim expenses

$

9,365,469

$

9,384,349

Unearned premiums

3,549,641

2,530,975

Debt

1,135,216

1,384,105

Reinsurance balances payable

4,094,027

2,830,691

Payable for investments purchased

1,259,116

225,275

Other liabilities

342,014

932,024

Total liabilities

19,745,483

17,287,419

Redeemable noncontrolling interest

3,387,099

3,071,308

Shareholders’ Equity

Preference shares

525,000

650,000

Common shares

50,811

44,148

Additional paid-in capital

1,602,738

568,277

Accumulated other comprehensive loss

(3,066)

(1,939)

Retained earnings

5,171,689

4,710,881

Total shareholders’ equity attributable to RenaissanceRe

7,347,172

5,971,367

Total liabilities, noncontrolling interests and shareholders’ equity

$

30,479,754

$

26,330,094

Book value per common share

$

134.27

$

120.53

RenaissanceRe Holdings Ltd.

Supplemental Financial Data - Segment Information

(in thousands of United States Dollars, except percentages)

(Unaudited)

Three months ended June 30, 2020

Property

Casualty and Specialty

Other

Total

Gross premiums written

$

1,042,536

$

659,336

$

$

1,701,872

Net premiums written

$

704,138

$

476,665

$

$

1,180,803

Net premiums earned

$

491,116

$

518,980

$

$

1,010,096

Net claims and claim expenses incurred

164,050

346,266

(44)

510,272

Acquisition expenses

94,772

138,837

1

233,610

Operational expenses

31,656

17,422

(1)

49,077

Underwriting income

$

200,638

$

16,455

$

44

217,137

Net investment income

89,305

89,305

Net foreign exchange losses

(7,195)

(7,195)

Equity in earnings of other ventures

9,041

9,041

Other loss

(1,201)

(1,201)

Net realized and unrealized gains on investments

448,390

448,390

Corporate expenses

(11,898)

(11,898)

Interest expense

(11,842)

(11,842)

Income before taxes and redeemable noncontrolling interests

731,737

Income tax expense

(29,875)

(29,875)

Net income attributable to redeemable noncontrolling interests

(118,728)

(118,728)

Dividends on preference shares

(7,289)

(7,289)

Net income available to RenaissanceRe common shareholders

$

575,845

Net claims and claim expenses incurred – current accident year

$

170,614

$

355,064

$

$

525,678

Net claims and claim expenses incurred – prior accident years

(6,564)

(8,798)

(44)

(15,406)

Net claims and claim expenses incurred – total

$

164,050

$

346,266

$

(44)

$

510,272

Net claims and claim expense ratio – current accident year

34.7

%

68.4

%

52.0

%

Net claims and claim expense ratio – prior accident years

(1.3)

%

(1.7)

%

(1.5)

%

Net claims and claim expense ratio – calendar year

33.4

%

66.7

%

50.5

%

Underwriting expense ratio

25.7

%

30.1

%

28.0

%

Combined ratio

59.1

%

96.8

%

78.5

%

Three months ended June 30, 2019

Property

Casualty and Specialty

Other

Total

Gross premiums written

$

839,200

$

637,708

$

$

1,476,908

Net premiums written

$

544,115

$

478,850

$

$

1,022,965

Net premiums earned

$

425,013

$

486,489

$

$

911,502

Net claims and claim expenses incurred

146,874

306,501

(2)

453,373

Acquisition expenses

89,711

137,963

(192)

227,482

Operational expenses

36,764

23,016

34

59,814

Underwriting income

$

151,664

$

19,009

$

160

170,833

Net investment income

118,588

118,588

Net foreign exchange gains

9,309

9,309

Equity in earnings of other ventures

6,812

6,812

Other income

922

922

Net realized and unrealized gains on investments

191,247

191,247

Corporate expenses

(23,847)

(23,847)

Interest expense

(15,534)

(15,534)

Income before taxes and redeemable noncontrolling interests

458,330

Income tax expense

(9,475)

(9,475)

Net income attributable to redeemable noncontrolling interests

(71,812)

(71,812)

Dividends on preference shares

(9,189)

(9,189)

Net income available to RenaissanceRe common shareholders

$

367,854

Net claims and claim expenses incurred – current accident year

$

136,111

$

317,029

$

$

453,140

Net claims and claim expenses incurred – prior accident years

10,763

(10,528)

(2)

233

Net claims and claim expenses incurred – total

$

146,874

$

306,501

$

(2)

$

453,373

Net claims and claim expense ratio – current accident year

32.0

%

65.2

%

49.7

%

Net claims and claim expense ratio – prior accident years

2.6

%

(2.2)

%

%

Net claims and claim expense ratio – calendar year

34.6

%

63.0

%

49.7

%

Underwriting expense ratio

29.7

%

33.1

%

31.6

%

Combined ratio

64.3

%

96.1

%

81.3

%

RenaissanceRe Holdings Ltd.

Supplemental Financial Data - Segment Information

(in thousands of United States Dollars, except percentages)

(Unaudited)

Six months ended June 30, 2020

Property

Casualty and Specialty

Other

Total

Gross premiums written

$

2,263,062

$

1,464,531

$

$

3,727,593

Net premiums written

$

1,378,719

$

1,071,892

$

$

2,450,611

Net premiums earned

$

912,451

...

$

1,010,743

$

$

1,923,194

Net claims and claim expenses incurred

308,902

772,475

(151)

1,081,226

Acquisition expenses

180,123

264,090

1

444,214

Operational expenses

75,663

40,876

(1)

116,538

Underwriting income (loss)

$

347,763

$

(66,698)

$

151

281,216

Net investment income

188,778

188,778

Net foreign exchange losses

(12,923)

(12,923)

Equity in earnings of other ventures

13,605

13,605

Other loss

(5,637)

(5,637)

Net realized and unrealized gains on investments

337,683

337,683

Corporate expenses

(27,889)

(27,889)

Interest expense

(26,769)

(26,769)

Income before taxes and redeemable noncontrolling interests

748,064

Income tax expense

(21,029)

(21,029)

Net income attributable to redeemable noncontrolling interests

(216,819)

(216,819)

Dividends on preference shares

(16,345)

(16,345)

Net income attributable to RenaissanceRe common shareholders

$

493,871

Net claims and claim expenses incurred – current accident year

$

301,458

$

781,274

$

$

1,082,732

Net claims and claim expenses incurred – prior accident years

7,444

(8,799)

(151)

(1,506)

Net claims and claim expenses incurred – total

$

308,902

$

772,475

$

(151)

$

1,081,226

Net claims and claim expense ratio – current accident year

33.0

%

77.3

%

56.3

%

Net claims and claim expense ratio – prior accident years

0.9

%

(0.9)

%

(0.1)

%

Net claims and claim expense ratio – calendar year

33.9

%

76.4

%

56.2

%

Underwriting expense ratio

28.0

%

30.2

%

29.2

%

Combined ratio

61.9

%

106.6

%

85.4

%

Six months ended June 30, 2019

Property

Casualty and Specialty

Other

Total

Gross premiums written

$

1,871,584

$

1,169,619

$

$

3,041,203

Net premiums written

$

1,108,345

$

843,651

$

$

1,951,996

Net premiums earned

$

715,758

$

745,772

$

$

1,461,530

Net claims and claim expenses incurred

202,957

477,434

17

680,408

Acquisition expenses

143,450

208,175

(192)

351,433

Operational expenses

65,308

39,405

34

104,747

Underwriting income

$

304,043

$

20,758

$

141

324,942

Net investment income

200,682

200,682

Net foreign exchange gains

6,463

6,463

Equity in earnings of other ventures

11,473

11,473

Other income

4,093

4,093

Net realized and unrealized gains on investments

361,260

361,260

Corporate expenses

(62,636)

(62,636)

Interest expense

(27,288)

(27,288)

Income before taxes and redeemable noncontrolling interests

818,989

Income tax expense

(17,006)

(17,006)

Net income attributable to redeemable noncontrolling interests

(142,034)

(142,034)

Dividends on preference shares

(18,378)

(18,378)

Net income available to RenaissanceRe common shareholders

$

641,571

Net claims and claim expenses incurred – current accident year

$

190,317

$

494,164

$

$

684,481

Net claims and claim expenses incurred – prior accident years

12,640

(16,730)

17

(4,073)

Net claims and claim expenses incurred – total

$

202,957

$

477,434

$

17

$

680,408

Net claims and claim expense ratio – current accident year

26.6

%

66.3

%

46.8

%

Net claims and claim expense ratio – prior accident years

1.8

%

(2.3)

%

(0.2)

%

Net claims and claim expense ratio – calendar year

28.4

%

64.0

%

46.6

%

Underwriting expense ratio

29.1

%

33.2

%

31.2

%

Combined ratio

57.5

%

97.2

%

77.8

%

RenaissanceRe Holdings Ltd.

Supplemental Financial Data - Gross Premiums Written

(in thousands of United States Dollars)

(Unaudited)

Three months ended

Six months ended

June 30,
2020

June 30,
2019

June 30,
2020

June 30,
2019

Property Segment

Catastrophe

$

711,786

$

602,656

$

1,647,976

$

1,447,869

Other property

330,750

236,544

615,086

423,715

Property segment gross premiums written

$

1,042,536

$

839,200

$

2,263,062

$

1,871,584

Casualty and Specialty Segment

General casualty (1)

$

206,666

$

258,357

$

453,333

$

411,691

Professional liability (2)

222,737

167,206

453,224

316,583

Financial lines (3)

101,635

91,202

248,714

218,558

Other (4)

128,298

120,943

309,260

222,787

Casualty and Specialty segment gross premiums written

$

659,336

$

637,708

$

1,464,531

$

1,169,619

(1)

Includes automobile liability, casualty clash, employer’s liability, umbrella or excess casualty, workers’ compensation and general liability.

(2)

Includes directors and officers, medical malpractice, and professional indemnity.

(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

Six months ended

June 30,
2020

June 30,
2019

June 30,
2020

June 30,
2019

Fixed maturity investments trading

$

69,943

$

88,106

$

143,281

$

149,589

Short term investments

6,049

17,807

18,141

29,651

Equity investments trading

1,666

916

3,217

1,943

Other investments

Catastrophe bonds

13,519

11,781

27,658

20,472

Other

1,107

1,914

2,736

3,554

Cash and cash equivalents

837

2,306

2,341

3,823

93,121

122,830

197,374

209,032

Investment expenses

(3,816)

(4,242)

(8,596)

(8,350)

Net investment income

89,305

118,588

188,778

200,682

Net realized and unrealized gains (losses) on:

Fixed maturity investments trading (1)

322,711

171,920

423,932

288,621

Equity investments trading (1)

113,506

22,083

(38,376)

76,027

Other investments

Catastrophe bonds

4,452

(11,902)

(9,900)

(14,112)

Other

7,721

9,146

(37,973)

10,724

Net realized and unrealized gains on investments

448,390

191,247

337,683

361,260

Total investment result

$

537,695

$

309,835

$

526,461

$

561,942

Total investment return - annualized

11.8

%

8.0

%

5.8

%

7.3

%

(1)

Net realized and unrealized gains (losses) on fixed maturity investments trading includes the impacts of interest rate futures, interest rate swaps, credit default swaps and total return swaps. Net realized gains (losses) on equity investments trading includes the impact of equity futures.

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.

Operating Income Available to RenaissanceRe Common Shareholders and Operating Return on Average Common Equity - Annualized

The Company uses "operating income available 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 available to RenaissanceRe common shareholders" as used herein differs from "net income 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, excluding other investments - catastrophe bonds, net foreign exchange gains and losses, transaction and integration expenses associated with the acquisition of TMR, the income tax expense or benefit associated with these adjustments and the portion of these adjustments attributable to the Company's redeemable noncontrolling interests." The Company’s management believes that "operating income available 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 fair value of the Company’s fixed maturity investment portfolio, equity investments trading, other investments (excluding catastrophe bonds) and investments-related derivatives; fluctuations in foreign exchange rates; certain transaction and integration expenses associated with the acquisition of TMR; the associated income tax expense or benefit of these adjustments; and the portion of these adjustments attributable to the Company's redeemable noncontrolling interests. The Company also uses "operating income available to RenaissanceRe common shareholders" to calculate "operating income available to RenaissanceRe common shareholders per common share - diluted" and "operating return on average common equity - annualized." The following table is a reconciliation of: (1) net income available to RenaissanceRe common shareholders to "operating income available to RenaissanceRe common shareholders"; (2) net income available to RenaissanceRe common shareholders per common share - diluted to "operating income available to RenaissanceRe common shareholders per common share - diluted"; and (3) return on average common equity - annualized to "operating return on average common equity - annualized." Comparative information for all prior periods has been updated to conform to the current methodology and presentation.

Three months ended

Six months ended

(in thousands of United States Dollars, except per share amounts and percentages)

June 30,
2020

June 30,
2019

June 30,
2020

June 30,
2019

Net income available to RenaissanceRe common shareholders

$

575,845

$

367,854

$

493,871

$

641,571

Adjustment for net realized and unrealized gains on investments, excluding other investments - catastrophe bonds

(443,938)

(203,149)

(347,583)

(375,372)

Adjustment for net foreign exchange losses (gains)

7,195

(9,309)

12,923

(6,463)

Adjustment for transaction and integration expenses associated with the acquisition of TMR

2,279

14,483

6,702

40,003

Adjustment for income tax expense (1)

21,223

10,442

17,082

18,776

Adjustment for net income attributable to redeemable noncontrolling interests (2)

27,472

18,518

40,491

33,932

Operating income available to RenaissanceRe common shareholders

$

190,076

$

198,839

$

223,486

$

352,447

Net income available to RenaissanceRe common shareholders per common share - diluted

$

12.63

$

8.35

$

11.02

$

14.81

Adjustment for net realized and unrealized gains on investments, excluding other investments - catastrophe bonds

(9.86)

(4.67)

(7.85)

(8.77)

Adjustment for net foreign exchange losses (gains)

0.16

(0.21)

0.29

(0.15)

Adjustment for transaction and integration expenses associated with the acquisition of TMR

0.05

0.33

0.15

0.93

Adjustment for income tax expense (1)

0.47

0.24

0.39

0.44

Adjustment for net income attributable to redeemable noncontrolling interests (2)

0.61

0.43

0.91

0.79

Operating income available to RenaissanceRe common shareholders per common share - diluted

$

4.06

$

4.47

$

4.91

$

8.05

Return on average common equity - annualized

38.5

%

28.9

%

17.1

%

26.4

%

Adjustment for net realized and unrealized gains on investments, excluding other investments - catastrophe bonds

(29.7)

%

(16.0)

%

(11.9)

%

(15.5)

%

Adjustment for net foreign exchange losses (gains)

0.5

%

(0.7)

%

0.4

%

(0.3)

%

Adjustment for transaction and integration expenses associated with the acquisition of TMR

0.2

%

1.1

%

0.2

%

1.6

%

Adjustment for income tax expense (1)

1.4

%

0.8

%

0.6

%

0.8

%

Adjustment for net income attributable to redeemable noncontrolling interests (2)

1.8

%

1.5

%

1.4

%

1.4

%

Operating return on average common equity - annualized

12.7

%

15.6

%

7.8

%

14.4

%

(1)

Adjustment for income tax expense represents the income tax expense associated with the adjustments to net income available to RenaissanceRe common shareholders. The income tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors.

(2)

Represents the portion of these adjustments that are attributable to the Company's redeemable noncontrolling interests, including the income tax impact of those adjustments.

Tangible Book Value Per Common Share and Tangible Book Value Per Common Share Plus Accumulated Dividends

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 table 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

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

June 30,
2019

Book value per common share

$

134.27

$

117.15

$

120.53

$

120.07

$

119.17

Adjustment for goodwill and other intangibles (1)

(5.56)

(6.46)

(6.50)

(6.55)

(6.60)

Tangible book value per common share

128.71

110.69

114.03

113.52

112.57

Adjustment for accumulated dividends

21.38

21.03

20.68

20.34

20.00

Tangible book value per common share plus accumulated dividends

$

150.09

$

131.72

$

134.71

$

133.86

$

132.57

Quarterly change in book value per common share

14.6

%

(2.8)

%

0.4

%

0.8

%

7.3

%

Quarterly change in tangible book value per common share plus change in accumulated dividends

16.6

%

(2.6)

%

0.7

%

1.1

%

8.2

%

Year to date change in book value per common share

11.4

%

(2.8)

%

15.7

%

15.3

%

14.4

%

Year to date change in tangible book value per common share plus change in accumulated dividends

13.5

%

(2.6)

%

17.9

%

17.1

%

15.7

%

(1)

At June 30, 2020, March 31, 2020, December 31, 2019, September 30, 2019 and June 30, 2019, goodwill and other intangibles included $23.5 million, $24.2 million, $24.9 million, $25.6 million, $26.3 million and $27.0 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/20200728005977/en/

Contacts

INVESTOR CONTACT:
Keith McCue
Senior Vice President, Finance & Investor Relations
RenaissanceRe Holdings Ltd.
(441) 239-4830

MEDIA CONTACT:
Keil Gunther
Vice President, Head of Global Marketing & Client Communication
RenaissanceRe Holdings Ltd.
(441) 239-4932
or
Kekst CNC
Dawn Dover
(212) 521-4800