RenaissanceRe Reports Fourth Quarter 2019 Net Income Available to Common Shareholders of $33.8 Million, or $0.77 Per Diluted Common Share; Operating Income Available to Common Shareholders of $23.0 Million, or $0.52 Per Diluted Common Share

Annual Net Income Available to Common Shareholders of $712.0 million, or $16.29 Per Diluted Common Share; Operating Income Available to Common Shareholders of $402.9 million, or $9.13 Per Diluted Common Share

PEMBROKE, Bermuda–(BUSINESS WIRE)–RenaissanceRe Holdings Ltd. (NYSE: RNR) (the “Company” or “RenaissanceRe”) today reported net income available to RenaissanceRe common shareholders of $33.8 million, or $0.77 per diluted common share, in the fourth quarter of 2019, compared to a net loss attributable to RenaissanceRe common shareholders of $83.9 million, or $2.10 per diluted common share, in the fourth quarter of 2018. Operating income available to RenaissanceRe common shareholders was $23.0 million, or $0.52 per diluted common share, in the fourth quarter of 2019, compared to $4.8 million, or $0.11 per diluted common share, in the fourth quarter of 2018. The Company reported an annualized return on average common equity of 2.5% and an annualized operating return on average common equity of 1.7% in the fourth quarter of 2019, compared to negative 7.8% and positive 0.4%, respectively, in the fourth quarter of 2018. Book value per common share increased $0.46, or 0.4%, to $120.53 in the fourth quarter of 2019, compared to a 1.0% decrease in the fourth quarter of 2018. Tangible book value per common share plus accumulated dividends increased $0.85, or 0.7%, to $134.71 in the fourth quarter of 2019, compared to a 0.4% decrease in the fourth quarter of 2018.

For 2019, the Company reported net income available to RenaissanceRe common shareholders of $712.0 million, or $16.29 per diluted common share, compared to $197.3 million, or $4.91 per diluted common share, in 2018. Operating income available to RenaissanceRe common shareholders was $402.9 million, or $9.13 per diluted common share, in 2019, compared to $349.0 million, or $8.73 per diluted common share, in 2018. The Company reported a return on average common equity of 14.1% and an operating return on average common equity of 8.0% in 2019, compared to 4.7% and 8.4%, respectively, in 2018. Book value per common share increased $16.40, or 15.7%, in 2019, to $120.53, compared to a 4.4% increase in 2018. Tangible book value per common share plus accumulated dividends increased $17.54, or 17.9%, to $134.71 in 2019, compared to a 6.4% increase in 2018.

Kevin J. O’Donnell, President and Chief Executive Officer of RenaissanceRe, commented: “I am pleased with our performance this year as we materially grew tangible book value per share plus accumulated dividends and earned a robust operating return on equity. We successfully executed our strategy by organically growing our business while efficiently integrating Tokio Millennium Re. Looking forward, I am excited about our opportunities to build a bigger and more attractive portfolio and am confident in our ability to continue delivering long-term value.”

Fourth Quarter of 2019 Summary

• During the fourth quarter of 2019, Typhoon Hagibis and losses associated with aggregate loss contracts (the “2019 Aggregate Losses”) resulted in a net negative impact to net income available to RenaissanceRe common shareholders of $193.3 million. In addition, the Company reallocated certain losses from Hurricane Dorian and Typhoon Faxai (collectively, the “Q3 2019 Catastrophe Events”) to 2019 Aggregate Losses, which had no net impact on the Company’s net income available to RenaissanceRe common shareholders.
• Gross premiums written increased by $357.7 million, or 65.3%, to $905.5 million, in the fourth quarter of 2019 compared to the fourth quarter of 2018, driven by an increase of $312.6 million in the Casualty and Specialty segment and an increase of $45.1 million in the Property segment. Included in gross premiums written in the fourth quarter of 2019 was $30.2 million of reinstatement premiums written primarily associated with Typhoon Hagibis. Included in the gross premiums written in the fourth quarter of 2018 was $102.5 million of reinstatement premiums written primarily associated with the wildfires in California during the fourth quarter of 2018 (the “Q4 2018 California Wildfires”) and Hurricane Michael (collectively, the “Q4 2018 Catastrophe Events”).
• Underwriting loss of $65.2 million and a combined ratio of 106.7% in the fourth quarter of 2019, compared to an underwriting loss of $82.3 million and a combined ratio of 114.3% in the fourth quarter of 2018. The Property segment incurred an underwriting loss of $87.1 million and had a combined ratio of 118.6% in the fourth quarter of 2019. The Casualty and Specialty segment generated underwriting income of $20.8 million and had a combined ratio of 95.9% in the fourth quarter of 2019. The Company’s underwriting results in the fourth quarter of 2019 were principally impacted by Typhoon Hagibis and the 2019 Aggregate Losses, which had a net negative impact on the underwriting result of $237.0 million and added 25.0 percentage points to the combined ratio.
• Total investment result was a gain of $130.6 million in the fourth quarter of 2019, generating an annualized total investment return of 3.1%.
• Over $300 million of capital raised in the fourth quarter of 2019 through the Company’s managed joint ventures and third-party capital vehicles, including Vermeer Reinsurance Ltd. (“Vermeer”), Upsilon RFO Re Ltd. (“Upsilon RFO”) and RenaissanceRe Medici Fund Ltd (“Medici”).

Net Negative Impact

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. The Company’s estimates of net negative impact are based on a review of its potential exposures, preliminary discussions with certain counterparties and catastrophe modeling techniques. The Company’s actual net negative impact, both individually and in the aggregate, may vary from these estimates, perhaps materially. Changes in these estimates will be recorded in the period in which they occur.

Meaningful uncertainty regarding the estimates and the nature and extent of the losses from these events remains, driven by the magnitude and recent occurrence of each event, the geographic areas in which the events occurred, relatively limited claims data received to date, the contingent nature of business interruption and other exposures, potential uncertainties relating to reinsurance recoveries and other factors inherent in loss estimation, among other things.

The financial data in the table below provides additional information detailing the net negative impact on the Company’s consolidated financial statements in the fourth quarter of 2019 resulting from Typhoon Hagibis, the 2019 Aggregate Losses and a reallocation of certain losses from the Q3 2019 Catastrophe Events to 2019 Aggregate Losses.

During the fourth quarter of 2019, the Company announced a preliminary estimated net negative impact on net income available to RenaissanceRe common shareholders of losses from Typhoon Hagibis of approximately $175 million on its fourth quarter 2019 results of operations. The Company’s estimated net negative impact from Typhoon Hagibis remains consistent with this initial estimate and is allocated between the Typhoon Hagibis column and the 2019 Aggregate Loss column in the table below.

During the third quarter of 2019, the Company’s initial estimate of the net negative impact of the Q3 2019 Catastrophe Events included loss estimates associated with aggregate loss contracts. Certain of those contracts have been reallocated to 2019 Aggregate Losses, with a comparable change reflected as a reduction to the Q3 2019 Catastrophe Events in the table below.

Acquisition of Tokio Millennium Re

On March 22, 2019, the Company completed its 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”). The Company accounted for the acquisition of TMR under the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic Business Combinations. The operating activities of TMR are included in the Company’s consolidated statements of operations from March 22, 2019, and comparisons of the Company’s results of operations for the fourth quarter and full year of 2019 to the fourth quarter and full year of 2018 should be viewed in that context. In addition, the results of operations for the fourth quarter and full year of 2019 may not be reflective of the ultimate ongoing business of the combined entities.

Underwriting Results by Segment

Property Segment

Gross premiums written in the Property segment were $245.0 million in the fourth quarter of 2019, an increase of $45.1 million, or 22.6%, compared to $199.9 million in the fourth quarter of 2018.

Gross premiums written in the catastrophe class of business were $44.8 million in the fourth quarter of 2019, a decrease of $64.1 million, or 58.9%, compared to the fourth quarter of 2018. In the fourth quarter of 2019, gross premiums written in the catastrophe class of business included $29.5 million of reinstatement premiums primarily associated with Typhoon Hagibis, compared to the fourth quarter of 2018, which included $102.8 million of reinstatement premiums associated with the Q4 2018 Catastrophe Events.

Gross premiums written in the other property class of business were $200.2 million in the fourth quarter of 2019, an increase of $109.2 million, or 120.0%, compared to the fourth quarter of 2018. The increase in gross premiums written in the other property class of business was primarily driven by growth from existing relationships, new opportunities across a number of the Company’s underwriting platforms and business acquired in connection with the acquisition of TMR.

Ceded premiums written in the Property segment were $2.1 million in the fourth quarter of 2019, a decrease of $27.2 million, or 92.9%, compared to the fourth quarter of 2018. The decrease in ceded premiums written in the fourth quarter of 2019 was principally due to $26.0 million of ceded reinstatement premiums written in the fourth quarter of 2018 associated with Q4 2018 Catastrophe Events which did not reoccur in the fourth quarter of 2019.

The Property segment incurred an underwriting loss of $87.1 million and had a combined ratio of 118.6% in the fourth quarter of 2019, compared to an underwriting loss of $35.0 million and a combined ratio of 110.6% in the fourth quarter of 2018. The Property segment underwriting result and combined ratio in the fourth quarter of 2019 were principally impacted by Typhoon Hagibis and the 2019 Aggregate Losses, which resulted in a net negative impact on the Property segment underwriting result of $235.5 million and added 52.5 percentage points to the Property segment combined ratio.

In comparison, the fourth quarter of 2018 was impacted by the Q4 2018 Catastrophe Events and changes in certain losses associated with aggregate loss contracts in 2018 (the “2018 Aggregate Losses”), which resulted in a net negative impact on the underwriting result of $205.7 million and added 74.1 percentage points to the Property segment combined ratio. In addition, the underwriting results in the fourth quarter of 2018 were positively impacted by changes in the estimates of the net negative impact of the wildfires in California during the third quarter of 2018 (the “Q3 2018 California Wildfires”), Typhoons Jebi, Mangkhut and Trami, and Hurricane Florence (collectively, the “Q3 2018 Catastrophe Events”) and Hurricanes Harvey, Irma and Maria, the Mexico City Earthquake, the wildfires in California during the fourth quarter of 2017 and certain losses associated with aggregate loss contracts (collectively, the “2017 Large Loss Events”) of $55.2 million and $24.8 million, respectively, reducing the Property segment combined ratio by 17.7 and 7.9 percentage points, respectively.

Casualty and Specialty Segment

Gross premiums written in the Casualty and Specialty segment were $660.5 million in the fourth quarter of 2019, an increase of $312.6 million, or 89.9%, compared to the fourth quarter of 2018. The increase was due to growth from new and existing business opportunities written in the current and prior periods across various classes of business within the segment, and business acquired in connection with the acquisition of TMR.

The Casualty and Specialty segment generated underwriting income of $20.8 million and had a combined ratio of 95.9% in the fourth quarter of 2019, compared to an underwriting loss of $47.4 million and a combined ratio of 119.3% in the fourth quarter of 2018. The improvement in the Casualty and Specialty segment combined ratio was driven by a decrease of 14.8 percentage points in the net claims and claim expense ratio, principally the result of lower current accident year losses in the fourth quarter of 2019 compared to the fourth quarter of 2018, which included loss estimates for liability exposures associated with the Q4 2018 California Wildfires. The Casualty and Specialty segment also experienced an 8.6 percentage point decrease in the underwriting expense ratio in the fourth quarter of 2019 compared to the fourth quarter of 2018, resulting from a decrease in both the acquisition expense ratio and the operating expense ratio. The acquisition ratio decreased in the fourth quarter of 2019 compared to the fourth quarter of 2018 primarily as a result of the effects of purchase accounting amortization related to the acquisition of TMR and changes in estimated commissions. The operating expense ratio decreased 3.6 percentage points due to improved operating leverage from the business acquired in connection with the acquisition of TMR.

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 $130.6 million in the fourth quarter of 2019, compared to a loss of $35.3 million in the fourth quarter of 2018, an improvement of $165.9 million. The improvement in the total investment result was principally due to higher returns on the Company’s equity investments trading, private equity investments and catastrophe bonds, partially offset by lower returns on its portfolio of fixed maturity investments trading. Also driving the investment result for the fourth quarter of 2019 were higher average invested assets primarily resulting from the acquisition of TMR, combined with capital raised during 2019 in certain of the Company’s consolidated third-party capital vehicles, including DaVinciRe Holdings Ltd. (“DaVinciRe”), Upsilon RFO, Vermeer and Medici, and the subsequent investment of those funds as part of the Company’s consolidated investment portfolio.
• Net loss attributable to redeemable noncontrolling interests in the fourth quarter of 2019 was $2.6 million compared to $49.3 million in the fourth quarter of 2018. The change was primarily driven by improved performance from DaVinciRe in the fourth quarter of 2019, compared to the fourth quarter of 2018, which was negatively impacted by significant losses in DaVinciRe associated with Hurricane Michael, the Q4 2018 California Wildfires and changes in the 2018 Aggregate Losses. In addition, the fourth quarter of 2019 included net income attributable to Vermeer and improved performance in Medici.
• In the fourth quarter of 2019, total fee income increased by $4.6 million, to $13.2 million, compared to $8.6 million in the fourth quarter of 2018, primarily driven by an increase in the dollar value of capital being managed combined with improved underlying performance.

   

FULL YEAR 2019 SUMMARY

• Gross premiums written increased by $1.5 billion, or 45.2%, to $4.8 billion, in 2019, compared to 2018, driven by increases of $670.1 million in the Property segment and $827.3 million in the Casualty and Specialty segment. The increase was primarily driven by expanded participation on existing transactions, certain new transactions, rate improvements, and the impact of the acquisition of TMR.
• Underwriting income of $256.4 million and a combined ratio of 92.3% in 2019, compared to underwriting income of $244.9 million and a combined ratio of 87.6% in 2018. Underwriting income was comprised of $209.3 million in the Property segment and $46.0 million in the Casualty and Specialty segment. Impacting the underwriting result for 2019 were Typhoon Hagibis, the Q3 2019 Catastrophe Events and 2019 Aggregate Losses (collectively, the “2019 Large Loss Events”), which had a net negative impact on the Company’s underwriting result of $418.9 million and added 12.9 percentage points to the combined ratio.
• Net income available to RenaissanceRe common shareholders of $712.0 million in 2019 included total net negative impact on the Company’s net income available to RenaissanceRe common shareholders of $348.2 million from the 2019 Large Loss Events.
• Total investment result was a gain of $838.3 million in 2019, generating an annualized total investment return of 5.2%. The Company’s portfolio of fixed maturity and short term investments had a yield to maturity of 2.1% at December 31, 2019, contributing $423.8 million of net investment income included in the total investment result in 2019.
• Over $1.5 billion of capital raised in 2019 through the Company’s managed joint ventures and third-party capital vehicles, DaVinciRe, Upsilon RFO, Vermeer and Medici, including $175 million from the Company. In addition, effective January 1, 2020, the Company raised over $625 million of capital through Upsilon RFO and Medici, including over $100 million from the Company.

Net Negative Impact

The financial data below provides additional information detailing the net negative impact on the Company’s consolidated financial statements in 2019 resulting from the 2019 Large Loss Events, including Typhoon Hagibis, the Q3 2019 Catastrophe Events and the 2019 Aggregate Losses.

Underwriting Results by Segment

Property Segment

In 2019, gross premiums written in the Property segment increased by $670.1 million, or 38.1%, to $2.4 billion, compared to $1.8 billion in 2018.

Gross premiums written in the catastrophe class of business were $1.6 billion in 2019, an increase of $246.1 million, or 18.2%, compared to 2018. Impacting the catastrophe class of business in 2019 were expanded participation on existing transactions, certain new transactions, rate improvements, and the acquisition of TMR.

Gross premiums written in the other property class of business were $835.5 million in 2019, an increase of $423.9 million, or 103.0%, compared to 2018. The increase in gross premiums written in the other property class of business was primarily driven by growth across the Company’s underwriting platforms, both from existing relationships and through new opportunities the Company believes have comparably attractive risk-return attributes, rate improvements, and business acquired in connection with the acquisition of TMR.

The Company’s Property segment generated underwriting income of $209.3 million in 2019, compared to $262.1 million in 2018, a decrease of $52.8 million. In 2019, the Property segment generated a net claims and claim expense ratio of 59.3%, an underwriting expense ratio of 27.8% and a combined ratio of 87.1%, compared to 47.4%, 27.7% and 75.1%, respectively, in 2018.

Principally impacting the Property segment underwriting result and combined ratio in 2019 were the 2019 Large Loss Events, which resulted in a net negative impact on the Property segment underwriting result of $414.4 million and a corresponding increase in the Property segment combined ratio of 26.7 percentage points. In comparison, 2018 was impacted by the Q3 2018 Catastrophe Events, the Q4 2018 Catastrophe Events, and the 2018 Aggregate Losses (collectively, the “2018 Large Loss Events”). The 2018 Large Loss Events resulted in a net negative impact on the underwriting result of $338.7 million, and a corresponding increase in the Property segment combined ratio of 37.4 percentage points. This was partially offset by a net positive impact on the underwriting result associated with changes in the estimates of the net negative impact on the underwriting result of the 2017 Large Loss Events of $145.7 million, and a corresponding decrease in the combined ratio of 14.0 percentage points.

Casualty and Specialty Segment

In 2019, gross premiums written in the Casualty and Specialty segment increased by $827.3 million, or 53.4%, to $2.4 billion, compared to $1.5 billion in 2018. The increase was principally due to growth from new and existing business opportunities written in the current and prior periods across various classes of business within the segment and business acquired in connection with the acquisition of TMR.

The Company’s Casualty and Specialty segment generated underwriting income of $46.0 million in 2019, compared to an underwriting loss of $17.0 million in 2018. In 2019, the Casualty and Specialty segment generated a net claims and claim expense ratio of 66.

Contacts

INVESTOR:
Keith McCue

Senior Vice President, Finance & Investor Relations

RenaissanceRe Holdings Ltd.

(441) 239-4830

MEDIA:
Keil Gunther

Vice President, Marketing & Communications

RenaissanceRe Holdings Ltd.

(441) 239-4932

or

Kekst CNC

Dawn Dover

(212) 521-4800

Read full story here