RenaissanceRe Reports $495.0 Million of Net Income Available to Common Shareholders and $650.8 Million of Operating Income Available to Common Shareholders in Q2 2024.

• Annualized return on average common equity of 21.4% and annualized operating return on average common equity of 28.2%.
• Gross premiums written grew by $773.9 million, or 29.2%, from Q2 2023. Property grew by $350.5 million, or 25.0%, and Casualty and Specialty grew by $423.4 million, or 33.9%.
• Combined ratio of 81.1% and adjusted combined ratio of 78.6%.
• Fee income of $84.1 million; up 48.3% from Q2 2023.
• Net investment income of $410.8 million; up 40.4% from Q2 2023.
• Repurchased $108.5 million of common shares in the second quarter and an additional $61.2 million of common shares from July 1, 2024 through July 22, 2024.

RenaissanceRe Holdings Ltd. (NYSE: RNR) (“RenaissanceRe” or the “Company”) today announced its financial results for the second quarter of 2024.

Operating Return on Average Common Equity, Operating Income (Loss) Available (Attributable) to Common Shareholders, Operating Income (Loss) Available (Attributable) to Common Shareholders per Diluted Common Share, Change in Tangible Book Value per Common Share Plus Change in Accumulated Dividends, Adjusted Combined Ratio, Property Adjusted Combined Ratio and Casualty and Specialty Adjusted Combined Ratio are non-GAAP financial measures; see “Comments on Non-GAAP Financial Measures” for a reconciliation of non-GAAP financial measures.

Acquisition of Validus

On November 1, 2023, the Company completed its acquisition (the “Validus Acquisition”) of Validus Holdings, Ltd. (“Validus Holdings”), Validus Specialty, LLC (“Validus Specialty”) and the renewal rights, records and customer relationships of the assumed treaty reinsurance business of Talbot Underwriting Limited from subsidiaries of American International Group, Inc. Validus Holdings, Validus Specialty, and their respective subsidiaries collectively are referred to herein as “Validus.”

The results of operations and financial condition include Validus since November 1, 2023. The results of operations for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, should be viewed in that context. In addition, the results of operations for three and six months ended June 30, 2024 may not be reflective of the ongoing business of the combined entities.

Underwriting Results - Property Segment: Combined ratio of 53.9%; increase in gross premiums written of 25.0%

• Gross premiums written increased by $350.5 million, or 25.0%, driven by:

– a $262.8 million increase in catastrophe, driven by the renewal of business acquired in the Validus Acquisition, in conjunction with the retention of legacy lines, primarily at the June 1, 2024 renewal.

– a $87.7 million increase in other property, reflecting the renewal of business acquired in the Validus Acquisition and organic growth, in both catastrophe and non-catastrophe exposed business.

• Net premiums written increased by $214.0 million, or 18.7%, driven by the increase in gross premiums written discussed above, partially offset by an increase in ceded premiums written as part of the Company’s gross-to-net strategy.

• Combined ratio improved by 9.1 percentage points, and adjusted combined ratio, which removes the impact of acquisition related purchase accounting adjustments, improved by 11.1 percentage points, each primarily due to growth in net premiums earned, a lower level of current accident year net losses, and higher prior year favorable development.

• Net claims and claim expense ratio - current accident year improved by 4.8 percentage points, due to a lower impact from large loss events as compared to Q2 2023. The Q2 2024 Large Loss Events added 9.6 percentage points to the catastrophe class of business and 5.5 percentage points to the other property class of business.

• Net claims and claim expense ratio - prior accident years reflects net favorable development in the second quarter of 2024, primarily driven by better than expected loss emergence from large catastrophe events across the 2017 to 2023 accident years.

• Underwriting expense ratio increased 0.2 percentage points, primarily due to:

– a 0.6 percentage point increase in the acquisition expense ratio, driven by the increase in acquisition expenses from purchase accounting adjustments primarily related to the Validus Acquisition, which added 1.8 percentage points to the acquisition expense ratio in the second quarter of 2024, partially offset by changes in the mix of business as a result of the continued relative growth in catastrophe, which has a lower acquisition expense ratio than other property; partially offset by

– a 0.4 percentage point decrease in the operating expense ratio primarily due to higher net premiums earned.

Underwriting Results - Casualty and Specialty Segment: Combined ratio of 98.2% and adjusted combined ratio of 95.6%; increase in gross premiums written of 33.9%

• Gross premiums written increased by $423.4 million, or 33.9%, primarily driven by:

– the renewal of business acquired in the Validus Acquisition, principally in the general casualty and other specialty classes of business, which grew by $255.4 million and $247.8 million, respectively, compared to the second quarter of 2023; and

– organic growth of legacy lines, particularly within other specialty class of business; partially offset by

– a decrease in the professional liability class of business of $94.2 million, driven by changes in premium estimates in the second quarter of 2024 for business underwritten in prior years.

• Net premiums written increased 40.8%, consistent with the drivers discussed for gross premiums written above, in addition to an overall reduction in our retrocessional purchases.

• Combined ratio increased by 5.0 percentage points, and adjusted combined ratio, which removes the impact of acquisition related purchase accounting adjustments, increased by 2.7 percentage points, each primarily due to the increase in the net claims and claim expense ratio - current accident year.

• Net claims and claim expense ratio - current accident year increased by 4.6 percentage points, driven by higher losses in the quarter.

• Net claims and claim expense ratio - prior accident years reflects net favorable development driven by reported losses generally coming in lower than expected on attritional net claims and claim expenses from the other specialty and credit classes of business.

• Underwriting expense ratio increased 1.8 percentage points, driven by a 1.7 percentage point increase in the acquisition expense ratio primarily due to the impact of the purchase accounting adjustments relating to the Validus Acquisition.

Fee Income: $84.1 million of fee income, up 48.3% from Q2 2023; increase in both management and performance fees

• Management fee income increased $11.9 million, reflecting growth in the Company’s joint ventures and managed funds, specifically DaVinciRe Holdings Ltd. (“DaVinci”), and Fontana Holdings L.P. (“Fontana”), as well as the addition of fees earned by AlphaCat Managers Ltd., which was acquired as part of the Validus Acquisition.

• Performance fee income increased $15.5 million, driven by improved underwriting results and prior year favorable development, primarily in DaVinci and certain structured reinsurance products.

Investment Results: Total investment result of $283.3 million; net investment income growth of 40.4%

• Net investment income increased $118.2 million, due to a combination of higher average invested assets, primarily resulting from the Validus Acquisition, and higher yielding assets in the fixed maturity and short term portfolios.

• Net realized and unrealized losses on investments decreased by $95.2 million, principally driven by:

– lower net realized and unrealized losses on fixed maturity investments trading of $123.3 million, primarily due to generally lower increases in interest rates in the current period as compared to the prior period;

– an increase in net realized and unrealized gains on investment-related derivatives of $75.4 million, primarily as a result of a lower impact from the interest rate movements noted above on interest rate futures, and lower losses on credit default swaps; partially offset by

– an increase in net realized and unrealized losses on catastrophe bonds of $72.3 million, reflective of changes in risk spreads in the wider catastrophe bond market.

• Total investments were $30.5 billion at June 30, 2024 (December 31, 2023 - $29.2 billion). The weighted average yield to maturity and duration on the Company’s investment portfolio (excluding investments that have no final maturity, yield to maturity or duration) was 6.0% and 2.8 years, respectively (December 31, 2023 - 5.8% and 2.6 years, respectively). 

• Net income attributable to redeemable noncontrolling interests of $224.7 million was primarily driven by:

– strong underwriting results in DaVinci and Vermeer Reinsurance Ltd.; and

– strong net investment income driven by higher average invested assets and higher yielding assets within the investment portfolios of the Company’s joint ventures and managed funds.

• Raised partner capital of $84.5 million in the second quarter of 2024, primarily in Upsilon RFO Ltd.

• Returned partner capital of $340.8 million during the second quarter of 2024, including $182.0 million from Medici Funds Ltd. following strong earnings over the last few quarters, resulting in investors rebalancing their position, and $75.0 million from Upsilon Diversified Fund, as a result of the release of collateral associated with prior years’ contracts.

• Share Repurchases of 485.1 thousand common shares at an aggregate cost of $108.5 million and an average price of $223.73 per common share in the second quarter of 2024. Repurchased an additional 278.6 thousand of common shares at an aggregate cost of $61.2 million from July 1, 2024 through July 22, 2024.
  
  
  
  
• Income tax benefit of $20.8 million in the current quarter, primarily driven by a $33.7 million deferred tax benefit resulting from the merger of RenaissanceRe Europe AG and Validus Reinsurance (Switzerland) Ltd completed in the quarter.

Net negative impact on underwriting result includes the sum of (1) net claims and claim expenses incurred, (2) assumed and ceded reinstatement premiums earned and (3) earned and lost profit commissions. Net negative impact on net income (loss) available (attributable) to RenaissanceRe common shareholders is the sum of (1) net negative impact on underwriting result and (2) redeemable noncontrolling interest, both before consideration of any related income tax benefit (expense).

The Company’s estimates of net negative impact are based on a review of the Company’s potential exposures, preliminary discussions with certain counterparties and actuarial 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 remains regarding the estimates and the nature and extent of the losses from this catastrophe event, driven by the magnitude and recent nature of the event, the 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.

Net negative impact on the segment underwriting results and consolidated combined ratio

Net negative impact on the consolidated financial statements

Non-GAAP Financial Measures and Additional Financial Information

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 (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,” “tangible book value per common share,” “tangible book value per common share plus accumulated dividends,” “adjusted combined ratio,” “property adjusted combined ratio” and “casualty and specialty adjusted combined ratio.” 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.

Conference Call Information

RenaissanceRe will host a conference call on Thursday, July 25, 2024 at 10:00 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 desirable risk with efficient capital. The Company provides property, casualty and specialty reinsurance and certain insurance solutions to customers, principally through intermediaries. Established in 1993, RenaissanceRe has offices in Bermuda, Australia, Canada, 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. The Company may also make forward-looking statements with respect to its business and industry, such as those relating to its strategy and management objectives, plans and expectations regarding its response and ability to adapt to changing economic conditions, market standing and product volumes, estimates of net negative impact and insured losses from loss events, and the Validus Acquisition and its impact on the Company’s business, among other things. These statements are subject to numerous factors that could cause actual results to differ materially from those addressed by such forward-looking statements, including the following: the Company’s exposure to natural and non-natural catastrophic events and circumstances and the variance it may cause in the Company’s financial results; the effect of climate change on the Company’s business, including the trend towards increasingly frequent and severe climate events; the effectiveness of the Company’s claims and claim expense reserving process; the effect of emerging claims and coverage issues; the performance of the Company’s investment portfolio and financial market volatility; the effects of inflation; the ability of the Company’s ceding companies and delegated authority counterparties to accurately assess the risks they underwrite; the Company’s ability to maintain its financial strength ratings; the Company’s reliance on a small number of brokers; the highly competitive nature of the Company’s industry; the historically cyclical nature of the (re)insurance industries; collection on claimed retrocessional coverage, and new retrocessional reinsurance being available on acceptable terms or at all; the Company’s ability to attract and retain key executives and employees; the Company’s ability to successfully implement its business strategies and initiatives; difficulties in integrating Validus; the Company’s exposure to credit loss from counterparties; the Company’s need to make many estimates and judgments in the preparation of its financial statements; the Company’s exposure to risks associated with its management of capital on behalf of investors in joint ventures or other entities it manages; changes to the accounting rules and regulatory systems applicable to the Company’s business, including changes in Bermuda and U.S. laws and regulations; the effect of current or future macroeconomic or geopolitical events or trends, including the ongoing conflicts between Russia and Ukraine, and Israel and Hamas; other political, regulatory or industry initiatives adversely impacting the Company; the Company’s ability to comply with covenants in its debt agreements; the effect of adverse economic factors, including changes in prevailing interest rates; the impact of cybersecurity risks, including technology breaches or failure; a contention by the U.S. Internal Revenue Service that any of the Company’s Bermuda subsidiaries are subject to taxation in the U.S.; the effects of new or possible future tax reform legislation and regulations in the jurisdictions in which the Company operates, including recent changes in Bermuda tax law; the Company’s ability to determine any impairments taken on its investments; the Company’s ability to raise capital on acceptable terms, including through debt instruments, the capital markets, and third party investments in the Company’s joint ventures and managed fund partners; the Company’s ability to comply with applicable sanctions and foreign corrupt practices laws; the Company’s dependence on capital distributions from its subsidiaries; and other factors affecting future results disclosed in RenaissanceRe’s filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.