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RenaissanceRe Reports Q3 2022 Net Loss Attributable to Common Shareholders of $825.3 Million; Operating Loss Attributable to Common Shareholders of $396.7 Million.

  • Hurricane Ian and certain other catastrophe events contributed to a $648.4 million net negative impact on net loss attributable to common shareholders, and added 57.2 percentage points to the combined ratio.

  • 101.6% growth in net investment income compared to Q3 2021.

  • 95.7% Casualty and Specialty combined ratio, an improvement of 3.9 percentage points from Q3 2021.

  • 22.6% growth in net premiums written; driven by 39.7% growth in Casualty and Specialty.

  • $641.5 million of net realized and unrealized losses on investments, primarily driven by the impact of increasing interest rates on the fixed maturity portfolio.

PEMBROKE, Bermuda, November 01, 2022--(BUSINESS WIRE)--RenaissanceRe Holdings Ltd. (NYSE: RNR) ("RenaissanceRe" or the "Company") today announced its financial results for the third quarter of 2022.

Net Loss Attributable to Common Shareholders per Diluted Common Share: $(19.27)

Operating Loss Attributable to Common Shareholders per Diluted Common Share*: $(9.27)

Underwriting Loss

$(683.1)M

Fee Income

$25.7M

Net Investment Income

$157.8M

Change in Book Value per Common Share: (16.8)%

Change in Tangible Book Value per Common Share Plus Change in Accum. Dividends*: (17.4)%

* 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 and Change in Tangible Book Value per Common Share Plus Change in Accumulated Dividends are non-GAAP financial measures; see "Comments on Regulation G" for a reconciliation of non-GAAP financial measures.

Kevin J. O’Donnell, President and Chief Executive Officer, said, "Hurricane Ian’s arrival in the final days of the quarter was both a stark reminder of our value proposition to our customers and a catalyst for change in the reinsurance marketplace. RenaissanceRe’s strategic focus on reinsurance, strong capital and industry leadership uniquely situate us to drive transformative change during the upcoming renewal period. As a result, we are positioned to deliver an attractive return to our investors through materially increased underwriting profit, robust fee income and significantly higher investment income."

Consolidated Financial Results

Consolidated Highlights

Three months ended September 30,

(in thousands, except per share amounts and percentages)

2022

2021

Gross premiums written

$

2,220,661

$

1,774,180

Net premiums written

1,821,711

1,486,440

Underwriting income (loss)

(683,114

)

(678,825

)

Combined ratio

138.7

%

145.1

%

Net Income (Loss)

Available (attributable) to common shareholders

(825,344

)

(450,222

)

Available (attributable) to common shareholders per diluted common share

$

(19.27

)

$

(9.75

)

Operating Income (Loss) (1)

Available (attributable) to common shareholders

(396,674

)

(414,538

)

Available (attributable) to common shareholders per diluted common share

$

(9.27

)

$

(8.98

)

Book value per common share

$

94.55

$

128.91

Change in book value per share

(16.8

)%

(7.5

)%

Tangible book value per common share plus accumulated dividends (1)

$

113.29

$

146.40

Change in tangible book value per common share plus change in accumulated dividends (1)

(17.4

)%

(7.6

)%

Return on average common equity - annualized

(72.4

)%

(28.4

)%

Operating return on average common equity - annualized (1)

(34.8

)%

(26.1

)%

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

Net Negative Impact

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 our potential exposures, preliminary discussions with certain counterparties and actuarial modeling techniques. Our 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 these catastrophe events, driven by the magnitude and recent nature of each event, the geographic areas impacted by the events, 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.

Weather-Related Large Losses

Net negative impact on the consolidated financial statements

Three months ended September 30, 2022

Hurricane Ian

Other Q3 2022 Catastrophe Events (1)

Aggregate Losses (2)

Total Q3 2022 Weather-Related Large Losses (3)

(in thousands)

Net claims and claims expenses incurred

$

(990,382

)

$

(152,418

)

$

(9,695

)

$

(1,152,495

)

Assumed reinstatement premiums earned

221,799

14,105

9

235,913

Ceded reinstatement premiums earned

(57,733

)

(283

)

(58,016

)

Earned (lost) profit commissions

(1,487

)

(1,285

)

(49

)

(2,821

)

Net negative impact on underwriting result

(827,803

)

(139,881

)

(9,735

)

(977,419

)

Redeemable noncontrolling interest

288,383

40,621

329,004

Net negative impact on net income (loss) available (attributable) to RenaissanceRe common shareholders

$

(539,420

)

$

(99,260

)

$

(9,735

)

$

(648,415

)

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

Three months ended September 30, 2022

Hurricane Ian

Other Q3 2022 Catastrophe Events (1)

Aggregate Losses (2)

Total Q3 2022 Weather-Related Large Losses (3)

(in thousands, except percentages)

Net negative impact on Property segment underwriting result

$

(820,765

)

$

(137,881

)

$

(9,735

)

$

(968,381

)

Net negative impact on Casualty and Specialty segment underwriting result

(7,038

)

(2,000

)

(9,038

)

Net negative impact on underwriting result

$

(827,803

)

$

(139,881

)

$

(9,735

)

$

(977,419

)

Percentage point impact on consolidated combined ratio

47.7

7.7

0.6

57.2

  1. "Other Q3 2022 Catastrophe Events" includes the severe weather in France in May and June of 2022, and typhoons in Asia and Hurricane Fiona during the third quarter of 2022.

  2. "Aggregate Losses" includes loss estimates associated with certain aggregate loss contracts triggered during 2022 as a result of weather-related catastrophe events.

  3. "Q3 2022 Weather-Related Large Losses" includes Hurricane Ian, Other Q3 2022 Catastrophe Events and the Aggregate Losses described above.

Three Drivers of Profit: Underwriting, Fee and Investment Income

Underwriting Results - Property Segment: Q3 2022 Weather-Related Large Losses contributed 123.0 percentage points to the combined ratio

Property Segment

Three months ended September 30,

Q/Q Change

(in thousands, except percentages)

2022

2021

Gross premiums written

$

800,330

$

773,692

3.4

%

Net premiums written

696,520

681,095

2.3

%

Underwriting income (loss)

(722,599

)

(681,929

)

Underwriting Ratios

Net claims and claim expense ratio - current accident year

166.3

%

180.0

%

(13.7) pts

Net claims and claim expense ratio - prior accident years

(2.9

)%

(17.9

)%

15.0 pts

Net claims and claim expense ratio - calendar year

163.4

%

162.1

%

1.3 pts

Underwriting expense ratio

22.6

%

21.4

%

1.2 pts

Combined ratio

186.0

%

183.5

%

2.5 pts

  • Gross premiums written increased by $26.6 million, or 3.4%, driven by growth of $55.9 million within the catastrophe class of business, partially offset by a reduction of $29.2 million within the other property class of business.

    – Reinstatement premiums from the Q3 2022 Weather-Related Large Losses were $234.0 million compared to $254.9 million of reinstatement premiums from the weather related large losses in the third quarter of 2021.

  • Net premiums written increased by $15.4 million, or 2.3%, driven by the increase in gross premiums written, slightly offset by an increase in ceded premiums written of $11.2 million.

  • Net claims and claim expense ratio - current accident year decreased 13.7 percentage points, primarily due to a lower impact from weather-related large losses.

    – Q3 2022 Weather-Related Large Losses contributed 127.9 percentage points to the current accident year net claims and claim expense ratio, compared to the weather-related large losses in the third quarter of 2021, which contributed 143.1 percentage points to the current accident year net claims and claim expense ratio.

  • Net claims and claim expense ratio - prior accident years reflects net favorable development primarily from weather-related large losses in the 2017 to 2020 accident years.

  • Underwriting loss of $722.6 million in the Property segment included a $968.4 million net negative impact from the Q3 2022 Weather-Related Large Losses with significant impacts in both the catastrophe and other property classes of business.

    – Combined ratio of 186.0% included 123.0 percentage points from the Q3 2022 Weather-Related Large Losses.

Underwriting Results - Casualty and Specialty Segment: Combined ratio of 95.7% and growth in net premiums written of 39.7%

Casualty and Specialty Segment

Three months ended September 30,

Q/Q Change

(in thousands, except percentages)

2022

2021

Gross premiums written

$

1,420,331

$

1,000,488

42.0

%

Net premiums written

1,125,191

805,345

39.7

%

Underwriting income (loss)

39,485

3,104

Underwriting Ratios

Net claims and claim expense ratio - current accident year

65.0

%

69.0

%

(4.0) pts

Net claims and claim expense ratio - prior accident years

(0.8

)%

(0.2

)%

(0.6) pts

Net claims and claim expense ratio - calendar year

64.2

%

68.8

%

(4.6) pts

Underwriting expense ratio

31.5

%

30.8

%

0.7 pts

Combined ratio

95.7

%

99.6

%

(3.9) pts

  • Gross premiums written increased 42.0% across various lines of business, principally in the financial lines classes of business, which grew $237.0 million.

  • Net premiums written increased 39.7%, primarily driven by growth in the financial lines classes of business, consistent with the changes in gross premiums written.

  • Net claims and claim expense ratio - current accident year improved by 4.0 percentage points, primarily due to a lower impact from the Q3 2022 Weather-Related Large Losses compared to the weather related large losses in the third quarter of 2021.

  • Net claims and claim expense ratio - prior accident year improved by 0.6 percentage points, reflecting higher favorable prior accident year loss development compared to the third quarter of 2021.

  • Underwriting expense ratio increased 0.7 percentage points, principally due to a 1.6 percentage point increase in the net acquisition expense ratio due to higher costs and changes in mix of business. This was largely offset by a 0.9 percentage point improvement in the operating expense ratio, driven by improved operating leverage.

Fee Income: $25.7 million of fee income; management fees stable while performance fees impacted by Q3 2022 Weather-Related Large Losses

Fee Income

Three months ended September 30,

Q/Q Change

(in thousands, except percentages)

2022

2021

Total management fee income

$

24,989

$

23,854

$

1,135

Total performance fee income (loss) (1)

739

4,481

(3,742

)

Total fee income

$

25,728

$

28,335

$

(2,607

)

  1. Performance fees are based on the performance of the individual vehicles or products, and may be negative in a particular period if, for example, large losses occur, which can potentially result in no performance fees or the reversal of previously accrued performance fees.

  • Management fee income was relatively stable in comparison to the third quarter of 2021, reflecting increased capital managed at DaVinciRe Holdings Ltd. ("DaVinci"), Vermeer Reinsurance Ltd. ("Vermeer"), RenaissanceRe Medici Fund Ltd. ("Medici"), and Fontana Holdings L.P. and its subsidiaries, largely offset by reductions in the Company’s structured reinsurance products.

  • Performance fee income was lower in the third quarter of 2022 compared to the third quarter of 2021, primarily due to the impact of the Q3 2022 Weather-Related Large Losses.

Investment Results: Net investment income up $79.5 million; total investment result driven by net realized and unrealized losses, primarily in the fixed maturity investments portfolio

Investment Results

Three months ended September 30,

Q/Q Change

(in thousands, except percentages)

2022

2021

Net investment income

$

157,793

$

78,267

$

79,526

Net realized and unrealized gains (losses) on investments

(641,500

)

(42,071

)

(599,429

)

Total investment result

$

(483,707

)

$

36,196

$

(519,903

)

Total investment return - annualized

(8.9

)%

0.7

%

(9.6) pts

  • Net investment income increased $79.5 million, primarily driven by higher investment yields from:

– Portfolio management to take advantage of rising interest rates and increase the book yield within the fixed maturity trading and short term investment portfolios, and

– Higher average invested assets and yields in private credit fund investments.

  • Net realized and unrealized losses on investments increased $599.4 million principally driven by:

– Net realized and unrealized losses on fixed maturity investments trading of $424.2 million as a result of the significant increase in interest rates on the fixed maturity portfolio, compared to net realized and unrealized losses of $29.4 million in the third quarter of 2021 resulting from a smaller increase in interest rates.

– Net realized and unrealized losses on catastrophe bonds of $127.0 million (primarily held in the Medici portfolio, the majority of which is owned by third party investors), principally as a result of the impact of Hurricane Ian, compared to net realized and unrealized losses of $6.0 million in the third quarter of 2021.

  • Total investments were $20.9 billion at September 30, 2022 (December 31, 2021 - $21.4 billion). Weighted average yield to maturity and duration on the Company’s investment portfolio (which excludes investments that have no final maturity, yield to maturity or duration) was 5.1% and 2.5 years.

Other Items of Note

  • Net loss attributable to redeemable noncontrolling interests of $372.4 million was primarily driven by:

– Impact of the Q3 2022 Weather-Related Large Losses on the performance of DaVinci, Medici and Vermeer; and

– Realized and unrealized losses on investments in the Company’s joint ventures driven by the significant increase in interest rates.

  • Raised capital of $122.1 million in the third quarter of 2022 through Vermeer and Medici.

  • Share repurchases of 175.7 thousand common shares at an aggregate cost of $25.3 million and an average price of $144.07 per common share from July 1, 2022 through July 22, 2022.

Conference Call Details and Additional Information

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" 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.

Conference Call Information

RenaissanceRe will host a conference call on Wednesday, November 2, 2022 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, RenaissanceRe 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 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 historically cyclical nature of the (re)insurance industries; collection on claimed retrocessional coverage, and new retrocessional reinsurance being available on acceptable terms; 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 performance of the Company’s investment portfolio and financial market volatility; the effects of inflation; the highly competitive nature of the Company’s industry, resulting in consolidation of competitors, customers and (re)insurance brokers, and the Company’s reliance on a small and decreasing number of brokers; the impact of large non-recurring contracts and reinstatement premiums on the Company’s financial results; the Company’s ability to attract and retain key executives and employees; the effect of cybersecurity risks, including technology breaches or failure; the Company’s ability to successfully implement its business strategies and initiatives, and 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 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 ability to effectively manage 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 laws or regulations or as a result of increased global regulation of the insurance and reinsurance industries; other political, regulatory or industry initiatives adversely impacting the Company; the Company’s ability to comply with covenants in its debt agreements; 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 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 Company’s ability to determine any impairments taken on its investments; the uncertainty of the continuing and future impact of the COVID-19 pandemic, including measures taken in response thereto and the effect of legislative, regulatory and judicial influences on the Company’s potential reinsurance, insurance and investment exposures, or other effects that it may have; foreign currency exchange rate fluctuations; the Company’s ability to raise capital if necessary; the Company’s ability to comply with applicable sanctions and foreign corrupt practices laws; 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 serving process or enforcing judgments against the Company in the U.S.; 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.

RenaissanceRe Holdings Ltd.

Summary Consolidated Statements of Operations

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

(Unaudited)

Three months ended

Nine months ended

September 30,
2022

September 30,
2021

September 30,
2022

September 30,
2021

Revenues

Gross premiums written

$

2,220,661

$

1,774,180

$

7,628,264

$

6,520,780

Net premiums written

$

1,821,711

$

1,486,440

$

5,850,544

$

4,822,815

Decrease (increase) in unearned premiums

(54,690

)

19,825

(1,140,715

)

(969,924

)

Net premiums earned

1,767,021

1,506,265

4,709,829

3,852,891

Net investment income

157,793

78,267

348,695

238,996

Net foreign exchange gains (losses)

(1,383

)

(4,755

)

(67,690

)

(24,309

)

Equity in earnings (losses) of other ventures

1,739

5,305

2,732

8,479

Other income (loss)

2,834

1,692

4,950

4,449

Net realized and unrealized gains (losses) on investments

(641,500

)

(42,071

)

(1,968,624

)

(196,616

)

Total revenues

1,286,504

1,544,703

3,029,892

3,883,890

Expenses

Net claims and claim expenses incurred

1,967,931

1,798,045

3,515,903

...