RenaissanceRe Reports Fourth Quarter 2021 Net Income Available to Common Shareholders of $210.9 Million; Operating Income Available to Common Shareholders of $213.7 Million.

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RenaissanceRe Reports Annual Net Loss Attributable to Common Shareholders of $73.4 Million; Operating Income Available to Common Shareholders of $81.6 Million.

  • Grew gross premiums written by $2.0 billion, or 34.9%, and net premiums written by $1.8 billion, or 45.0%, in 2021.

  • Casualty and Specialty segment combined ratio of 92.5% in the fourth quarter of 2021 and 97.0% in 2021.

  • Repurchased $326.9 million of common shares in the fourth quarter; aggregate of $1.0 billion of common shares repurchased in 2021; and an additional $56.7 million of common shares repurchased from January 1, 2022 through January 21, 2022.

  • Raised $1.1 billion of additional capital in the Capital Partners business in 2021, including $258.0 million from RenaissanceRe, with a further $662.7 million raised effective January 1, 2022, including $209.7 million from RenaissanceRe.

  • 2021 Weather-Related Large Losses contributed a $962.1 million net negative impact on net loss attributable to common shareholders in 2021, including $53.4 million in the fourth quarter of 2021.

PEMBROKE, Bermuda, January 25, 2022--(BUSINESS WIRE)--RenaissanceRe Holdings Ltd. (NYSE: RNR) ("RenaissanceRe" or the "Company") today announced its financial results for the fourth quarter and full year 2021.

Fourth Quarter 2021

Net Income Available to Common Shareholders per Diluted Common Share: $4.65

Operating Income Available to Common Shareholders per Diluted Common Share*: $4.71

Underwriting Income

Fee Income

Net Investment Income

$276.7M

$30.0M

$80.5M

Change in Book Value per Common Share: 2.5%

Change in Tangible Book Value per Common Share Plus Change in Accum. Dividends*: 2.8%

*

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, "The fourth quarter was a solid finish to a difficult year. We reported a return on average common equity of over 14% for the quarter driven by record profitability in our Casualty and Specialty segment and strong results in our Property segment. For the full year, we earned a modest operating profit despite catastrophe losses of nearly $1 billion. At the same time, we exercised leadership in the market, growing net premiums written by 45% while simultaneously returning over $1 billion in capital to shareholders.

At the January 2022 renewal, our Capital Partners team once again led the industry, raising $500 million in DaVinci to grow in an improving environment and further optimize our Property segment. In addition, we continued to expand our Casualty and Specialty business in an attractive market, and as a result have built a stronger, more diversified and efficient underwriting portfolio that I am confident will produce superior returns for our shareholders in 2022."

Consolidated Financial Results - Fourth Quarter

Consolidated Highlights

Three months ended
December 31

(in thousands, except per share amounts and percentages)

2021

2020

Gross premiums written

$

1,313,018

$

935,514

Underwriting income (loss)

276,661

(151,655

)

Combined ratio

79.4

%

114.7

%

Net Income (Loss)

Available (Attributable) to common shareholders

210,917

189,812

Available (Attributable) to common shareholders per diluted common share

$

4.65

$

3.74

Operating Income (Loss) (1)

Available (Attributable) to common shareholders

213,692

(77,122

)

Available (Attributable) to common shareholders per diluted common share

$

4.71

$

(1.59

)

Book value per common share

$

132.17

$

138.46

Change in book value per share

2.5

%

2.5

%

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

$

149.79

$

155.17

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

2.8

%

3.0

%

Return on average common equity - annualized

14.2

%

10.9

%

Operating return on average common equity - annualized (1)

14.4

%

(4.4

) %

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

Three Drivers of Profit: Underwriting, Fee and Investment Income - Fourth Quarter

Underwriting Results - Property Segment: Combined ratio of 64.4%; 10.8 percentage points from weather-related large losses.

Property Segment

Three months ended
December 31

Q/Q Change

(in thousands, except percentages)

2021

2020

Gross premiums written

$

384,657

$

308,315

24.8%

Underwriting income (loss)

223,098

(130,268

)

Underwriting Ratios

Net claims and claim expense ratio - current accident year

43.8

%

130.5

%

(86.7) pts

Net claims and claim expense ratio - prior accident years

(4.9

) %

(24.8

) %

19.9 pts

Net claims and claim expense ratio - calendar year

38.9

%

105.7

%

(66.8) pts

Underwriting expense ratio

25.5

%

19.9

%

5.6 pts

Combined ratio

64.4

%

125.6

%

(61.2) pts

  • Gross premiums written increased 24.8%, driven by:

- Growth in the other property class of business of $127.7 million, or 51.2%, principally as a result of rate improvements driving growth in new and existing business, notably within catastrophe exposed U.S. property excess and surplus lines; partially offset by a
- Decrease in property catastrophe class of business of $51.3 million, or 86.8%, primarily due to a decrease in reinstatement premiums.

  • Ceded premiums written were $9.5 million, a decrease of $19.0 million, or 66.6%. This decrease was primarily driven by the non-renewal of certain deals ceded to Upsilon RFO Re Ltd. ("Upsilon RFO").

  • The net claims and claim expense ratio - current accident year decreased 86.7 percentage points, primarily as a result of COVID-19 losses in the fourth quarter of 2020, combined with a lower amount of weather-related losses in the fourth quarter of 2021.

  • The net claims and claim expense ratio - prior accident year reflected net favorable development primarily from weather-related large losses in the 2017 to 2019 accident years.

  • Underwriting expense ratio increased 5.6 percentage points, driven by lower profit commissions and a lower impact to the ratio from reinstatement premiums, as well as changes in the mix of business due to continued growth in the other property class of business.

  • Underwriting income of $223.1 million and a combined ratio of 64.4% included weather-related large losses which had a $68.4 million net negative impact on the Property segment underwriting result and added 10.8 percentage points to the combined ratio in the fourth quarter of 2021.

Underwriting Results - Casualty and Specialty Segment: Grew gross premiums written by 48.0% and reported a combined ratio of 92.5%

Casualty and Specialty Segment

Three months ended
December 31

Q/Q
Change

(in thousands, except percentages)

2021

2020

Gross premiums written

$

928,361

$

627,199

48.0

%

Underwriting income (loss)

53,563

(21,387

)

Underwriting Ratios

Net claims and claim expense ratio - current accident year

63.9

%

70.5

%

(6.6) pts

Net claims and claim expense ratio - prior accident years

(1.3

) %

(0.5

) %

(0.8) pts

Net claims and claim expense ratio - calendar year

62.6

%

70.0

%

(7.4) pts

Underwriting expense ratio

29.9

%

34.1

%

(4.2) pts

Combined ratio

92.5

%

104.1

%

(11.6) pts

  • Gross premiums written increased 48.0%, primarily driven by growth in professional liability, general casualty and other specialty lines of business. This growth was principally driven by increases in new and existing business written in the current and prior periods, combined with rate improvements.

  • Net claims and claim expense ratio declined 7.4 percentage points principally as a result of lower current accident year losses, which in turn were primarily driven by lower attritional losses and lower losses related to the COVID-19 pandemic.

  • The underwriting expense ratio decreased 4.2 percentage points driven by a 2.9 percentage point improvement in the net acquisition expense ratio, principally due to changes in the mix of business and estimated profit commissions, combined with a decrease in the operating expense ratio driven by improved operating leverage.

Fee Income: $30.0 million of fee income; impacted by the 2021 Weather-Related Large Losses

Fee Income

Three months ended
December 31

Q/Q
Change

(in thousands, except percentages)

2021

2020

Total management fee income

$

24,723

$

26,778

$

(2,055

)

Total performance fee income (loss) (1)

5,299

9,128

(3,829

)

Total fee income

$

30,022

$

35,906

$

(5,884

)

(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.

  • Total fee income decreased $5.9 million due to lower management and performance fee income primarily driven by the impact of the 2021 Weather-Related Large Losses on the results of the Company’s joint ventures and managed funds. In addition, management fees were also impacted by a deferral of management fees in DaVinci in the fourth quarter of 2021.

Investment Results: Performance primarily driven by net realized and unrealized losses in the fixed maturity investments portfolio

Investment Results

Three months ended
December 31

Q/Q
Change

(in thousands, except percentages)

2021

2020

Net investment income

$

80,483

$

81,717

$

(1,234

)

Net realized and unrealized gains (losses) on investments

(21,518

)

258,745

(280,263

)

Total investment result

58,965

340,462

(281,497

)

Total investment return - annualized

1.1

%

6.6

%

(5.5) pts

  • Total investment result decreased $281.5 million, primarily due to the difference in net realized and unrealized gains (losses) on investments, principally within the fixed maturity and equity investments portfolios.

– In the fourth quarter of 2021, net realized and unrealized losses on fixed maturity investments of $116.7 million were primarily driven by increasing yields on U.S. treasuries; partially offset by net realized and unrealized gains of $73.6 million on equity investments in line with wider equity markets.
– In the fourth quarter of 2020, net realized and unrealized gains on equity investments of $154.3 million were primarily driven by the significant price appreciation in equity markets generally, and in particular in the Company’s strategic investment in Trupanion, Inc. Net realized and unrealized gains on fixed maturity investments of $90.1 million during the quarter were largely driven by tightening credit spreads on certain fixed maturity investments.

  • Managed fixed maturity and short-term investment weighted average yield to maturity was 1.2% and average duration was 3.0 years on total consolidated fixed maturity and short-term investments at fair value of $18.8 billion at December 31, 2021.

Other Items of Note - Fourth Quarter

  • Net income attributable to redeemable noncontrolling interests was $68.5 million compared to net loss attributable to redeemable noncontrolling interests of $5.5 million in the fourth quarter of 2020, primarily due to:

– DaVinciRe Holdings Ltd. ("DaVinci"), which had underwriting income in the fourth quarter of 2021 as compared to underwriting losses in the fourth quarter of 2020, and was partially offset by;
– RenaissanceRe Medici Fund Ltd. ("Medici"), which had net loss in the fourth quarter of 2021 as compared to net income in the fourth quarter of 2020. The Medici net loss for the quarter includes net foreign exchange losses that were attributable to third party investors, resulting in net income being retained by the Company.

  • Income tax expense of $18.6 million compared to an income tax benefit of $9.9 million in the fourth quarter of 2020. The increase in income tax expense was primarily driven by underwriting income in the Company’s taxable jurisdictions, partially offset by net unrealized investment losses in the Company’s U.S. based operations.

  • Net foreign exchange losses of $16.7 million compared to a $23.3 million net foreign exchange gain in the fourth quarter of 2020. The net foreign exchange loss was primarily driven by losses attributable to third-party investors in Medici which are allocated through noncontrolling interests and miscellaneous foreign exchange losses generated by underwriting activities.

Consolidated Financial Results - Full Year

Consolidated Highlights

Twelve months ended
December 31

(in thousands, except per share amounts and percentages)

2021

2020

Gross premiums written

$

7,833,798

$

5,806,165

Underwriting income (loss)

(108,948

)

(76,511

)

Combined ratio

102.1

%

101.9

%

Net Income (Loss)

Available (Attributable) to common shareholders

$

(73,421

)

$

731,482

Available (Attributable) to common shareholders per diluted common share

$

(1.57

)

$

15.31

Operating Income (Loss) (1)

Available (Attributable) to common shareholders

$

81,599

$

14,640

Available (Attributable) to common shareholders per diluted common share

$

1.72

$

0.12

Book value per common share

$

132.17

$

138.46

Change in book value per share

(4.5

) %

14.9

%

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

$

149.79

$

155.17

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

(4.0

) %

17.9

%

Return on average common equity

(1.1

) %

11.7

%

Operating return on average common equity (1)

1.3

%

0.2

%

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

Net negative impact of the 2021 Weather-Related Large Losses

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.

Net negative impact on the consolidated financial statements

Year ended December 31, 2021

Winter Storm
Uri

European
Floods

Hurricane
Ida

Other 2021
Catastrophe
Events (1)

Aggregate
Losses (2)

Total 2021
Weather-
Related Large
Losses (3)

(in thousands)

Net claims and claims expenses incurred

$

(358,937

)

$

(360,644

)

$

(741,285

)

$

(85,941

)

$

(161,093

)

$

(1,707,900

)

Assumed reinstatement premiums earned

86,626

90,346

156,061

9,939

6,140

$

349,112

Ceded reinstatement premiums earned

(11,045

)

(16,372

)

(27,467

)

$

(54,884

)

Earned (lost) profit commissions

773

8,084

1,645

10,502

Net negative impact on underwriting result

(282,583

)

(278,586

)

(612,691

)

(74,357

)

(154,953

)

(1,403,170

)

Redeemable noncontrolling interest

101,966

84,082

200,806

17,082

37,175

441,111

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

$

(180,617

)

$

(194,504

)

$

(411,885

)

$

(57,275

)

$

(117,778

)

$

(962,059

)

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

Year ended December 31, 2021

Winter Storm
Uri

European
Floods

Hurricane
Ida

Other 2021
Catastrophe
Events (1)

Aggregate
Losses (2)

Total 2021
Weather-
Related Large
Losses (3)

(in thousands, except percentages)

Net negative impact on Property segment underwriting result

$

(275,566

)

$

(276,317

)

$

(596,271

)

$

(74,357

)

$

(154,953

)

$

(1,377,464

)

Net negative impact on Casualty and Specialty segment underwriting result

(7,017

)

(2,269

)

(16,420

)

(25,706

)

Net negative impact on underwriting result

$

(282,583

)

$

(278,586

)

$

(612,691

)

$

(74,357

)

$

(154,953

)

$

(1,403,170

)

Percentage point impact on consolidated combined ratio

5.5

5.4

12.0

1.4

3.0

28.5

(1)

"Other 2021 Catastrophe Events" includes the hail storm in Europe in late June 2021, the wildfires in California during the third quarter of 2021, the tornadoes in the Central and Midwest U.S. in December 2021, and the Midwest Derecho in December 2021.

(2)

"Aggregate Losses" includes loss estimates associated with certain aggregate loss contracts triggered during 2021 as a result of weather-related catastrophe events.

(3)

"2021 Weather-Related Large Losses" includes Winter Storm Uri, the European Floods, Hurricane Ida, Other 2021 Catastrophe Events and Aggregate Losses.

Estimates of net negative impact are based on a review of potential exposures, preliminary discussions with certain counterparties and actuarial modeling techniques. 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 losses from 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.

Three Drivers of Profit: Underwriting, Fee, and Investment Income - Full Year

Underwriting Results - Property Segment: Grew gross premiums written by 32.0%; 2021 Weather-Related Large Losses contributed 58.6 percentage points to the combined ratio

Property Segment

Twelve months ended
December 31

Y/Y
Change

(in thousands, except percentages)

2021

2020

Gross premiums written

$

3,958,724

$

2,999,142

32.0

%

Underwriting income (loss)

(185,504

)

11,021

Underwriting Ratios

Net claims and claim expense ratio - current accident year

91.9

%

82.3

%

9.6 pts

Net claims and claim expense ratio - prior accident years

(9.0

) %

(8.1

) %

(0.9) pts

Net claims and claim expense ratio - calendar year

82.9

%

74.2

%

8.7 pts

Underwriting expense ratio

24.2

%

25.2

%

(1.0) pts

Combined ratio

107.1

%

99.4

%

7.7 pts

  • Gross premiums written increased 32.0%, driven by:
    – Growth in the other property class of business of $610.6 million, or 54.9%, principally as a result of rate improvements driving growth in new and existing business, notably within catastrophe exposed U.S. property excess and surplus lines.
    – Growth in the property catastrophe class of business of $349.0 million, or 18.5%, principally as a result of an increase in reinstatement premiums, rate improvements, and increased shares on existing deals, as well as participation in new deals and opportunities.

    • $339.7 million of reinstatement premiums associated with the 2021 Weather-Related Large Losses, compared to reinstatement premiums of $77.0 million associated with 2020 weather-related large losses and $25.9 million associated with COVID-19 losses in 2020.

  • Ceded premiums written were $1.1 billion, an increase of $128.8 million, or 13.4%. This increase was primarily driven by higher gross premiums written in 2021, which were ceded to Upsilon RFO, and ceded reinstatement premiums earned of $54.7 million from the 2021 Weather-Related Large Losses.

  • The net claims and claim expense ratio for prior accident years reflected net favorable development of 15.3% for property catastrophe and 2.4% for other property in the year, primarily related to weather-related large losses in the 2017 to 2019 accident years.

  • Underwriting loss of $185.5 million and a combined ratio of 107.1%, primarily driven by the 2021 Weather-Related Large Losses, which had a $1.4 billion net negative impact on the Property segment underwriting result and added 58.6 percentage points to the combined ratio.

Casualty and Specialty Segment: Grew gross written premium by 38% and reported a combined ratio of 97.0%

Casualty and Specialty Segment

Twelve months ended
December 31

Y/Y
Change

(in thousands, except percentages)

2021

2020

Gross premiums written

$

3,875,074

$

2,807,023

38.0

%

Underwriting income (loss)

76,556

(87,532

)

Underwriting Ratios

Net claims and claim expense ratio - current accident year

66.9

%

75.2

%

(8.3) pts

Net claims and claim expense ratio - prior accident years

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