RenRe acknowledges market challenges as first half income flattens out
RenaissanceRe (RenRe) has recognised that it is facing challenging conditions as it announced that although it had made a profit of $171.1 million in the second quarter of 2017, up from the $136.3 million it made in 2016’s Q2, first half 2017 net income fell slightly, going from $264.3 million in the first half of 2016 to $263.5 million in the same period of 2017.
“We had a good quarter, generating an annualised operating return on average common equity of 10.0 percent and growing tangible book value per common share plus accumulated dividends by 3.9 percent,” said RenRe CEO Kevin O'Donnell. “Recognising challenging market conditions, we executed on our gross-to-net strategy to build an attractive net portfolio of risk. We believe that we have the right strategy and necessary flexibility to navigate the market conditions ahead while continuing to maximise shareholder value over the long-term.”
According to RenRe, gross premiums written increased $68.3 million, or 9.0 percent, to $827.4 million, in the second quarter of 2017 compared to the second quarter of 2016.
Gross premiums written in RenRe’s property segment were $499.3 million in the second quarter of 2017, an increase of $5.4 million, or 1.1 percent, compared to $494.0 million in the second quarter of 2016. During the second quarter of 2017, RenRe said it was able to increase its participation on a select number of transactions and enter into certain new transactions it believes have comparably attractive risk-return attributes within its other property class of business. As a result, gross premiums written in the Company's other property class of business were $87.8 million in the second quarter of 2017, an increase of $25.9 million, or 41.9 percent, compared to the second quarter of 2016.
Looking at the figures ibn more detail, gross premiums written in RenRe’s catastrophe class of business were $411.5 million in the second quarter of 2017, a decrease of $20.5 million, or 4.8 percent, compared to the second quarter of 2016, driven by a challenging pricing environment as the Company continued to exercise underwriting discipline given prevailing market terms and conditions.
Gross premiums written in the casualty and specialty segment were $328.1 million in the second quarter of 2017, an increase of $62.9 million, or 23.7 percent, compared to $265.2 million in the second quarter of 2016. The $62.9 million increase was principally due to selective growth from existing business and private placements within certain of RenRe’s casualty lines of business.
Underwriting income was $109.7 million and the combined ratio was 71.3 percent in the second quarter of 2017. Total investment result was a gain of $112.3 million in the second quarter of 2017, generating an annualised total investment return of 4.8 percent.
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