Nat cats drag RenaissanceRe’s 2017 results down

RenaissanceRe Holdings has reported a net loss of $3.5 million in the fourth quarter of 2017, a severe fall from the profit of $69.4 million that it made in the same period of 2016.

Operating income for the quarter came to $41.4 million, down from the $108.9 million RenaissanceRe reported in the fourth quarter of 2016. The company reported an annualised return on average common equity of negative 0.3 percent and an annualised operating return on average common equity of positive 4.2 percent in the fourth quarter of 2017, compared to positive 6.3 percent and 9.9 percent, respectively, in the fourth quarter of 2016.

The Q4 figures takes RenaissanceRe to a net loss of $244.8 million for full year 2017, again down on the $480.6 million profit the company made in 2016. The company posted an operating loss of $332.3 million in 2017, compared to operating income of $342.3 million in 2016.

During the fourth quarter of 2017, the wildfires in California resulted in an underwriting loss of $154.4 million and added 37.6 percentage points to the Company’s combined ratio. Also impacting the underwriting result in the fourth quarter of 2017 was a $53.5 million net positive impact reflecting changes to the initial estimate of underwriting losses associated with Hurricanes Harvey, Irma and Maria and the Mexico City Earthquake which occurred in the third quarter of 2017, partially offset by $49.6 million of underwriting losses associated with aggregate loss contracts.

As a result of the reduction in the US corporate tax rate from 35 percent to 21 percent effective January 1, 2018 pursuant to the Tax Cuts and Jobs Act of 2017, which was enacted on December 22, 2017, the company wrote-down a portion of its US deferred tax asset during the fourth quarter of 2017, increasing its net loss by $36.7 million.

Looking at the full year figures RenaissanceRe reported growth in gross premiums written in 2017 of $423.0 million, or 17.8 percent, to $2.8 billion, compared to 2016. Included in gross premiums written in 2017 was $180.2 million of reinstatement premiums written primarily related to the third quarter 2017 catastrophe events and the fourth quarter 2017 California wildfires, compared to $22.0 million of reinstatement premiums written in 2016 related to the Fort McMurray wildfire, 2016 Texas events and Hurricane Matthew.

“In 2017, we experienced solid growth across our segments, while performing well in the face of the year’s catastrophe losses and benefiting from our gross-to-net strategy,” said Kevin J. O'Donnell, chief executive officer. “We ended the year on a positive note, with strong execution at the January 1 renewals allowing us to construct a more attractive portfolio. Looking forward, I am confident that we will see continued opportunities to grow in 2018 while maintaining underwriting discipline and maximising shareholder value.”