RenaissanceRe: pressure on pricing persists

RenaissanceRe says that abundant capital is placing continued pressure on pricing, as supply continues to outstrip demand.

Commenting on the quarter, Kevin O'Donnell, CEO of RenaissanceRe says: “Pressure on pricing persists, as abundant supply from many forms of capital continues to outstrip demand. Despite the challenging environment, we are well positioned to bring efficient risk management solutions to clients and to build an attractive portfolio through our unique mix of owned rated balance sheets, non-owned rated balance sheets, and collateralized vehicles.”

Commenting on its results, O'Donnell says: “We reported a solid first quarter, generating $151.0 million of net income, an annualized operating ROE of 15.9 percent and 2.8 percent growth in tangible book value per share plus accumulated dividends. Our results were driven by strong underwriting in each of our segments and good investment performance.”

Renaissance Re has reported net income available to its common shareholders of $151.0 million, or $3.56 per diluted common share, in the first quarter of 2014, compared to $190.5 million, or $4.23 per diluted common share in Q1 of 2013.

Gross written premiums reached $705.3 million or an 11 percent increase in the first quarter of 2014, driven by the company’s specialty reinsurance and Lloyd’s segments which experienced growth in gross premiums written of $72.0 million and $9.0 million respectively, or 87.4 percent and 12.1 percent of their existing book.

The company generated underwriting income of $151.3 million and a combined ratio of 47.2 percent in this quarter, compared to $173.0 million and a combined ratio of 36.2 percent in the first quarter of 2013. This change was primarily driven by a $21 million reduction in favourable development on prior accident years’ net claims and claim expenses to $16.7 million in the first quarter of 2014, compared to $36.7 million for the first quarter of 2013.