RenRe’s profits fall, but acquisitions drive growth

27-04-2016

Bermuda-based RenaissanceRe Holdings (RenRe) has reported decrease in its net income for the first quarter of 2016, down to $128, compared with $167.8 million in the first quarter of 2015.

Operating income for the first quarter was also down to $66.3 million, nearly half of the $126.1 million operating income reported in the first quarter of 2015.

Despite these losses, gross premiums written (GWP) increased by 34 percent to $862.1 million in the first quarter of 2016, compared with the first quarter of 2015. The company’s specialty reinsurance and Lloyd’s segments experienced increases of $244.7 million, or 196.9 percent, and $2.6 million, or 2 percent, respectively, in the first quarter of 2016, offset in part by a decrease of $28.8 million, or 7.4 percent, in the company’s catastrophe reinsurance segment.

Impacting GWP in the first quarter of 2016 was the inclusion of GWP associated with entities acquired in connection with the company’s acquisition of Platinum Underwriters Holdings (Platinum), for the period from January 1, 2016 through March 31, 2016, compared with the first quarter of 2015, which included GWP from the acquired entities for the period from March 2, 2015 (the date of acquisition) through March 31, 2015.

RenRe generated underwriting income of $105.2 million and a combined ratio of 70.3 percent in the first quarter of 2016, compared to $130.9 million and 55.9 percent, respectively, in the first quarter of 2015.

It said the increase in the combined ratio in the first quarter of 2016, compared to the first quarter of 2015, was primarily driven by an increase in net claims and claim expenses and acquisition expenses, adding 9.9 and 4.5 percentage points, respectively, to the combined ratio, principally driven by the company’s specialty reinsurance segment.

RenRe also reported an annualised return on average common equity (ROE) of 11.8 percent and an annualised operating return on average common equity of 6.1 percent in the first quarter of 2016, compared to 17.1 percent and 12.9 percent, respectively, in the first quarter of 2015.

Kevin O'Donnell, chief executive officer, RenRe, said: "The risk markets around the world are currently challenging and volatile. This volatility benefited our net income during the first quarter with mark to market investment gains. In addition, while we benefited from low catastrophe loss activity in our catastrophe reinsurance segment, we also experienced an unusually large aggregation of event-specific loss activity within our specialty reinsurance segment."

"The market remains difficult and we continue to see reductions to rates. With this backdrop, we will continue to exercise the same level of underwriting discipline as we have in the past, focusing on superior execution and helping our clients pursue opportunities and addressing their needs."

RenaissanceRe Holdings, First Quarter 2016 Results, Reinsurance, Kevin O'Donnell, Bermuda

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