Validus acquisition pays off for RenRe as net income soars
Bermuda-based RenaissanceRe produced a fourth quarter profit of $1.58 billion in the wake of its $3.5 billion purchase of the Validus reinsurance group from AIG.
The net income attributable to RenRe shareholders compared to a profit of $457 million in the same period in 2022 and was driven by strong underwriting performances across all segments as well as rises in investment income.
The company also paid $403 million to redeemable no-controlling interests for the quarter.
Gross written premiums rose to $1.8 billion from $1.58 billion in the quarter and the company recorded an underwriting profit of $541 million compared to $316 million in the same period in 2022. The company’s combined ratio fell to 76% from 80.5% in 2022.
“We finished a strong year with an exceptional quarter, reporting an annualised operating return on average common equity of 33%,” said Kevin O’Donnell, chief executive officer. “We begin 2024 stronger than ever. The Validus acquisition and integration has exceeded our expectations and positions us to continue delivering exceptional shareholder value.
“At the January 1 renewal we were successful in retaining our combined portfolio at favourable terms. Our underwriting portfolio is now larger, more diverse, and more efficient with great rate adequacy, providing the platform for continuing strong performance across our Three Drivers of Profit.”
RenRe closed the acquisition of Validus on November 1 last year, and its performance for the last two months of the year was included in the results.
For the year, RenRe recorded a profit of $2.52 billion compared to a loss of $1.1 billion in 2022 when the company was hurt by losses from investments and Hurricane Ian.
Gross written premiums fell from $9.2 billion to $8.8 billion while its underwriting income soared from $149 million to $1.65 billion. The company’s combined ratio dropped from 97.7% to 77.9%.
By segment, RenRe recorded underwriting income of $503 million in the fourth quarter compared to $257 million in 2022 while its combined ratio was 43.1% compared to 62.6%.
In the casualty and specialty segment, the company’s net income fell to $37 million from $59 million and the combined ratio increased to 97.3% from 93.7% in 2022.
Fee income rose 133.2% to $70.8 million due to growth in the company’s third party managed funds.
Net Investment income rose by $166 million to $377 million as as a result of higher yielding assets and the addition of Validus’s invested assets.
Net realised and unrealised gains on investments rose $417.8 million to $586 million.
