RenRe’s profits drop; disciplined approach shrinks cat book

04-02-2015

RenaissanceRe’s profits dropped in 2014 as the business also shrank slightly, largely due to it writing a lower volume of catastrophe business.

The Bermuda company made a $510.3 million profit last year, a significant drop compared with the $665.7 million profit it posted in 2013. Its operating income for the year was $468.9 million compared with $630.6 million in 2013.

Its gross premiums written decreased by $54.8 million, or 3.4 percent, to $1.55 billion in 2014. It said the decrease was principally driven by its catastrophe reinsurance segment, which experienced a decrease of $186.4 million or 16.6 percent, partially offset by increases in the company’s specialty reinsurance and Lloyd’s segments.

Gross premiums written in its catastrophe reinsurance segment decreased by $186.4 million, or 16.6 percent, to $934 million in 2014, compared with $1.1 billion in 2013, primarily driven by the continued softening of market conditions, including reduced risk-adjusted pricing for the January and June renewals. The company stressed its underwriting discipline given the prevailing terms and conditions, and noted that it had reduced participation on certain quota share deals.

The company generated underwriting income of $529.4 million and a combined ratio of 50.2 percent in 2014, compared with $626.7 million and 43.8 percent in 2013. The decrease in underwriting income was primarily driven by a $52.2 million decrease in net premiums earned due to a combination of lower gross premiums written during the preceding 12 months and an increase in ceded premiums written principally within the company’s catastrophe reinsurance segment.

Its return on average common equity of 14.9 percent compared with 20.5 percent in 2013. Its book value per common share increased by $9.86, or 12.3 percent, in 2014 to $90.15, compared to a 17.8 percent increase in 2013.

Kevin O'Donnell, chief executive officer, said: “I am pleased with RenaissanceRe’s performance, both for the fourth quarter and for the full year. We achieved solid growth in tangible book value per share plus accumulated dividends of 5.5 percent for the quarter and 13.9 percent for the year, while demonstrating discipline and objectivity about the risk we assumed and the pricing required. Our underwriting team executed extremely well during the most recent renewal period, as pressure on pricing from abundant capacity persisted.”

O'Donnell continued: “Over the past few years, we have steadily developed the spectrum of products, platforms and scale we offer, in anticipation of the evolving needs of our customers. The acquisition of Platinum Underwriters Holdings will accelerate our efforts, broadening our client and broker base and our capital flexibility. The preparation for the integration of the two entities is on track and we are looking forward to welcoming our new team members.”

RenRe, Bermuda, Reinsurance, Kevin O'Donnell

Intelligent Insurer