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Catastrophes hit RenRe’s fourth-quarter results

30th January 2019 - Author: Luke Gallin

Bermuda-based reinsurer RenaissanceRe Holdings Ltd. has announced a net loss of $83.9 million for the fourth-quarter of 2018, driven by the impact of catastrophe losses.

RenRe logo newThe $83.9 million Q4 net loss compares with a net loss of $3.5 million for the same period in 2017. The reinsurer states that Hurricane Michael, the California wildfires, and also changes in certain losses associated with aggregate loss contracts, resulted in a net negative impact of more than $104 million.

However, the firm did experience a positive impact on its Q4 result due to changes in its estimates of net negative impacts of Q3 cat events and the 2017 large loss events, of $49.3 million and $19.4 million, respectively.

But despite this, the impacts of Q4 events has resulted in the reinsurer recording an underwriting loss of $82.3 million for Q4 with a combined ratio of 114.3%. This compares with an underwriting loss of $10.4 million and a combined ratio of $102.5% for the fourth-quarter of 2017.

The combination of Michael, the Cali wildfires and changes in the 2018 aggregate losses, says RenRe, resulted in a net negative impact of $205.7 million on the underwriting result within the property segment for Q4, while adding 38.3 percentage points to the combined ratio.

Furthermore, the wildfires also hit the underwriting result through certain casualty liability exposures, within the Casualty and Specialty division.

Gross premiums written for the quarter increased by over 34% to $547.8 million, driven mostly by growth in the property segment, of $104.8 million.

RenRe’s President and Chief Executive Officer (CEO), Kevin O’Donnell, said: “Once again in 2018, we benefited from our industry leading ability to construct efficient portfolios of risk through superior underwriting and the application of our gross-to-net strategy. In the quarter, we reported positive operating income, while rapidly paying claims to customers facing significant losses from Category 4 Hurricane Michael and a second consecutive year of record breaking wildfires in California.

“For the year, we outperformed on multiple metrics, posting a strong operating ROE, delivering robust top line growth, and executing effectively on a number of key initiatives, including the formation of our latest innovative joint venture, Vermeer and our pending acquisition of Tokio Millennium Re. Looking ahead, at the recent January 1 renewal we laid the foundation for a successful 2019 and ongoing shareholder value creation.”

For the full-year, RenRe recorded net income of $197.3 million, which includes a total net negative impact of $86.4 million from the 2018 large loss events and changes in estimates of the net impact of 2017 large loss events.

Gross premiums written increased to $3.3 billion driven by growth in the property segment of more than $320 million, and growth of more than $192 million in the Casualty and Specialty segment. RenRe’s full-year 2018 underwriting income totalled $244.9 million, while its combined ratio improved significantly to 87.6%.

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