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RenRe falls to Q4 operating loss; expects increased profitability

27th January 2021 - Author: Luke Gallin

Bermuda-based reinsurance company, RenaissanceRe Holdings Ltd. (RenRe), has reported an operating and underwriting loss for the fourth-quarter of 2020 amid losses from both weather-related events and the COVID-19 pandemic.

RenaissanceRe buildingFor the final quarter of 2020, RenRe has reported net income of $189.9 million, compared to $33.8 million for the same period in 2019. Despite the rise in net income, RenRe’s operating result has produced a loss of $77.1 million in the period, against a gain of $12.6 million a year earlier.

The Bermuda domiciled reinsurer notes that Q4 2020 weather-related large losses had a net negative impact of $166.1 million on its net income in the period, while COVID-19 losses had a negative impact of $172.7 million.

For the fourth-quarter, the firm has reported an underwriting loss of $151.7 million and a combined ratio of 114.7%, compared to a loss of $65.2 million and a combined ratio of 106.7% for the same period in 2019. RenRe’s property unit incurred an underwriting loss of $130 million in the period while its casualty and specialty unit produced an underwriting loss of $21.4 million.

In the quarter, weather-related large losses led to a net negative impact on the underwriting result of $239.8 million and added a significant 23.4 percentage points to the combined ratio. Additionally, losses related to the ongoing COVID-19 pandemic resulted in a net negative impact on RenRe’s underwriting result of $237.2 million, adding 23.2 percentage points to the combined ratio.

RMS

Both weather-related losses and impacts from the pandemic mostly hit the reinsurer’s property segment, although this was somewhat offset by favourable development on prior accident years of $128.4 million, attributable to large loss events in 2017, 2018, and 2019.

In Q4, the firm’s total investment result produced a gain of $340.5 million, generating an annualised total investment return of 6.6%. This compares to an investment gain of $130.6 million and an annualised total investment return of 3.1% in the final quarter of 2019.

Turning to premiums, and RenRe has reported a 3.3% rise in gross premiums written to $935.5 million in Q4 2020, driven by $63.3 million of growth in the property segment, somewhat offset by a decline of $33.3 million in its casualty and specialty segment.

Kevin O’Donnell, President and Chief Executive Officer (CEO) of RenRe, commented: “We begin 2021 looking forward and fully focused on executing our strategy into an attractive reinsurance market. The book of business that we wrote at the January 1 renewal is larger and more efficient, with increased expected profitability, and we anticipate further opportunities to improve it over the course of the year.

“While 2020 brought many challenges, I am particularly proud of the accomplishments of our employees and the continuity of our culture during a difficult year marked by record-breaking weather events and the stresses of the COVID-19 pandemic.”

For the full-year, RenRe has reported net income of $731.5 million, representing a slight increase from the $712 million announced in 2019. Operating income for 2020 amounted to $14.6 million, compared with $397.8 million a year earlier.

Weather-related large loss events had a net negative impact on net income of $493.6 million, while COVID-19 losses had a negative impact of $286.6 million on full-year net income.

The impacts of weather events and the pandemic has seen RenRe fall to an underwriting loss for 2020 of $76.5 million with a combined ratio of 101.9%, compared with an underwriting gain of $256.4 million and a combined ratio of 92.3% in 2019.

On the underwriting result, weather-related large loss events had a net negative impact of $668.5 million and added 17.2 percentage points to the combined ratio. At the same time, COVID-19 losses had a negative impact on the underwriting result of $351.9 million in 2020, adding 8.9 percentage points to the combined ratio.

For 2020, weather-related losses and COVID-19 impacts were somewhat offset by favourable development on prior accident years of $183.8 million.

Gross premiums written jumped by almost 21% year-on-year to $5.8 billion in 2020, driven by growth of $568.2 million in the firm’s property business and an increase of $430.3 million in its casualty and specialty segment.

In 2020, RenRe’s total investment result was a gain of $1.2 billion, generating an annualised total investment return of 5.9%.

Additionally, RenRe has reported that throughout 2020, it raised over $1 billion of capital via its managed joint-venture and third-party reinsurance capital operations, which includes Upsilon RFO, Medici, Vermeer, and DaVinciRe, as well as $138.1 million from RenRe.

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