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RenRe falls to Q4 underwriting loss on Hagibis, but net income up

5th February 2020 - Author: Luke Gallin

Bermuda-based reinsurer RenaissanceRe Holdings Ltd. has reported net income of $33.8 million for the fourth-quarter of 2019, however, the impact of Typhoon Hagibis and 2019 Aggregate Losses pushed the firm to a Q4 underwriting loss of $65.2 million.

RenaissanceRe buildingThe reinsurer’s net income in Q4 2019 compares with a net loss of $83.9 million in the prior year quarter, while operating income also improved in the period, from $4.8 million to $23 million.

Despite the return to net income in the quarter, RenRe has reported an underwriting loss of $65.2 million and a combined ratio of 106.7%, which is a slight improvement on the underwriting loss of $82.3 million and combined ratio of 114.3% recorded in Q4 2018.

The firm’s property unit fell to an underwriting loss of $87.1 million in the period and recorded a combined ratio of 118.6%, somewhat offset by underwriting income of $20.8 million and a combined ratio of 95.9% recorded in its casualty and specialty segment.

RenRe states that its underwriting loss was primarily a result of the impact of Typhoon Hagibis in Japan and 2019 Aggregate Losses, which had a net negative impact on the underwriting result of $237 million, adding 25 percentage points to the combined ratio.

RenRe adds that Typhoon Hagibis and losses associated with aggregate loss contracts (2019 Aggregate Losses) resulted in a net negative impact to net income of $193.3 million. Furthermore, the firm explains that it reallocated certain losses from Hurricane Dorian and Typhoon Faxai to 2019 Aggregate Losses, but notes that this had no net impact on its Q4 2019 net income.

Turning to premiums, and RenRe’s gross premiums written increased to $905.5 million, driven mostly by expansion in casualty and specialty but also by more modest growth in property.

The Bermudian’s investment result produced a gain of $130.6 million in Q4, which generated an annualised total investment return of 3.1%.

Kevin O’Donnell, President and Chief Executive Officer (CEO) of RenRe, commented: “I am pleased with our performance this year as we materially grew tangible book value per share plus accumulated dividends and earned a robust operating return on equity. We successfully executed our strategy by organically growing our business while efficiently integrating Tokio Millennium Re.

“Looking forward, I am excited about our opportunities to build a bigger and more attractive portfolio and am confident in our ability to continue delivering long-term value.”

RenRe, through various joint ventures and its third-party, or alternative reinsurance capital vehicles, raised more than $300 million of capital in Q4. And, effective January 1st, 2020, raised more than $625 million of capital through its funds Upsilon RFO and Medici, including over $100 million from the company.

For the full-year, gross premiums written jumped by more than 45% to $4.8 billion in 2019, driven by solid growth in property and casualty and specialty. Underwriting income improved slightly for the year to $256.4 million, while the combined ratio weakened to 92.3%, compared with 87.6% in 2019.

The underwriting result for the year was impacted by Typhoon Hagibis, Q3 Catastrophe Events and 2019 Aggregate Losses, which had a net negative impact on RenRe’s underwriting result of $418.9 million in 2019, adding 12.9 percentage points to the combined ratio.

In total, RenRe’s net income reached $712 million in 2019, which included total net negative impact on its net income of $348.2 million from the 2019 Large Loss Events.

For 2019, RenRe has recorded an investment gain of $838.3 million, generating an annualised total investment return of 5.2%.

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