Reinsurance News

RenRe reports a solid first-quarter, underpinned by 72% combined ratio

8th May 2019 - Author: Luke Gallin

Bermuda domiciled reinsurer RenaissanceRe Holdings Ltd. (RenRe) has reported an improved year-on-year net income for the first-quarter of 2019, of $273.3 million, an increase of more than 380%.

RenaissanceRe buildingOperating income also increased for the reinsurer during the first-quarter of 2019, from $122.1 million to $154.4 million. RenRe’s annualised return on average common equity for the period reached 23.5% in Q1 2019, compared with 5.7% in the first-quarter of 2018.

The reinsurer saw its underwriting income improve to $154.1 million and has posted a combined ratio of 72% for the first-quarter of 2019. This compares with underwriting income of $129.6 million and a combined ratio of 70.6% in Q1 2018.

Overall, gross written premiums increased by more than $404 million to $1.6 billion in Q1 2019, driven by an increase in both property and the casualty and specialty segment.

RenRe’s property business performed well in the quarter, producing underwriting income of $152.4 million and a combined ratio of 47.6%. In Q1 2018, this segment produced underwriting income of $127.2 million and recorded a combined ratio of 43.5%.

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The firm explains that its property segment result was positively impacted by lower current accident year net claims and claim expenses, driven by a lower level of insured catastrophe events in the period, when compared with Q1 2018. However, this was somewhat offset by net adverse development on prior accident years net claims and claims expenses totalling $1.9 million.

The property segment increased its gross written premiums (GWP) by more than $325 million in the period, reaching $1 billion in the first-quarter of 2019. Within the catastrophe line of business, GWP increased by 43.2% to $845.2 million, mainly as a result of “expanded participation on existing transactions and certain new transactions,” explains the reinsurer.

In other property classes, GWP increased by 60.5% to $187.2 million, driven primarily by RenRe’s underwriting platforms, from both existing relationships and new market opportunities.

For the first-quarter of 2019, RenRe has announced that ceded written premiums in the property segment increased by almost 33% year-on-year to $468.2 million. RenRe explains that this increase is mostly a result of a substantial increase in GWP in the catastrophe business line being ceded to third-party investors through its Upsilon RFO.

GWP in the casualty and specialty segment jumped 17.5% to $531.9 million. The unit recorded underwriting income of $1.7 million and a combined ratio of 99.3% in Q1 2019, compared with $2.6 million and 98.8% in Q1 2018, respectively.

RenRe President and Chief Executive Officer (CEO), Kevin O’Donnell, said: “Our strong first quarter was distinguished by solid profits, material growth and strategic advancement. We achieved an annualized operating return on average common equity of 13.3% and growth in tangible book value per common share plus accumulated dividends of 7.0%. At the same time, we grew our business materially by leveraging into an improving rate environment.

“The purchase of Tokio Millennium Re advanced our strategy, and we have moved from planning to execution on what we are optimistic will be a quick and successful integration.”

Discussing its acquisition of Tokio Millennium Re, which completed on the 22nd of March 2019, RenRe explains that the operating activities of the TMR Group entities, from the completion date through March 31st, 2019 were not material and as such have not been included in the firm’s consolidated Q1 2019 results.

During Q1 2019, RenRe recorded $25.5 million of corporate expenses in relation to the acquisition. This was comprised of $12.9 million of transaction-related fees, $5.9 million of integration-related costs, and $6.7 million of compensation-related costs.

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