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RenRe reports higher underwriting income, improved CR in Q2 2021

23rd July 2021 - Author: Luke Gallin

Bermuda-based reinsurer RenaissanceRe Holdings Ltd. has announced gross written premium growth to more than $2 billion for the second quarter of 2021, as the company’s underwriting income improved year-on-year and combined ratio strengthened to 72.4%.

RenaissanceRe buildingFor Q2 2021, RenRe’s underwriting income reached $329 million compared with $217 million for the same period last year.

In the firm’s property segment, gross written premiums increased by 13.5% to roughly $1.183 billion in Q2 2021, as underwriting income rose from a little over $200 million in Q2 2020 to over $315 million this year.

The property segment’s combined ratio strengthened by 15.3 percentage points, year-on-year, to 43.8% and is comprised of a 17.3% net claims and claim expense ratio, and a 26.5% underwriting expense ratio.

The reduction in the net claims and claim expense ratio in Q2 is primarily a result of relatively lower catastrophe losses alongside higher prior accident year favourable development in the period.

Ceded premiums in this part of the business totalled $380.2 million, which represents growth of more than 12% from the prior year period. RenRe attributes this growth to an increase in gross premiums written which were ceded to third-party investors in its managed vehicles, principally the RenaissanceRe Upsilon Fund Ltd.

In RenRe’s casualty and specialty segment, gross written premiums jumped by more than 38% in Q2 2021 to over $910 million.

Underwriting income, while still positive, did decline year-on-year within the casualty and specialty segment, from more than $16 million to roughly $13.8 million in Q2 2021. The segment’s combined ratio deteriorated slightly to 97.8%, comprised of 66.9% net claims and claim expense ratio and 30.9% underwriting expense ratio.

RenRe attributes the higher underwriting expense ratio to an increase in the net acquisition expense ratio, principally due to the effects of purchase accounting amortization related to the acquisition of TMR.

As well as its underwriting, RenRe’s profits are also supported by fee income from its insurance-linked securities (ILS) management and third-party capital business.

In Q2 2021, management fee income, across ILS strategies, joint-ventures and structured reinsurance, reached its highest quarterly level ever, at nearly $32 million. At the same time, performance fee income fell slightly to $14.2 million, taking its overall fee income to $46.2 million for the quarter.

Turning to the asset side of the balance sheet, and RenRe has announced net investment income of almost $81 million for Q2 2021, which is down by roughly $8 million from the same period last year.

The total investment result in the second quarter of 2021 was primarily driven by net realized and unrealized gains on investments of $191.0 million, principally within fixed maturity and equity investments.

Overall, RenRe has reported a dip in net income for the second-quarter of 2021 to $456.8 million, while operating income increased, year-on-year, to $278 million.

The company has also provided some details around its raised capital during the period, which reached more than $200 million in Q2 2021 through the RenaissanceRe Medici Fund Ltd. and the Upsilon RFO Re Ltd. vehicle.

Additionally, RenRe raised $500 million in July 2021 via the issuance of 20,000,000 Depositary Shares.

Kevin O’Donnell, President and Chief Executive Officer (CEO), commented: “We delivered a solid quarter for our shareholders, characterized by strong underwriting growth, high quality fee income and robust investment returns. Our Casualty and Specialty team extended its leadership by continuing to find opportunities to support our customers and our Property segment deployed capital in attractive business at the mid-year renewals.

“I am pleased with the continued execution of our strategy and resulting growth in tangible book value per share, and remain confident in our ability to provide superior shareholder returns over the long term.”

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