Bermudian reinsurer RenaissanceRe Holdings Ltd (RenRe) reported better than expected results for the second-quarter of 2018, driven by a substantial drop in its estimated losses from 2017 catastrophe events.
The reinsurer has announced a decrease in net claims and claims expenses incurred of $128.6 million, which, after factoring in assumed reinstatement premiums earned, ceded reinstatement premiums earned, and lost profit commissions, results in a net positive impact on underwriting result of $91.963 million.
The adjustments suggest that the reinsurer reserved very prudently after the events, and was therefore able to make a significant adjustment to its estimates and release some of those reserves to boost its second-quarter 2018 result.
While many expected announcements of further loss creep from 2017 events, particularly when concerning hurricanes Harvey, Irma and Maria, this hasn’t happened, and the firm reported net income of $191.8 million for the quarter, up from $171.1 million a year earlier.
As well as a net positive impact to the underwriting result of $92 million, the adjusted loss estimates also resulted in 23.5% impact on its consolidated combined ratio, which came in at 47.2%, compared with 71.3% a year earlier.
RenRe’s Chief Executive Officer (CEO), Kevin O’Donnell, commented: “We celebrated our 25th anniversary as a company this quarter, and I am proud to report very strong results. We recorded annualised operating return on average common equity of 20.3% and growth in tangible book value per common share plus accumulated dividends of 4.9%.
“I am especially pleased that we were also able to construct our best portfolio of risk in years. Moving forward, a combination of top line growth, an effective gross-to-net strategy, rising interest rates and improved operational efficiency should provide the foundations for continued superior shareholder return.”
