Bermuda-based reinsurer RenaissanceRe (RenRe) has reported a stronger combined ratio of 76% and 77.9% for the fourth quarter and full year 2023, respectively, as the firm’s underwriting and investment income improved for both periods.
RenRe has recorded a strong set of results for the final quarter of 2023, as gross premiums written (GPW) rose to $1.8 billion and net premiums written (NPW) increased to $1.6 billion.
Underwriting income rose from $316 million in Q4 2022 to $541 million in Q4 2023, as the combined ratio strengthened from 80.5% to 76%, and the adjusted combined ratio strengthened from 80.6% to 73.6%.
Within the firm’s property segment, GPW fell 7.4% to $345 million on the back of a more than $86 million decrease in other property, which RenRe attributes primarily to the non-renewal of certain catastrophe exposed quota share programmes that did not meet its return hurdles, partially offset by an increase related to the Validus acquisition.
Property NPW decreased 4% year-on-year to $358 million as a result of the dip in GPW, partially offset by an adjustment that reduced ceded premium written in the fourth quarter of 2023.
The property segment’s underwriting performance improved from $257 million in Q4 2022 to $504 million in Q4 2023, as the combined ratio strengthened by 19.5 percentage points to 43.1%.
In the casualty and specialty segment, GPW rose 20% to $1.5 billion and NPW grew more than 26% to $1.3 billion, driven by growth in the other specialty line of business and the general casualty line of business, primarily from Validus.
However, the segment’s underwriting result fell from $59 million to $37 million, as the combined ratio rose to 97.3% from 93.7%.
Turning to quarterly fee income, and RenRe has reported total management fee income of $48 million compared with $26 million a year earlier, as total performance fee income increased to $23 million, driving total fee income for the quarter of $70.8 million, compared with $30.3 million a year earlier.
Group-wide, for the quarter, net income jumped significantly from $448 million to $1.6 billion, and operating income moved from $322 million to $623 million.
On the asset side of the balance sheet, net investment income increased $166 million to $378 million, with net realised and unrealised gains on investments of $586 million.
“We finished a strong year with an exceptional quarter, reporting an annualized operating return on average common equity of 33%. We begin 2024 stronger than ever,” said Kevin J. O’Donnell, President and Chief Executive Officer. “The Validus acquisition and integration has exceeded our expectations and positions us to continue delivering exceptional shareholder value.
“At the January 1 renewal we were successful in retaining our combined portfolio at favorable terms. Our underwriting portfolio is now larger, more diverse, and more efficient with great rate adequacy, providing the platform for continuing strong performance across our Three Drivers of Profit.”
Turning to the reinsurer’s full year 2023 performance, and GPW fell from $9.2 billion in 2022 to $8.9 billion in 2023, as NPW rose to $7.5 billion from $7.2 billion.
Underwriting income for the year reached $1.7 billion compared with just $150 million in 2022, as the combined ratio strengthened considerably from 97.7% to 77.9%, and the adjusted combined ratio strengthened from 97.5% to 77.1%.
In terms of losses, RenRe has reported net claims and claims expenses incurred of $354 million for 2023, which after reinstatement premiums and earned profit commissions, had a net negative impact on the underwriting result of $298.6 million, most of which is attributable to the property segment.
Within property, GPW fell 4.6% for the year to $3.6 billion as NPW increased 4.2% to almost $3 billion. Underwriting income for 2023 within property reached $1.5 billion, compared with a loss of $16 million in 2022. The segment’s combined ratio improved considerably to 53.4% from 100.6% in 2022.
In the casualty and specialty arm, GPW fell 3.3% in 2023 to $5.3 billion, and NPW increased 3.5% to $4.5 billion. The segment delivered a stronger underwriting result of $208 million, with a combined ratio of 95.2%, compared with 95.3% in 2022.
Total management fee income rose to $177 million in 2023 as total performance fee income jumped to $60.1 million, leading to total fee income of $237 million compared with $119 million in 2022.
On the asset side of the balance sheet, net investment income ended 2023 at $1.3 billion, up $693 million year-on-year. Net realised and unrealised gains on investments totalled $414 million, a swing from the $1.8 billion of realised and unrealised losses in 2022.
All in all, net income for 2023 amounted to $2.5 billion compared with a loss of over $1 billion in 2022, as operating income rose from $322 million in 2022 to $1.8 billion in 2023.
