RenaissanceRe Reports Fourth Quarter 2020 Net Income Available to Common Shareholders of $189.8 Million, or $3.74 Per Diluted Common Share; Operating Loss Attributable to Common Shareholders of $77.1 Million, or $1.59 Per Diluted Common Share
RenaissanceRe Holdings Ltd. reported a net income of $189.8 million, or $3.74 per diluted share, for Q4 2020, a significant increase from $33.8 million, or $0.77 per share, in Q4 2019. However, the operating loss was $77.1 million, compared to a gain of $12.6 million a year earlier. The company faced a net negative impact of $166.1 million from weather-related losses and $172.7 million from COVID-19. Gross premiums written rose 3.3% to $935.5 million. Book value per share increased 2.5% to $138.46, while the annualized return on average equity was 10.9%.
- Net income reached $189.8 million in Q4 2020 vs. $33.8 million in Q4 2019.
- Gross premiums written increased by 3.3% to $935.5 million in Q4 2020.
- Book value per common share increased by 2.5% to $138.46 in Q4 2020.
- Operating loss of $77.1 million in Q4 2020 compared to a profit of $12.6 million in Q4 2019.
- Combined ratio deteriorated to 114.7% in Q4 2020 from 106.7% in Q4 2019.
- Net negative impact of $166.1 million from weather-related losses and $172.7 million from COVID-19.
RenaissanceRe Holdings Ltd. (NYSE: RNR) (the “Company” or “RenaissanceRe”) today reported net income available to RenaissanceRe common shareholders of
For 2020, the Company reported net income available to RenaissanceRe common shareholders of
Kevin J. O’Donnell, President and Chief Executive Officer of RenaissanceRe, commented: “We begin 2021 looking forward and fully focused on executing our strategy into an attractive reinsurance market. The book of business that we wrote at the January 1 renewal is larger and more efficient, with increased expected profitability, and we anticipate further opportunities to improve it over the course of the year. While 2020 brought many challenges, I am particularly proud of the accomplishments of our employees and the continuity of our culture during a difficult year marked by record-breaking weather events and the stresses of the COVID-19 pandemic.”
Fourth Quarter of 2020 Summary
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Net negative impact on net income available to RenaissanceRe common shareholders of
$166.1 million resulting from the Q4 2020 Weather-Related Large Losses (as defined in the table below) and$172.7 million from losses related to the COVID-19 pandemic. -
Gross premiums written increased
$30.0 million , or3.3% , to$935.5 million , in the fourth quarter of 2020 compared to the fourth quarter of 2019, driven by an increase of$63.3 million in the Property segment, partially offset by a decrease of$33.3 million in the Casualty and Specialty segment. -
Underwriting loss of
$151.7 million and a combined ratio of114.7% in the fourth quarter of 2020, compared to an underwriting loss of$65.2 million and a combined ratio of106.7% in the fourth quarter of 2019. The Property segment incurred an underwriting loss of$130.0 million and had a combined ratio of125.6% in the fourth quarter of 2020. The Casualty and Specialty segment incurred an underwriting loss of$21.4 million and had a combined ratio of104.1% in the fourth quarter of 2020. The Company’s underwriting result in the fourth quarter of 2020 was principally impacted by the Q4 2020 Weather-Related Large Losses and the COVID-19 losses, both of which were primarily in the Property segment. The Q4 2020 Weather-Related Large Losses resulted in a net negative impact on the underwriting result of$239.8 million and added 23.4 percentage points to the combined ratio. The COVID-19 losses resulted in a net negative impact on the underwriting result of$237.2 million and added 23.2 percentage points to the combined ratio.
Partially offsetting the impact of the Q4 2020 Weather-Related Large Losses and COVID-19 losses was favorable development on prior accident years of$128.4 million , primarily related to large loss events in 2019, 2018 and 2017, as well as favorable movements in other assumed losses and ceded recoveries. The favorable development on prior accident years reduced the combined ratio by 12.5 percentage points and was principally in the Property segment.
In comparison, the Company’s underwriting results in the fourth quarter of 2019 were principally impacted by Typhoon Hagibis and losses associated with aggregate loss contracts in 2019 (the “2019 Aggregate Losses”), which together had a net negative impact on the underwriting result of$237.0 million and added 25.0 percentage points to the combined ratio. -
Total investment result was a gain of
$340.5 million in the fourth quarter of 2020, generating an annualized total investment return of6.6% , compared to$130.6 million and an annualized total investment return of3.1% in the fourth quarter of 2019.
Net Negative Impact
Net negative impact includes the sum of estimates of net claims and claim expenses incurred, earned reinstatement premiums assumed and ceded, earned and lost profit commissions and redeemable noncontrolling interest. The Company’s estimates of net negative impact are based on a review of its potential exposures, preliminary discussions with certain counterparties and actuarial modeling techniques. The Company’s actual net negative impact, both individually and in the aggregate, may vary from these estimates, perhaps materially. Changes in these estimates will be recorded in the period in which they occur.
Meaningful uncertainty remains regarding the estimates and the nature and extent of the losses from catastrophe events, driven by the magnitude and recent nature of each event, the geographic areas impacted by the events, relatively limited claims data received to date, the contingent nature of business interruption and other exposures, potential uncertainties relating to reinsurance recoveries and other factors inherent in loss estimation, among other things.
The Company continues to evaluate industry trends and its own potential exposure associated with the ongoing COVID-19 pandemic, and expects historically significant industry losses to emerge over time as the full impact of the pandemic and its effects on the global economy are realized. Among other things, the Company continues to actively monitor information received from or reported by clients, brokers, industry actuaries, regulators, courts, and others, and to assess that information in the context of its own portfolio. The Company’s loss estimates represent its best estimate of incurred losses based on currently available information, and actual losses may vary materially from these estimates.
Weather-Related Large Loss Events
The financial data in the table below provides additional information detailing the net negative impact of the Q4 2020 Weather-Related Large Losses on the Company’s consolidated financial statements in the fourth quarter of 2020.
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Three months ended December 31, 2020 |
Hurricane
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Hurricane
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Other Q4 2020
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Change in
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Aggregate
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Total Q4 2020
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(in thousands) |
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Net claims and claims expenses incurred |
$ |
(48,556) |
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$ |
(43,996) |
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$ |
(36,842) |
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$ |
(108,125) |
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$ |
(27,194) |
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$ |
(264,713) |
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Assumed reinstatement premiums earned |
4,935 |
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1,464 |
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(76) |
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19,691 |
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(259) |
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25,755 |
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Ceded reinstatement premiums earned |
(113) |
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(651) |
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(914) |
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(3,449) |
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— |
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(5,127) |
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Earned (lost) profit commissions |
731 |
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882 |
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1,161 |
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2,549 |
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(1,038) |
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4,285 |
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Net negative impact on underwriting result |
(43,003) |
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(42,301) |
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(36,671) |
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(89,334) |
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(28,491) |
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(239,800) |
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Redeemable noncontrolling interest |
12,058 |
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14,548 |
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10,205 |
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23,443 |
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13,454 |
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73,708 |
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Net negative impact on net income available to RenaissanceRe common shareholders |
$ |
(30,945) |
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$ |
(27,753) |
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$ |
(26,466) |
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$ |
(65,891) |
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$ |
(15,037) |
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$ |
(166,092) |
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The financial data in the table below provides additional information detailing the net negative impact of the Q4 2020 Weather-Related Large Losses on the Company’s segment underwriting results and consolidated combined ratio in the fourth quarter of 2020.
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Three months ended December 31, 2020 |
Hurricane
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Hurricane
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Other Q4 2020
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Change in
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Aggregate
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Total Q4 2020
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(in thousands, except percentages) |
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Net negative impact on Property segment underwriting result |
$ |
(40,590) |
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$ |
(40,889) |
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$ |
(36,671) |
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$ |
(86,032) |
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$ |
(28,491) |
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$ |
(232,673) |
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Net negative impact on Casualty and Specialty segment underwriting result |
(2,413) |
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(1,412) |
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— |
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(3,302) |
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— |
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(7,127) |
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