RenaissanceRe Holdings Ltd. yesterday reported a 22 percent fall in second-quarter net income compared to the same period last year.

The Bermuda-based reinsurer's net earnings totalled $210.2 million for the April through June period, or $3.66 per share, compared to $271.2 million, or $4.32 per share in last year's second quarter.

In a statement released after US markets closed yesterday, RenRe also said it had established $15 million of reserves in its specialty unit to pay claims resulting from the Deepwater Horizon oil rig disaster.

The company added that this month it sold its entire ownership interest in ChannelRe Holdings Ltd., which is expected to result in a $15.8 million gain in RenRe's third-quarter results.

ChannelRe is a privately-held financial guaranty company, whose business all comes from US bond insurance giant MBIA. It was a joint venture in which RenRe owned a 32.7 percent stake. Another Bermuda reinsurer, PartnerRe was a co-owner.

MBIA suffered huge losses through its exposure to bonds backed by US mortgages as the sub-prime mortgage crisis unfolded in 2007, which led to huge losses for ChannelRe. Both RenRe and PartnerRe wrote down their stakes in ChannelRe to nothing in January 2008.

RenRe reduced its catastrophe book of business, in which gross premiums written fell 12 percent year over year, but thanks to increases in business written through its Lloyd's, specialty and insurance segment, overall GPW fell just 1.6 percent.

RenRe chief executive officer Neill Currie said: "I am pleased to report another good quarter with an annualised operating return on average common equity of 18 percent and growth in book value per share of almost six percent.

"We generated strong underwriting profits, had a successful June 1 renewal season, and have underwritten an attractive portfolio of risks. We actively managed our capital during the quarter and remain committed to generating superior returns for our shareholders.

"Our ability to produce an attractive portfolio of business in this market is a testament to our position as a market leader with strong client and broker relationships. We will continue to maintain our strong underwriting discipline in this market while also continuing to focus on risk management and laying the foundation for future opportunities and long-term performance."

Operating income, which excludes investment gains, was $139.9 million, or $2.40 per share, compared to $254.1 million, or $4.05 per share for the second quarter of 2009.

Net realised and unrealised gains on fixed maturity investments were $71.1 million, compared to $18.9 million in the same period in 2009.

The company said annualised return on average common equity was 26.8 percent and an annualised operating return on average common equity was 17.9 percent. Book value per common share increased $3.10, to $56.96 at June 30, 2010, a 5.8 percent increase in the second quarter of 2010.

The reinsurance segment experienced $81.4 million of favourable development in the second quarter of 2010 which includes $60.9 million in the catastrophe unit.

RENRE Q2 REPORT CARD

Net income: $210.2 million compared to $271.2 million in the same period of last year.

Gross premiums written: $841.5 million compared to $855.2 million in 2009.

Combined ratio: 42.3 percent compared to 43.8 percent in 2009.