Fall in catastrophe claims helps RenRe to $211m profit
RenaissanceRe Holdings Ltd. bounced back from a net loss of $55.2 million to report a profit of $211.8 million for the fourth quarter of 2009 as a result of fewer catastrophe losses and solid investment returns.
For the full year 2009, RenRe achieved a profit of $838.9 million, or $13.40 per share, compared to a net loss of $13.3 million in 2008. The return on average common equity for the 12 months was 30.2 percent.
The re/insurer saw operating income rise to $177.7 million for the fourth quarter, or $2.82 per share, compared to $28.7 million, or 47 cents per share, for the same period in 2008.
Operating income excluded net realised and unrealised gains on fixed maturity investments of $35.4 million and net other-than-temporary impairments of $1.3 million in last year's fourth quarter and net realised losses on fixed maturity investments of $17.6 million and net other-than-temporary impairments of $66.3 million in the prior year's fourth quarter.
The company scaled back significantly on the amount of reinsurance it sold, as gross premiums written for the fourth quarter were $73 million, representing a $88.6 million decrease from the fourth quarter of 2008, reflecting a $63.6 million decrease in the company's reinsurance segment and a $24.4 million fall in the individual risk segment.
The company reported an annualised return on average common equity of 27.1 percent and an annualised operating return on average common equity of 22.7 percent in the fourth quarter of 2009, compared to negative 9.2 percent and positive 4.8 percent, respectively, in the fourth quarter of 2008.
Book value per common share increased $2.47, or five percent, in the fourth quarter of 2009 to $51.68, compared to a 0.5 percent decrease in the fourth quarter of 2008.
Neill Currie, CEO of RenaissanceRe, said: "I am pleased to report strong full year earnings, resulting in an increase in our tangible book value per common share plus the change in accumulated dividends of 38 percent.
"These earnings are a result of a relatively low level of insured catastrophe losses, favourable development on prior year reserves, solid investment results and strong performance by our team.
"While volatility is inherent in our business, we seek to build a portfolio of risks with attractive expected returns, with the potential to achieve superior returns in good years, such as 2009, while seeking to ensure our losses are manageable in high catastrophe loss years.
RENRE Q4 REPORT CARD |
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| Net income: $211.8 million compared to a net loss of $55.2 million in 2008 |
| Combined ratio: 37.7 percent compared to 36.1 percent in 2008 |
| Gross premiums written:$73 million compared to $161.6 million in 2008 |
"We are pleased with the results of our January 1 renewals and have constructed an attractive portfolio of business for 2010. We will continue to maintain our underwriting discipline, focusing on expected profit rather than premium volume. This discipline has been part of our culture since our formation and we believe this strategy will continue to benefit our shareholders over the long term."
Returns on the company's investment portfolio were notably higher in the fourth quarter of 2009 compared to the fourth quarter of 2008, primarily down to higher total returns on its non-investment grade allocations.
