RenRe Q1 impacted by Ogden and individual claims

Bermuda-based RenaissanceRe has seen its combined ratio deteriorate in the first quarter of 2017 due to the change of the personal injury Ogden discount rate in the UK and higher personal claims.

RenRe’s combined ratio worsened to 88.4 percent in the first quarter of 2017 compared to 70.3 percent in the same period a year ago.

“We remained disciplined during a successful first quarter renewal and constructed an attractive portfolio of risk,” said CEO Kevin O'Donnell. “Our first quarter results were impacted by an increase in our combined ratio with the Ogden rate change driving prior accident years and an increase in individual claims affecting the current accident year. We have the right strategy to navigate a challenging reinsurance market and we are well positioned to continue to build shareholder value over the long term.”

Gross premiums written increased 7.0 percent to $922.1 million in the first quarter of 2017 compared to the first quarter of 2016.

Net profit dropped 28 percent year-on-year to $92.4 million in the first three months of 2017. Operating income for the quarter came to $49 million, again down on the $66.3 million it made in the first three months of 2016.

In the property segment, the company said that it was able to increase its participation on a select number of transactions and enter into certain new transactions RenRe believes have comparably attractive risk-return attributes. As a result, the company was able to grow its catastrophe and other property classes of business by $41.4 million and $34.2 million, respectively, compared to the first quarter of 2016, while continuing to exercise underwriting discipline given prevailing market terms and conditions.

Underwriting income in the property segment fell to $91.4 million from $104.6 million a year ago. The combined ratio deteriorated to 51.1 percent in the first quarter of 2017, compared to 40.3 percent in the first quarter of 2016. Principally impacting underwriting income and the combined ratio in the first quarter of 2017 was a $17.0 million increase in net claims and claim expenses and a $9.0 million increase in acquisition expenses, according to RenRe.

Gross premiums written in the casualty and specialty segment were $401.6 million in the first quarter of 2017, a decrease of 3.7 percent compared to the first quarter of 2016. The $15.6 million decrease was driven by a drop in financial lines gross premiums written, primarily as a result of the impact of a large, in-force, multi-year mortgage reinsurance contract written in the first quarter of 2016.

The casualty and specialty segment incurred an underwriting loss of $49.3 million compared to underwriting income of $0.5 million a year ago. The combined ratio of the segment deteriorated to 127.5 percent in the first quarter of 2017, compared to 99.7 percent in the first quarter of 2016.

The increase in the company’s casualty and specialty segment’s combined ratio was driven by a 27.5 percentage point increase in the net claims and claim expense ratio in the first quarter of 2017 to 86.3 percent, compared to 58.8 percent in the first quarter of 2016.

The casualty and specialty segment experienced $30.3 million, of adverse development on prior accident years net claims and claim reserves during the first quarter of 2017, compared to $4.4 million of adverse development in the first quarter of 2016. This adverse development during the first quarter of 2017 was principally driven by $33.5 million associated with the decrease in the Ogden rate during the first quarter of 2017, partially offset by net favourable development on attritional net claims and claim expenses.

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