RenaissanceRe surges into recovering casualty segment, total margin slips y/y

RenaissanceRe enjoyed a 17.7 percent rise in gross written premium (GWP) in the second quarter, but ended with a 3.8 percent decline in underwriting profits as slippage in property could not be buoyed by a rebuilding of profits in casualty.

“We reported a strong quarter, with continuing top line growth and solid operating profitability demonstrating the power of our diversified platform," CEO Kevin O’Donnell (pictured) said in his company's Q2 trading statement.

"Our financial results were driven by strong performance across both underwriting segments, a significant increase in net investment income and an expanding Capital Partners business."

GWP of $2.5 billion took a strong boost from the casualty and specialty segment's 36.9 percent year on year gain from growth principally visible in professional liability and financial lines.

GWP in property rose a much milder 2.9 percent but with management praising an "improving rate environment, in addition to new opportunities, notably within the property catastrophe class of business." Net written premiums were up by a stronger 10.5 percent year on year on lower retrocessional purchase.

Profitability in the property sector remains strong with a combined ratio at a mere 57.6 percent, a figure nonetheless 13.8 percentage points (pps) higher than the prior year figure. Management cited "relatively low" cat activity, "slightly higher" than the prior year period. Non-cat segments contributed to higher expense ratios as well as higher attritional loss ratios, management said.

Profitability in the casualty and specialty segment remains a bit more strained, although management did ballyhoo the 4 pps decline in the combined ratio to 93.8 percent. A 2.7 pps decline in the net claims and claims expense ratio was put to both current year claims and prior year adjustments.

Fee income, including from ILS-units and managers, was down by a quarter on reduced performance fees. Management fees were more stable, in part on assets put to the newly launched Fontana unit.

Total investment results swung to a loss on Q2 market mayhem to render a negative 10 percent total annualized investment return.

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