Profits and GWP up in Q2 at RenRe but uncertainty on 2017 cat claims remains

RenaissanceRe enjoyed strong growth in the second quarter in both its property book and its casualty book and its profits grew. But it warned that “meaningful uncertainty” remains around the scale of claims stemming from many of the big catastrophes that hit its profits last year.

The Bermudian reinsurer made a net profit of $191.8 million in the second quarter compared with $171.1 million in the second quarter of 2017. Its operating income was $209.6 million compared with $116.8 million in the second quarter of 2017.

Its gross written premiums increased by $149.9 million, or 18.1 percent, to $977.3 million, in the second quarter compared with the second quarter of 2017, driven by increases of $96.6 million in the casualty and specialty segment and $53.3 million in the property segment. Gross premiums written in the property segment included a $31.4 million reduction in assumed reinstatement premiums written.

It noted that an increase in gross premiums written in the catastrophe class of business was driven primarily by expanded participation on existing transactions and certain new transactions. The increase in gross premiums written in the other property class of business was primarily driven by growth in the Lloyd’s underwriting platform.

In casualty, it said the growth was principally due to selective growth from new business opportunities within the general casualty, financial lines and other specialty classes of business.

The company posted underwriting income of $226.6 million and a combined ratio of 47.2 percent in the second quarter of 2018, compared with $109.7 million and 71.3 percent, respectively, in the second quarter of 2017.

The company stressed, however, that “meaningful uncertainty” remains regarding the estimates, and the nature and extent of the losses, associated with Hurricanes Harvey, Irma and Maria, the Mexico City Earthquake, and the Q4 2017 California Wildfires driven by the magnitude and recent occurrence of each event, 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.

Kevin O'Donnell, CEO, said: “We celebrated our 25th anniversary as a company this quarter, and I am proud to report very strong results. We recorded annualized operating return on average common equity of 20.3 percent and growth in tangible book value per common share plus accumulated dividends of 4.9 percent. I am especially pleased that we were also able to construct our best portfolio of risk in years. Moving forward, a combination of top line growth, an effective gross-to-net strategy, rising interest rates and improved operational efficiency should provide the foundations for continued superior shareholder return.”

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