RenRe CEO declares ‘successful renewals’ while profits fall

Bermuda-based RenaissanceRe CEO Kevin O'Donnell described the recent renewals as “successful,” while profits fell in the first quarter of 2018 despite improvements on the underwriting side.

The property segment generated underwriting income of $127.2 million in the first three months of 2018, up from $91.4 million in the same period a year ago. The combined ratio of the segment improved to 43.5 percent from 51.1 percent over the period.

During the first quarter of 2018 the property segment faced a favourable development on prior accident years net claims and claim expenses of $27.6 million compared to $0.9 million in the first quarter of 2017. In addition, the company faced an increase in net premiums earned driven by the growth in net premiums written over the trailing twelve months.

The favourable development during the first quarter of 2018 included $27.1 million of net decreases in the estimated ultimate losses associated with hurricanes Harvey, Irma and Maria, the Mexico City earthquake and the wildfires in California during the fourth quarter of 2017.

Overall, gross premiums written in the property segment were up 35.8 percent year on year at $707.0 million in the first quarter of 2018.

Gross premiums written in the casualty and specialty segment grew 12.7 percent year on year to $452.7 million in the first quarter of 2018. The $51.1 million increase was principally due to selective growth from new and existing business within certain classes of business where the company found comparably attractive risk-return attributes, according to the company statement.

The casualty and specialty segment generated underwriting income of $2.6 million in the first quarter of 2018 after an an underwriting loss of $49.3 million in the same period a year ago.

The combined ratio in the casualty and specialty segment improved to 98.8 percent in the first quarter of 2018 from 127.5 percent in the first quarter of 2017.

The decrease in the combined ratio was principally driven by a 20.8 percentage point decrease in the casualty and specialty segment net claims and claim expenses ratio principally as a result of favourable development on prior accident years net claims and claim expenses compared to adverse development during the first quarter of 2017, the company said. In addition, the segment benefitted from a 7.9 percentage point decrease in the underwriting expense ratio, driven primarily by an increase in net premiums earned.

During the first quarter of 2018, the casualty and specialty segment experienced favourable development on prior accident years net claims and claim expenses of $3.8 million compared to $30.3 million of adverse development on prior accident years net claims and claim expenses in the first quarter of 2017.

The favourable development during the first quarter of 2018 was principally driven by reported losses being lower than expected, compared to the first quarter of 2017 which experienced adverse development associated with the decrease in the Ogden rate during that period.

“I am pleased with our solid results and very strong execution in the first quarter,” O'Donnell commented. “The January 1 renewal was successful, as we increased both the size and efficiency of our portfolio of risk. Moving into the mid-year renewals, we remain focused on implementing our strategy in order to continue to build a diverse and profitable book of business and maximize shareholder value,” he added.

However, net income available to RenaissanceRe common shareholders fell to $56.7 million in the first quarter of 2018 from $92.4 million a year earlier. The results were impacted by net investment losses of $82.1 million compared to net investment gains of $43.4 million in the same period of 2017.

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