RenRe cuts back on cat

RenRe cuts back on cat

Bermuda-based RenaissanceRe has reported net attributable income of $271.8m for the first half of the year, up from $217.3m in H1 2013, on gross written premiums (GWP) of $1.22bn, down from $1.34bn in the same period last year.

For the second quarter, net attributable income rose to $120.8m from $26.8m, on GWP of $511.5m, down from $703.2m in Q2 2013.

RenRe booked underwriting income of $99.7m and a combined ratio of 61.7% in Q2 2014, compared with $113.4m and 61.2% in Q2 2013.

Segmentally, catastrophe reinsurance continues to dominate RenRe's business. It made up $855.8m of GWP ($493.2m NWP and $323.7m NEP) and generated underwriting income of $213.0m. Specialty reinsurance had GWP of $205.8m (NWP $171.7m and NEP $123.2m), generating an underwriting income of $28.2m. Lloyd's segment (roughly 2/3 specialty and 1/3 catastrophe) had GWP of $155.2m (NWP $131.8m and NEP $99.9m), generating an underwriting income of $2.8m.

Catastrophe reinsurance had a combined ratio of 34.2% in H1, while specialty reinsurance was 77.1% and Lloyd's business was 97.2%. All three were slightly worse than last year's H1 percentages of 33.4%, 71.7% and 99.2%.

However, catastrophe reinsurance business was reduced significantly from H1 2013, when GWP was $1.056bn. Specialty Reinsurance and Lloyd's business both grew year on year, with the former's GWP in H1 2013 reaching $140.9m, while the latter's GWP in H1 2013 was $143.1m. RenRe noted that its syndicate 1458 "continuing to grow organically in the Lloyd’s marketplace, principally in its property lines of business, notwithstanding challenging market conditions".

RenRe said that the decline in reinsurance premiums was "driven by the continued softening of market conditions, including reduced risk-adjusted pricing for the second quarter renewals". In addition, catastrophe reinsurance premiums in Q2 2014 were affected by a decrease of $28.2m in GWP related to one quota share deal and a $27.0m multi-year transaction that was booked in Q2 2013 but did not reoccur in Q2 2014.

Chief executive Kevin O'Donnell said that the RenRe team had "executed well in tough market conditions" and that he was "pleased with the book of business we constructed".

Meanwhile, RenRe's stake in DaVinciRe, still included in RenRe's main book of figures, was reduced to 23.4%, effective July 1 2014. This compares with a 26.5% stake on June 30. RenRe sold the stake to an unnamed existing third-party shareholder.

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