Bermudan re/insurer RenaissanceRe (RenRe) saw its profits fall in 2014 as a result of the competitive rate environment currently affecting the market.
RenRe recorded full year net profit of just over $510m compared with almost $666m for the 12 months of 2013. In the fourth quarter, net profit dropped to just under $171m compared with nearly $269m the year before.
The re/insurer generated underwriting income of $529.4m and a combined ratio of 50.2% in 2014, compared with $626.7m and 43.8% respectively in 2013.
RenRe said that the decrease in underwriting income was primarily driven by a $52.2 million decrease in net premiums earned, because of a combination of lower gross premiums written during the preceding 12 months and an increase in ceded premiums, written principally within its catastrophe reinsurance segment.
Gross written premiums in 2014 also decreased, to $1.5bn, down by $54.8m from 2013. The company said that the decrease in gross written premium was again principally driven by its catastrophe reinsurance segment which itself experienced a decrease of $186m from the year before.
The results were better when looking at the fourth quarter alone however, with gross written premiums increasing by almost $49m year on year to just under $133m.
RenRe’s catastrophe reinsurance, specialty reinsurance and Lloyd’s segments experienced increases of $27.8m, $13.4m and $7.1m, respectively.
"I am pleased with RenaissanceRe’s performance, both for the fourth quarter and for the full year,” said Kevin O’Donnell chief executive of RenRe.
“We achieved solid growth in tangible book value per share plus accumulated dividends of 5.5% for the quarter and 13.9% for the year, while demonstrating discipline and objectivity about the risk we assumed and the pricing required. Our underwriting team executed extremely well during the most recent renewal period, as pressure on pricing from abundant capacity persisted.”
The catastrophe reinsurance sector remains highly competitive and as a result many reinsurers have expressed a desire to expand into other lines of business.
RenRe has been aggressive in its attempts to diversify and announced in November 2014 that it would acquire Platinum Underwriters in a $1.9bn deal.
O’Donnell said at the time that the deal would “accelerate” the growth of RenRe’s US specialty and casualty reinsurance platform, which would create value for the company’s shareholders.
“Over the past few years, we have steadily developed the spectrum of products, platforms and scale we offer, in anticipation of the evolving needs of our customers,” added O’Donnell on the release of the company’s results.
“The acquisition of Platinum Underwriters Holdings Ltd will accelerate our efforts, broadening our client and broker base and our capital flexibility.
“The preparation for the integration of the two entities is on track and we are looking forward to welcoming our new team members.”