RenaissanceRe was established in 1993 and is a leading global provider of reinsurance
and insurance coverages and related services. Our aspiration is to be the world’s
best underwriter by matching well-structured risks with efficient sources of
capital. Through our operating subsidiaries, we seek to produce superior returns
for our shareholders by being a trusted, long-term partner to our customers
for assessing and managing risk, and by delivering responsive solutions. We
accomplish this by leveraging our core capabilities of risk assessment and information
management, by investing in our capabilities to serve our customers across the
cycles that have historically characterized our markets and by keeping our promises.
Overall, our strategy focuses on superior risk selection, superior customer
relationships and superior capital management. We provide value to our customers
and joint venture partners in the form of financial security, innovative products,
and responsive service. We are known as a leader in paying valid reinsurance
claims promptly. We principally measure our financial success through long-term
growth in tangible book value per common share plus the change in accumulated
dividends, which we believe is the most appropriate measure of our Company’s
financial performance, and believe we have delivered superior performance in
respect of this measure over time.
Our core products include property catastrophe and specialty reinsurance risks
written through our wholly owned operating subsidiaries, joint ventures and
Syndicate 1458; and certain insurance products primarily written through Syndicate
1458. We believe we are one of the world’s leading providers of property
catastrophe reinsurance. We also believe we have a strong position in certain
specialty reinsurance lines of business and a growing presence in the Lloyd’s
marketplace. Our reinsurance and insurance products are principally distributed
through intermediaries, with whom we seek to cultivate strong long-term relationships.
We continually explore appropriate and efficient ways to address the risk needs
of our clients. We have created and managed, and continue to manage, multiple
capital vehicles and may create additional risk bearing vehicles in the future.
As our product and geographical diversity increases, we may be exposed to new
risks, uncertainties and sources of volatility.
Since a meaningful portion of the reinsurance and insurance we write provides
protection from damages relating to natural and man-made catastrophes, our results
depend to a large extent on the frequency and severity of such catastrophic
events, and the coverages we offer to customers affected by these events. We
are exposed to significant losses from these catastrophic events and other exposures
we cover. Accordingly, we expect a significant degree of volatility in our financial
results and our financial results may vary significantly from quarter-to-quarter
and from year-to-year, based on the level of insured catastrophic losses occurring
around the world. Our acquisition of Platinum Underwriters Holdings, Ltd. (“Platinum”)
on March 2, 2015 accelerated the growth of our U.S. platform by expanding our
client base and enhancing our U.S. market presence in our casualty and specialty
reinsurance lines of business. Accordingly, in the future, these lines of business
may represent a greater proportion of our premiums and claims and claim expenses,
and generate a higher percentage of our returns.
Our revenues are principally derived from three sources: (1) net premiums earned
from the reinsurance and insurance policies we sell; (2) net investment income
and realized and unrealized gains from the investment of our capital funds and
the investment of the cash we receive on the policies which we sell; and (3)
other income received from our joint ventures, advisory services and various
other items.
Our expenses primarily consist of: (1) net claims and claim expenses incurred
on the policies of reinsurance and insurance we sell; (2) acquisition costs
which typically represent a percentage of the premiums we write; (3) operating
expenses which primarily consist of personnel expenses, rent and other operating
expenses; (4) corporate expenses which include certain executive, legal and
consulting expenses, costs for research and development, transaction and integration-related
expenses, and other miscellaneous costs, including those associated with operating
as a publicly traded company; (5) redeemable noncontrolling interests, which
represent the interests of third parties with respect to the net income of DaVinciRe
and Medici; and (6) interest and dividend costs related to our debt and preference
shares. We are also subject to taxes in certain jurisdictions in which we operate.
Since the majority of our income is currently earned in Bermuda, which does
not have a corporate income tax, the tax impact to our operations has historically
been minimal, however, in the future, our net tax exposure may increase as our
operations expand geographically.
The underwriting results of an insurance or reinsurance company are discussed
frequently by reference to its net claims and claim expense ratio, underwriting
expense ratio, and combined ratio. The net claims and claim expense ratio is
calculated by dividing net claims and claim expenses incurred by net premiums
earned. The underwriting expense ratio is calculated by dividing underwriting
expenses (acquisition expenses and operational expenses) by net premiums earned.
The combined ratio is the sum of the net claims and claim expense ratio and
the underwriting expense ratio. A combined ratio below 100% generally indicates
profitable underwriting prior to the consideration of investment income. A combined
ratio over 100% generally indicates unprofitable underwriting prior to the consideration
of investment income. We also discuss our net claims and claim expense ratio
on an accident year basis. This ratio is calculated by taking net claims and
claim expenses, excluding development on net claims and claim expenses from
events that took place in prior fiscal years, divided by net premiums earned.
Our business consists of the following reportable segments: (1) Catastrophe
Reinsurance, which includes catastrophe reinsurance and certain property catastrophe
joint ventures managed by our ventures unit; (2) Specialty Reinsurance, which
includes specialty reinsurance and certain specialty joint ventures managed
by our ventures unit; and (3) Lloyd’s, which includes reinsurance and
insurance business written through Syndicate 1458. In addition, our Other category
primarily includes our strategic investments, investments unit, corporate expenses,
capital servicing costs, noncontrolling interests, certain expenses related
to the acquisition of Platinum, results of our discontinued operations, and
the remnants of our Bermuda-based insurance operations.
Our mission is to produce superior returns for our shareholders over the long-term.
We believe that market leadership is required to produce the best expected returns.
As such, we pursue markets where we believe being the best underwriter produces
market leadership, thereby facilitating a competitive advantage and superior
returns.
To be the best underwriter, our strategy is to operate an integrated system
of three competitive advantages: superior customer relationships; superior risk
selection; and superior capital management.
We believe all three competitive advantages are required to achieve our mission,
and we aim to seamlessly coordinate the delivery of these competitive advantages
for the benefit of our ceding insurers, brokers, investors in our sidecars and
joint ventures, and shareholders. The strategy is supported by our core values,
our principles and our culture.
We believe our competitive advantages include:
Superior Customer Relationships. We seek to be a trusted long-term partner to
our customers for assessing and managing risk and delivering responsive solutions.
We believe our modeling and technical expertise, our risk management products
we provide our customers and our track record of keeping our promises have made
us a provider of first choice in many lines of business to our customers worldwide.
We seek to offer stable, predictable, and consistent risk-based pricing and
a prompt turnaround on claims.
Superior Risk Selection. We seek to build a portfolio of risks that produces
an attractive risk-adjusted return on utilized capital. We develop a perspective
of each risk using both our underwriters’ expertise and sophisticated
risk selection techniques, including computer models and databases such as Renaissance
Exposure Management System (“REMS©”). We pursue a disciplined
approach to underwriting and seek to select only those risks we believe will
produce a portfolio with an attractive return, subject to prudent risk constraints.
We manage our portfolio of risks dynamically, both within sub-portfolios and
across the Company.
Superior Capital Management. We seek to write as much attractively priced business
as is available to us and then manage our capital accordingly. We generally
seek to raise capital when we forecast increased demand in the market, at times
by accessing capital through joint ventures or other structures, and seek to
return capital to our shareholders or joint venture investors when the demand
for our coverages appears to decline and when we believe a return of capital
would be beneficial to our shareholders or joint venture investors. In using
joint ventures, we intend to leverage our access to business and our underwriting
capabilities on an efficient capital base, develop fee income, generate profit
commissions, diversify our portfolio and provide attractive risk-adjusted returns
to our capital providers. We routinely evaluate and review potential joint venture
opportunities and strategic investments.
We believe we are well positioned to fulfill our objectives by virtue of the
experience and skill of our management team, our integrated underwriting and
operating platform, our significant financial strength, and our strong relationships
with brokers and customers. In addition, we believe our superior service, our
proprietary modeling technology, and our extensive business relationships, which
have enabled us to become a leader in the property catastrophe reinsurance market,
will be instrumental in allowing us to achieve our strategic objectives. In
particular, we believe our strategy, high performance culture, and commitment
to our customers and joint venture partners help us to differentiate ourselves
by offering specialized services and products at times and in markets where
capacity and alternatives may be limited.
Our business consists of the following reportable segments: (1) Catastrophe
Reinsurance, which includes catastrophe reinsurance and certain property catastrophe
joint ventures managed by our ventures unit; (2) Specialty Reinsurance, which
includes specialty reinsurance and certain specialty joint ventures managed
by our ventures unit; and (3) Lloyd’s, which includes reinsurance and
insurance business written through Syndicate 1458.
