RenRe Q4 CR deteriorates to 91.7%, estimates $750mn LA wildfires Q1 negative impact

By Michael Loney

Jan 28 - (The Insurer) - RenaissanceRe has reported a Q4 earnings beat despite its combined ratio deteriorating 15.7 points, while the Bermudian company also disclosed it expects a $750mn Q1 net negative impact from the Los Angeles wildfires based on a 1.5 percent share of industry losses.

RenRe noted that this month’s California wildfires have led to a range of publicly available industry insured loss estimates.

“The company expects its pre-tax net negative impact to be approximately 1.5 percent of the California wildfires’ aggregate industry insured loss,” it said. “Based on a $50bn aggregate industry insured loss, the company estimates a pre-tax net negative impact on net income (loss) available (attributable) to common shareholders of approximately $750mn in the first quarter of 2025.”

RenRe made that disclosure as it reported $406.9mn of operating income available to common shareholders for the fourth quarter, down from $623.1mn in the same period of 2023.

The $8.06 operating income per share beat the $7.05 consensus estimate of 15 analysts as per MarketWatch, but was down from $11.77 in the prior-year period.

Underwriting income dropped to $208.1mn in the quarter, from $541.0mn in the prior-year period.

The combined ratio deteriorated to 91.7 percent in Q4 2024, from 76.0 percent in the fourth quarter of 2023.

The adjusted combined ratio was 89.4 percent, up from 73.6 percent in the prior-year period.

Hurricane Milton had a net negative impact of $270.5mn on net income available to common shareholders and added 13.9 percentage points to the combined ratio. This was roughly in line with the guidance RenRe provided on the storm in November.

RenRe noted that Milton had a $332.7mn net negative impact on its underwriting result, with a $62.3mn redeemable non-controlling interest.

The property segment’s combined ratio of 71.6 percent included a 41.8 percentage point impact from Milton, and was a 28.5 point deterioration from 43.1 percent in Q4 2023.

The casualty and specialty segment’s combined ratio of 103.7 percent was a 6.4 point deterioration from 97.3 percent in the prior-year period.

Overall gross premiums written increased to $1.92bn from $1.80bn in Q4 2023. Net premiums written increased to $1.75bn from $1.59bn.

Fee income was $77.1mn in the quarter, up 8.9 percent from $70.8mn in Q4 2023.

Net investment income of $428.8mn was up 13.8 percent from Q4 2023. But the total investment result was a $201.5mn loss compared with a $962.9mn gain in the prior-year period.

RenRe reported mark-to-market losses of $630.3mn in Q4 2024, primarily driven by $565.9mn of losses related to the fixed maturity portfolio.

The company reported a $198.5mn net loss attributable to common shareholders in the quarter, compared to $1.58bn net income in Q4 2023.

For the full year, RenRe reported $1.62bn of underwriting income, down from $1.65bn in 2023.

The 2024 combined ratio deteriorated to 83.9 percent from 77.9 percent in 2023.

Gross premiums written increased to $11.73bn, from $8.86bn from 2023.

Fee income increased to $326.8mn in 2024 from $236.8mn in the previous year.

“We delivered another strong year,” said RenRe president and CEO Kevin O’Donnell. “Our primary metric – growth in tangible book value per share plus change in accumulated dividends – was 26 percent. At the same time, we fulfilled our purpose while demonstrating our relevance to our customers, rapidly paying claims against a backdrop of elevated catastrophic events punctuated by two large hurricanes.”

In addition to Milton, RenRe had a $143.3mn net negative impact on its 2024 annual result from Hurricane Helene.

O’Donnell added: “At the January 1 renewal, our long-term partnership approach was rewarded with preferential signings across our business, and we retained our attractive underwriting book. Looking forward, we believe our strong capital and liquidity positions will allow us to capture additional opportunities, bolstering our leadership position and generating superior shareholder value.”

RenRe said that in 2024 it raised third-party capital of $857.4mn, primarily through DaVinci ($300.0mn), Medici ($199.6mn), Fontana ($100.0mn) and Vermeer ($175.0mn).

It also had return of third-party capital in 2024 of $1.4bn. This included $396.9mn of distributions from DaVinci, Vermeer, Medici and Top Layer, following strong earnings across these vehicles; and $332.9mn from Upsilon Diversified as a result of the release of collateral associated with prior years’ contracts.

RenRe also reported that effective 1 January 2025, it had raised third-party capital of $237.8mn in DaVinci, Medici and Fontana and returned third-party capital of $99.0mn in DaVinci and Fontana.

Following these transactions, the company’s ownership in DaVinci, Medici and Fontana was 24.3 percent, 16.5 percent and 28.7 percent, respectively.