• Operating Income: Over $540 million for the quarter.
• Operating Return on Average Common Equity: 22% for the quarter.
• Year-to-Date Operating Income: $1.8 billion.
• Year-to-Date Operating Return on Equity: 26%.
• Net Income: $1.2 billion for the quarter.
• Annualized Return on Average Common Equity: 47% for the quarter.
• Underwriting Income: $394 million with an adjusted combined ratio of 82%.
• Net Investment Income: $292 million, up 35% year-over-year.
• Gross Premiums Written: Up 48% for the quarter.
• Net Premiums Written: Up 52% for the quarter.
• Share Repurchase Authorization: Increased from $500 million to $750 million.
• Common Equity: Ended the quarter with $10.5 billion.
• Net Negative Impact from Large Events: $243 million, including $125 million from Hurricane Helene.
• Fee Income: $82 million, up 27%.
• Management Fees: $55 million, up 24%.
• Performance Fees: $27 million.
• Retained Unrealized Gains in Fixed Maturity Investments: $283 million.
• Operating Expense Ratio: 4.8%.

• Warning! GuruFocus has detected 7 Warning Sign with BRDG.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• RenaissanceRe Holdings Ltd (NYSE:RNR) reported strong financial performance with over $540 million in operating income for the quarter, representing a 22% operating return on average common equity.
• The company has demonstrated significant growth in its property and specialty businesses, with year-to-date top line growth between 35% and 75% depending on the line of business.
• RenaissanceRe's acquisition of Validus has been a major contributor to growth, enhancing capital and liquidity, and optimizing the capital structure.
• The company increased its share repurchase authorization from $500 million to $750 million, reflecting its larger scale and strong financial position.
• RenaissanceRe's investment income remains a significant contributor to earnings due to elevated interest rates and increased asset leverage.

Negative Points

• The company reported a net negative impact of $243 million from large events, including $125 million from Hurricane Helene.
• RenaissanceRe's casualty and specialty segment is facing challenges due to social inflation, requiring increased rates to maintain attractiveness over the next decade.
• The company expects a net negative impact of approximately $275 million in the fourth quarter related to Hurricane Milton.
• There is a need for increased rate in the casualty lines to ensure long-term profitability, indicating potential pressure on future earnings.
• The integration of Validus, while beneficial, has resulted in some purchase accounting adjustments impacting the combined ratio.

Q & A Highlights

Q: Can you provide insights on the expected impact of the 1/1 renewals on the cap side, considering the excess capital and record ROEs? A: Kevin O'Donnell, CEO, explained that while there is an expectation of $10 billion in new capacity entering the market, the additional demand should help stabilize the pricing environment. Rates are expected to remain fair and adequate, with current retention levels likely persisting.

Q: Regarding specialty casualty, why is there an increase in the adjusted combined ratio to mid- to high 90s next year, and is this reflected in current reserves? A: Robert Qutub, CFO, noted that the increase reflects anticipated changes in trend and mix. The current accident year reflects these trends, and the company has been proactive in shaping its portfolio to manage these risks.

Q: Why wouldn't the emerging loss trend issues necessitate revisiting reserves for prior years? A: David Marra, Chief Underwriting Officer, stated that the current reserves reflect cumulative actions taken over the past decade, including prudent underwriting and portfolio management. The focus is on securing the right rate for 2025 rather than adjusting current reserves.

Q: What prompted the 50% increase in share repurchase authorization this quarter? A: Robert Qutub, CFO, explained that the increase reflects the company's larger scale and financial flexibility following the integration of Validus. The consolidation of Validus balance sheets onto RenRe's balance sheet provided additional liquidity, enabling the increase.

Q: How does the company view the availability of property retro capacity for 2025? A: Kevin O'Donnell, CEO, indicated that while there is limited price discovery currently, the retro market is expected to remain stable. The company plans to purchase slightly less retro in 2025 but anticipates it will be available.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.