RenaissanceRe(RNR) - 2024 Q2 - Quarterly Report

Preliminary Information Glossary of Defined Terms This section provides definitions for key terms and abbreviations used throughout the Form 10-Q, including references to the company ("RenaissanceRe", "we", "us"), specific loss events ("2024 Large Loss Events"), subsidiaries ("DaVinci"), and financial/regulatory terms ("SEC", "GAAP") - The report defines "2024 Large Loss Events" as the collapse of the Francis Scott Key Bridge, severe convective storms in the U.S., the Hualien earthquake in Taiwan, and certain aggregate loss contracts triggered during 2024[12] - The "Validus Acquisition" refers to the acquisitions under the Stock Purchase Agreement with AIG, which was completed on November 1, 2023[31][375] Note on Forward-Looking Statements This section cautions that the report contains forward-looking statements based on current estimates and assumptions, which are subject to significant uncertainties, listing factors that could cause actual results to differ materially, and states the company undertakes no obligation to update these statements - The company identifies several key risk factors that could materially affect future results, including: - Exposure to natural and non-natural catastrophic events - The effect of climate change on the frequency and severity of climate events - The performance of its investment portfolio and financial market volatility - The effects of inflation - Difficulties in integrating the acquired Validus Business[4] - The company explicitly states it has no obligation to revise or update forward-looking statements to reflect new information or events after the date of the report[5] PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited consolidated financial statements for RenaissanceRe Holdings Ltd. as of June 30, 2024, and for the three and six-month periods then ended, including balance sheets, statements of operations, comprehensive income, changes in shareholders' equity, and cash flows, along with detailed notes Consolidated Financial Statements The consolidated financial statements show significant year-over-year growth, with net income increasing to $1.35 billion, total assets growing to $51.6 billion, and net cash from operations substantially increasing to $1.90 billion, driven by higher premium collections and other operational changes Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Total Investments | $30,528,557 | $29,216,143 | | Total Assets | $51,567,589 | $49,007,105 | | Total Liabilities | $35,053,386 | $33,451,316 | | Total Shareholders' Equity | $10,178,895 | $9,454,958 | Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Gross Premiums Written | $7,416,179 | $5,441,882 | | Net Premiums Earned | $4,985,225 | $3,465,812 | | Total Revenues | $5,427,945 | $4,058,331 | | Net Income | $1,347,090 | $1,215,066 | | Net Income per Share - Diluted | $16.35 | $16.71 | Consolidated Cash Flow Highlights (in thousands) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $1,895,765 | $626,674 | | Net Cash from Investing Activities | $(1,283,608) | $(3,181,266) | | Net Cash from Financing Activities | $(853,740) | $2,301,798 | | Net (Decrease) in Cash | $(250,371) | $(250,404) | Notes to the Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies and financial statement components, covering the $30.5 billion investment portfolio, fair value hierarchy, reinsurance impact, $20.7 billion reserve for claims, debt, noncontrolling interests, and segment-level performance for Property and Casualty & Specialty divisions Fixed Maturity Investments Trading by Type (Fair Value, in thousands) | Investment Type | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | U.S. treasuries | $10,165,179 | $10,060,203 | | Corporate | $7,253,535 | $6,499,075 | | Residential mortgage-backed | $1,762,405 | $1,420,362 | | Asset-backed | $1,458,394 | $1,491,695 | | Total | $22,092,071 | $20,877,108 | Reserve for Claims and Claim Expenses by Segment (in thousands) | Segment | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Property | $6,996,272 | $7,833,620 | | Casualty and Specialty | $13,744,656 | $12,653,249 | | Total | $20,740,928 | $20,486,869 | - For the six months ended June 30, 2024, the company recorded net favorable development on prior accident years' net claims and claim expenses of $205.4 million, which increased net income, driven by favorable development of $179.1 million in the Property segment and $26.3 million in the Casualty and Specialty segment[110][156] - The company's share repurchase program was renewed on May 13, 2024, for up to $500.0 million. During the six months ended June 30, 2024, 485,071 common shares were repurchased for $108.5 million. As of June 30, 2024, $416.2 million remained available for repurchase[186] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses the company's financial performance, highlighting the successful integration of the Validus acquisition, which drove significant premium growth, covering underwriting results by segment, fee income from capital partners, and investment performance, noting strong performance across its three profit drivers and an outlook on attractive market conditions - The company's strategy focuses on three principal drivers of profit: underwriting income, fee income (from managing third-party capital), and investment income. This diversified model is intended to make the company more resilient to catastrophe activity[351][237] - The integration of the Validus business, acquired on November 1, 2023, is proceeding according to plan and has been a primary driver of premium growth in the first half of 2024[235][375] Summary of Results - Six Months Ended June 30 (in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Gross Premiums Written | $7,416,179 | $5,441,882 | | Underwriting Income | $1,020,018 | $720,634 | | Total Investment Result | $460,382 | $603,710 | | Net Income | $1,347,090 | $1,215,066 | | Combined Ratio | 79.5% | 79.2% | Underwriting Results by Segment For the first six months of 2024, the Property segment's underwriting income grew significantly to $986.1 million with a combined ratio of 48.6%, benefiting from lower large loss event impacts, while the Casualty and Specialty segment's underwriting income decreased to $33.9 million with a combined ratio of 98.9%, impacted by specific losses and higher losses in professional liability and credit lines Property Segment Underwriting Results - Six Months Ended June 30 (in thousands) | Metric (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Gross Premiums Written | $3,642,979 | $2,706,805 | | Underwriting Income | $986,138 | $579,689 | | Combined Ratio | 48.6% | 59.9% | Casualty & Specialty Segment Underwriting Results - Six Months Ended June 30 (in thousands) | Metric (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Gross Premiums Written | $3,773,200 | $2,735,077 | | Underwriting Income | $33,880 | $140,945 | | Combined Ratio | 98.9% | 93.0% | Fee Income Total fee income from third-party capital management increased by $66.2 million to $167.6 million in the first six months of 2024, driven by a $27.0 million increase in management fees due to more capital managed and the addition of AlphaCat Managers, and a $39.1 million increase in performance fees reflecting strong underwriting results Fee Income Breakdown - Six Months Ended June 30 (in thousands) | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | Management Fee Income | $111,380 | $84,344 | | Performance Fee Income | $56,247 | $17,109 | | Total Fee Income | $167,627 | $101,453 | Investment Results For the first six months of 2024, net investment income rose to $801.6 million from $547.0 million, driven by higher average invested assets and yields, but was offset by net realized and unrealized losses of $341.2 million, primarily due to rising interest rates impacting the fixed maturity portfolio - Net investment income increased by $254.6 million year-over-year for the first six months, primarily due to higher average invested assets and higher yields[268] - Net realized and unrealized losses on investments were $341.2 million in H1 2024, a significant shift from the $56.7 million gain in H1 2023. This was mainly caused by losses of $292.9 million in the fixed maturity portfolio due to rising interest rates[270] Financial Condition, Liquidity and Capital Resources The company maintains a strong financial position with total shareholders' equity of $10.2 billion and total debt of $2.0 billion as of June 30, 2024, supported by robust liquidity with $1.9 billion in cash flow from operations, and a conservatively positioned $30.5 billion investment portfolio focused on high-quality fixed-income securities - Cash flow from operations was $1.9 billion for the first six months of 2024, a substantial increase from $626.7 million in the same period of 2023[494][521] Capital Structure (in thousands) | Component | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Shareholders' Equity | $10,178,895 | $9,454,958 | | Total Debt | $1,960,167 | $1,958,655 | - The company's investment portfolio is structured to preserve capital and provide high liquidity, with 72.4% in fixed maturity investments and 14.3% in short-term investments as of June 30, 2024[230][552] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section states that there have been no material changes to the company's principal market risks—interest rate, foreign currency, credit, equity price, and commodity price risk—during the six months ended June 30, 2024, as compared to the disclosures in the 2023 Form 10-K - The company confirms no material changes to its market risk exposures, which include interest rate, foreign currency, credit, equity, and commodity price risks, since its year-end 2023 filing[242] ITEM 4. CONTROLS AND PROCEDURES Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2024, with no material changes to internal control over financial reporting identified during the quarter - Management concluded that as of June 30, 2024, the company's disclosure controls and procedures were effective[243] - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[543] PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company reports that there have been no material changes to the legal proceedings previously disclosed in its Form 10-K for the year ended December 31, 2023 - No material changes to legal proceedings have occurred since the last annual report[544] ITEM 1A. RISK FACTORS The company states that there have been no material changes to the risk factors previously disclosed in its Form 10-K for the year ended December 31, 2023 - No material changes to risk factors have occurred since the last annual report[567] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section details the company's share repurchase activity, noting the Board of Directors renewed the program for up to $500.0 million, with 485,071 shares repurchased for $108.5 million during Q2 2024, leaving $416.2 million available as of June 30, 2024 Share Repurchases - Q2 2024 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - 30, 2024 | 22,975 | $214.77 | | May 1 - 31, 2024 | 165,496 | $223.64 | | June 1 - 30, 2024 | 296,600 | $224.47 | | Total | 485,071 | $223.73 | - As of June 30, 2024, $416.2 million remained available for repurchase under the company's authorized share repurchase program[546]