RenaissanceRe(US:RNR)2021-02-05 21:23Company Overview - RenaissanceRe is a global provider of reinsurance and insurance, established in 1993, with offices in multiple countries including Bermuda, Australia, and the U.S.[17] - The company aims to produce superior returns for shareholders over the long term by focusing on superior risk selection, customer relationships, and capital management[18]. Business Segments - Approximately half of RenaissanceRe's gross written premiums annually come from its Casualty and Specialty business, which is less correlated with its Property business[23]. - The Property segment accounted for $2,999,142 in gross premiums written in 2020, which is 51.7% of total gross premiums, up from 50.6% in 2019[32]. - The Casualty and Specialty segment generated $2,807,023 in gross premiums written in 2020, representing 48.3% of total gross premiums, compared to 49.4% in 2019[32]. - Catastrophe class business in the Property segment contributed $1,886,785, or 62.9% of Property segment premiums in 2020, down from 65.6% in 2019[35]. - The U.S. and Caribbean market represented 50.5% of total gross premiums written in 2020, amounting to $2,932,519 across both segments[46]. Financial Performance - Total gross premiums written for 2020 reached $5,806,165, an increase from $4,807,750 in 2019, representing a growth of 20.7%[32]. - The company’s financial performance is primarily measured by long-term growth in tangible book value per common share plus accumulated dividends[18]. - The company’s underwriting approach aims to manage volatility and optimize risk-adjusted returns across its portfolio[41]. - The company’s financial strength allows it to offer significant capacity and limits for select risks, enhancing its competitive advantage in the market[44]. Risk Management - The company is exposed to significant losses from catastrophic events, which can lead to volatility in financial results from quarter to quarter[23]. - Enterprise Risk Management (ERM) is considered a key process and cultural value, aimed at identifying and managing risks to achieve corporate objectives[73]. - The Board of Directors oversees ERM and has direct access to senior executives responsible for risk management[74]. - The company’s ERM framework includes three lines of defense, with a dedicated risk team and an Internal Audit team providing independent assurance[75]. - Climate change is integrated into the ERM process, with measures taken to mitigate losses through underwriting and risk management models[84]. Underwriting and Risk Assessment - The company utilizes sophisticated risk selection techniques, including the Renaissance Exposure Management System (REMS©), to build a portfolio of risks[27]. - The proprietary REMS© system aids in assessing risk and return for reinsurance contracts, integrating various data sources for better decision-making[65][66]. - The underwriting process includes assessing various factors, establishing probability distributions, and managing correlations between casualty and specialty lines and property reinsurance portfolios[71]. - The company employs regulatory capital models to simulate potential outcomes and analyze the impact of individual reinsurance contracts on the overall portfolio[72]. Strategic Initiatives - The company has expanded and diversified its casualty and specialty platform through strategic initiatives, including organic growth and acquisitions[19]. - RenaissanceRe aims to leverage joint ventures and managed funds to access business and underwriting capabilities efficiently, while also generating fee income[29]. - The company continually evaluates potential joint venture and managed fund opportunities to enhance its strategic investments[30]. - The company plans to continue expanding its Casualty and Specialty segment operations through organic growth and acquisitions, contingent on favorable market conditions[40]. Investment Strategy - The company emphasizes capital preservation and liquidity in its investment portfolio, primarily consisting of highly-rated fixed income securities and significant short-term investments[93]. - The company’s investment portfolio includes private equity, catastrophe bonds, and hedge funds, which offer potential for higher returns but come with increased risk[93]. - The company’s investment strategy may be re-evaluated periodically to adjust overall asset risk, considering market-wide risks and fluctuations[93]. Regulatory Compliance - The company’s Bermuda-licensed operating insurance subsidiaries are subject to solvency and liquidity standards imposed by the Bermuda Monetary Authority[114]. - Class 4 insurers must maintain a minimum solvency margin of at least $100 million or 50% of net premiums written, whichever is greater[121]. - The BMA has established a target capital level for Class 3A, Class 3B, and Class 4 insurers equal to 120% of the respective ECR[123]. - The Economic Substance Act requires Bermuda-registered entities engaged in relevant activities to maintain a substantial economic presence in Bermuda[135]. Human Resources - As of February 1, 2021, the company employed 604 people worldwide, an increase from 566 in 2020 and 411 in 2019[102]. - The company’s DEI initiatives are led by a cross-functional council to enhance recruitment, selection, and leadership opportunities[105]. Financial Reporting - The company maintains a website where it provides free access to its Annual Reports, Quarterly Reports, and other filings with the SEC[206]. - The company’s financial statements are prepared in accordance with statutory accounting principles, which may affect the reported financial position and performance[204]. Other Income - Equity in earnings of other ventures was $17.2 million in 2020, a decrease of $6.0 million from $23.2 million in 2019, primarily due to reduced profitability in the Tower Hill Companies[502]. - Total other income in 2020 was $0.2 million, a significant decrease of $4.7 million from $4.9 million in 2019, driven by losses on assumed and ceded reinsurance contracts accounted for as derivatives and deposits[506].