RenaissanceRe(US:RNR)2022-11-02 20:30Financial Data and Key Metrics Changes - The company reported a retained investment loss of $340 million due to mark-to-market losses on fixed income and equity portfolios [7] - The overall net loss was reduced by $372 million, and the operating loss was reduced by $278 million [36] - Retained net investment income was $110 million in Q3, with expectations of $125 million in Q4 and further growth in 2023 [40] Business Line Data and Key Metrics Changes - The casualty and specialty segment reported a combined ratio of 95.7%, with gross premiums written up 42% and net premiums written up 40% [24][25] - Financial lines gross premium increased by $237 million, doubling compared to Q3 2021, primarily driven by the mortgage book [26] - The property segment faced significant losses, with a combined ratio of 186% due to weather-related large losses, including Hurricane Ian [29] Market Data and Key Metrics Changes - The company noted a strong capital position and liquidity, allowing it to capitalize on upcoming opportunities in the property cat market [12][13] - The current accident year loss ratio for Property was 90%, an improvement from 107% in the same period of 2021 [31] - The company raised $122 million in capital during the quarter, indicating strong investor interest despite market challenges [37] Company Strategy and Development Direction - The company plans to recalibrate its underwriting approach by requiring substantial rate increases and tightening terms and conditions [11] - The focus will be on profitability, with expectations of increased rates and improved terms in 2023, particularly in property cat and casualty lines [14][15] - The company aims to align the interests of customers and investors to ensure long-term capacity and profitability [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the upcoming years providing significant opportunities for reinsurers, driven by a hardening market [12] - The company anticipates a hard market across most specialty classes, particularly in cyber, marine, and energy [57] - Management highlighted the importance of maintaining a strong capital position to navigate the current challenging environment [41] Other Important Information - The company expects management fees to stabilize around $25 million to $30 million per quarter going forward [22][34] - The retained portion of unrealized losses in the fixed maturity portfolio is currently $768 million, representing potential accretion to par if held to maturity [40] - The company is not planning share repurchases in Q4, focusing instead on deploying capital into profitable business opportunities [44] Q&A Session Summary Question: Capital Position Post-Hurricane Ian - Management clarified that the strong capital position is due to a combination of holdings company capital and committed partner capital, despite lower common equity [68][70] Question: Rate Increases and Terms Tightening - Management indicated that substantial rate increases are required regardless of loss impact, with expectations for high-end rate changes in the upcoming renewal season [71][72] Question: Portfolio Construction and Market Timing - Management emphasized that they build a platform to execute in any environment and are focused on ensuring investors receive excess rewards for the risks taken [76][78] Question: Property Cat Market Expectations - Management noted that gross limits in the property cat market are expected to increase, with a focus on net exposure and profitability [104][106] Question: European Market Outlook - Management remains optimistic about strong rate changes in the European market, although it is not the most critical part of their portfolio [110]