Earnings Report: RenRe, Everest Re Post Strong 3Q Gains

October 22, 2002

Increases in premiums and higher demand for reinsurance seems to be offsetting falls in equity values, as two of Bermuda’s leading reinsurers, RenaissanceRe and Everest Re, posted strong third quarter results.

RenRe’s operating earnings per common share grew to $1.14 from $0.41 per common share in the third quarter of the previous year, while net income available to common shareholders rose to $88.2 million, or $1.26 per common share in the quarter, compared to $29.9 million or $0.49 per common share for the same quarter of 2001.

The company also announced that “Managed Catastrophe Premium” Increased by 54 percent; “Individual Risk Premium” grew to $81 million, compared to $11 million in 2001 and “Specialty Reinsurance Premium” grew to $48 million from $21 million in 2001.

RenRe achieved a 25 percent return on equity for the third quarter, well above its already high average. It reported $80.4 million in third quarter net operating income available to common shareholders (excluding realized investment gains and losses), compared to $25.0 million in the third quarter of 2001.

The bulletin noted, however, that last year’s third quarter figures were heavily impacted by the events of Sept. 11.

Chairman and CEO James N. Stanard commented that “Gross premiums written for the first nine months of 2002 have more than doubled compared to 2001. Each of our four major business segments — catastrophe reinsurance, specialty reinsurance, structured products, and individual risk — are strong contributors to our 25% annualized operating return on equity in the third quarter. Moving forward, we will continue to focus on building shareholder value by aggressively pursuing growth opportunities while maintaining our commitment to disciplined underwriting in all our business.”

“Gross premiums written for the third quarter of 2002 increased by 129% to $282.6 million, compared to $123.6 million for the same quarter of 2001. Net premiums written for the third quarter of 2002 were $192.7 million, versus $79.0 million for the same quarter of 2001. Net premiums earned for the third quarter of 2002 were $191.3 million, compared to $79.9 million for the same quarter of 2001. Those premiums include $38.5 million of gross written premiums, $36.2 million of net written premiums and $42.3 million of net premiums earned by the Company’s consolidated joint venture, DaVinci Re during the third quarter of 2002,” said the announcement.

For the nine months ended September 30, Ren Re reported gross premiums written were $1.01 billion, compared to $443.8 million for the same period of 2001, while net premiums written for the nine months ended September 30, 2002 were $770.3 million, compared to $293.2 million for the same period of 2001. Net premiums earned for the first nine months of 2002 were $526.4 million, compared to $239.4 million for the same period of 2001. “Those premiums include $168.6 million of gross written premiums, $166.3 million of net written premiums and $100.1 million of net premiums earned by DaVinci Re during the first nine months of 2002.”

The Everest Re Group, reporting from its Barbados headquarters, posted third quarter 2002 after-tax operating income (capital gains and losses are excluded) of $66.5 million, or $1.29 per diluted share, compared to a loss of $37.8 million, or $0.82 per diluted share, in the third quarter of 2001.

The reinsurer’s net income increased to $61.3 million, or $1.19 per diluted share compared to a loss of $43.8 million, or $0.95 per diluted share, in the third quarter of 2001. The company also noted the impact of Sept. 11 on last year’s third quarter results. This year it indicated that “both operating earnings and net income for 2002 were affected by a $12.5 million expense due to a mark-to-market valuation adjustment on certain derivative contracts.”

Everest Re’s nine month figures saw after-tax operating income of $202.2 million, or $3.97 per diluted share, an increase of 186.7 percent compared to $70.5 million, or $1.50 per diluted share, in 2001, while its net income in the first nine months of 2002 rose to $175.7 million, or $3.45 per diluted share, an increase of 176.1 percent compared to $63.7 million, or $1.35 per diluted share, in 2001.

“Gross premiums written for the third quarter of 2002 were $708.0 million, a 41.1% increase compared to $501.9 million in 2001. Net written premiums were $660.6 million, an increase of 74.4% from $378.8 million for the third quarter of 2001. The Company’s GAAP combined ratio in the third quarter was 96.7% compared to 141.1% in 2001. Net investment income for the third quarter was $86.4 million compared to $84.0 million in the third quarter of 2001. Cash flow from operations for the quarter was $179.9 million, an increase of 151.0% from $71.7 million in the third quarter of 2001,” said the announcement.

In the first nine months gross premiums written were $1.93 billion, a 37.6 percent increase from $1.41 billion in the first nine months of 2001, while net written premiums grew 54.2 percent to $1.83 billion from $1.18 billion in 2001. The period also saw the company’s combined ratio drop from 115.3 percent to 97.8 percent.

Was this article valuable?

Here are more articles you may enjoy.