RenRe Posts Q2 Results, 32% Increase in Cat Premiums

August 2, 2006

Renaissance Re, Bermuda’s leading property catastrophe reinsurer, posted net income of $130.4 million, or $1.81 per common share, for the second quarter of 2006, compared to net income of $172 million or $2.39 per common share for the same quarter of 2005.

However, RenRe’s taking a “high-roller” approach to this season’s hurricane risks. Net premiums written for the second quarter of 2006 were $512.2 million, compared to $387.9 million for the same quarter of 2005, a 32 percent increase. Net premiums earned were $430.9 million for the second quarter of 2006, compared to $338.8 million in the second quarter of 2005. Gross premiums written for the second quarter of 2006 were $742.6 million, compared to $443.5 million for the same quarter of 2005.

RenRe reported $154.8 million in second quarter operating income, which excludes net realized investment losses of $24.3 million and net realized investment gains of $1.6 million in the second quarters of 2006 and 2005, respectively, compared to $170.4 million in the second quarter of 2005.

CEO Neill A. Currie commented: “We had a strong quarter, with over 6 percent growth in book value per share and a 31.3 percent annualized operating return on equity. This quarter compares favorably to our second quarter of 2005, after taking into account the substantial catastrophe reserve reduction in that quarter.”

Commenting on RenRe’s decision to expand catastrophe coverage, Currie noted: “The severe capacity shortage facing many of our U.S. clients once again provided us an opportunity to demonstrate industry leadership. In anticipation of this shortage we had previously increased the capital in DaVinci [a reinsurance subsidiary in which RenRe has a substantial interest].

“As the June 1 renewal season progressed it became evident that more capacity was required. Our position as a market leader, combined with the expertise of our team, enabled us to move very quickly to bring new capacity to our clients and brokers. Within weeks, working with outside capital providers we participated in the formation of two new fully-collateralized joint ventures, Starbound Re and Tim Re. This capacity was utilized where it was most needed.

“Our managed catastrophe premium is up substantially for the first six months; much of this growth is due to improved pricing and terms as well as premium written on behalf of our joint ventures. We are pleased with our portfolio of business and believe we are well positioned for the future.”

As a result of its decision to go where others fear to tread, RenRe said it “is revising its annual premium forecasts for its catastrophe and Individual Risk units. Previously, the Company was forecasting over 15 percent growth in managed catastrophe premiums for the year, compared to 2005 normalized managed catastrophe premiums. The Company currently expects growth in managed catastrophe premiums, net of fully collateralized joint ventures, will be over 40 percent.

“The Company currently expects its Individual Risk premiums to be essentially flat for the year; the Company’s previous guidance was for 15 percent growth. The decrease in the Company’s Individual Risk premium growth rate is due in part to the Company’s decision to shift its catastrophe-exposed quota share capacity within Individual Risk to excess of loss reinsurance business in the Reinsurance segment, where the Company found pricing and terms to be more attractive.

“In addition, while the performance of the Company’s program business is stable, the Company is not seeing the growth opportunities it had anticipated earlier in the year. The Company continues to expect its specialty reinsurance premiums to decline by approximately 35 percent for the year.”

However, RenRe also recognized the uncertainties that lie ahead. “In light of the current dynamic market conditions, and the advent of the Atlantic hurricane season, the Company is not adjusting its annual operating EPS guidance,” the bulletin added.

The full text of the earnings report and the accompanying conference call may be accessed on the Company’s Website at: http://www.renre.com, under the “Investors” section.

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