RenaissanceRe Reports Operating Income of $28.7 Million for the Fourth Quarter of 2008 or $0.47 Per Common Share; Net Loss of $55.2 Million or $0.91 Loss Per Common Share

Business Wire, Feb 11, 2009

Annual Operating Income of $193.0 Million for 2008 or $3.04 Per Common Share; Annual Net Loss of $13.3 Million or $0.21 Loss Per Common Share

PEMBROKE, Bermuda -- RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $28.7 million in fourth quarter operating income available to common shareholders, or $0.47 per diluted common share, compared to $186.2 million, or $2.64 per diluted common share, in the fourth quarter of 2007. Operating income excludes net realized losses on investments of $83.9 million and net realized gains on investments of $7.2 million in the fourth quarters of 2008 and 2007, respectively, and, in the fourth quarter of 2007, $131.2 million of net unrealized losses on credit derivatives issued by ChannelRe Holdings Ltd. ("ChannelRe"). Net loss attributable to common shareholders was $55.2 million, or a loss of $0.91 per diluted common share in the fourth quarter of 2008, compared to net income available to common shareholders of $62.2 million, or $0.88 per diluted common share for the same quarter of 2007.

Neill A. Currie, CEO, commented: "Our results reflect the impact of a tumultuous investment environment, as negative total returns in our investment portfolio for the quarter overshadowed very strong operating results. These strong results include over $200.0 million of underwriting profits and a 36% combined ratio, driven in part by a low level of insured catastrophe losses and favorable reserve development. We generated $193.0 million of operating income and a 7.4% operating return on equity for the year."

Mr. Currie added: "The results of our January 1 renewals reflect an improving pricing environment. With our well-capitalized balance sheet, strong ratings at all of our operating subsidiaries and continued investments in our people, infrastructure and product offerings, we are well positioned to execute on the opportunities we see in 2009 and beyond."

FOURTH QUARTER 2008 HIGHLIGHTS

Underwriting Results

Gross premiums written for the fourth quarter of 2008 were $161.6 million, a $39.4 million increase from the fourth quarter of 2007, driven by increases in both of the Company's segments as described in more detail below. The Company generated $205.7 million of underwriting income and had a combined ratio of 36.1% in the fourth quarter of 2008, compared to $177.3 million of underwriting income and a combined ratio of 47.3% in the fourth quarter of 2007. The Company experienced $104.2 million of favorable development on prior year reserves in the fourth quarter of 2008, compared to $106.8 million in the fourth quarter of 2007.

Reinsurance Segment

Gross premiums written for the Company's Reinsurance segment increased $26.7 million to $53.4 million in the fourth quarter of 2008, compared to $26.7 million in the fourth quarter of 2007. The increase is due to a $35.4 million increase in gross premiums written in the Company's catastrophe reinsurance unit, and was partially offset by an $8.7 million decrease in gross premiums written in the Company's specialty reinsurance unit. The increase in gross premiums written in the Company's catastrophe reinsurance unit is due to several factors including new business, the timing of the inception of the renewal of an existing program, and the lack of significant negative premium adjustments in the fourth quarter of 2008, compared to $20.2 million of negative premium adjustments recorded in the fourth quarter of 2007. The decrease in gross premiums written in the Company's specialty reinsurance unit in the fourth quarter of 2008, compared to the fourth quarter of 2007, was principally due to a reduction in the Company's participation on a personal lines property quota share reinsurance contract.

The Reinsurance segment generated $205.8 million of underwriting income and had a combined ratio of negative 2.8% in the fourth quarter of 2008, compared to $164.7 million of underwriting income and a combined ratio of 29.7% in the fourth quarter of 2007. The increase in underwriting income in the fourth quarter of 2008 was driven by a comparably low level of insured catastrophes and partially offset by a decrease in net premiums earned of $34.2 million. The Company's Reinsurance segment experienced $96.3 million of favorable development on prior year reserves in the fourth quarter of 2008 which includes $83.7 million related to the Company's catastrophe reinsurance unit, principally attributable to a reduction in ultimate net losses associated with hurricanes Katrina, Rita and Wilma which occurred in 2005, and $12.5 million related to the Company's specialty reinsurance unit, principally attributable to lower than expected claims emergence. The net positive impact on the Company's fourth quarter of 2008 results associated with the reduction in the ultimate net losses for the 2005 hurricanes was $45.9 million. Net positive impact includes the sum of estimates of net claims and claim expenses incurred, earned reinstatement premiums assumed and ceded, profit commissions and minority interest.