RenaissanceRe Holdings Ltd. (RNR)

RNR 
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RenaissanceRe Holdings Ltd. (RNR)

Q2 2011 Earnings Conference Call

July 27, 2011 09:30 ET

Executives

Peter Hill – Director, Investor Relations

Neill Currie – Chief Executive Officer

Jeff Kelly – Executive Vice President and Chief Financial Officer

Kevin O'Donnell – Executive Vice President and Global Chief Underwriting Officer

Analysts

Keith Walsh – Citigroup

Josh Shanker – Deutsche Bank

Doug Mewhirter – RBC Capital Markets

Gregory Locraft – Morgan Stanley

Brian Meredith – UBS

Jay Cohen – Bank of America

Vinay Misquith – Evercore Partners

Ian Gutterman – Adage Capital

Presentation

Operator

Good morning. My name is Sarah and I will be your conference operator today. At this time, I would like to welcome everyone to the RenaissanceRe Second Quarter 2011 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. Mr. Peter Hill, you may begin your conference.

Peter Hill – Director, Investor Relations

Good morning and thank you for joining our second quarter 2011 financial results conference call. Yesterday after the market closed, we issued our quarterly release. If you didn't receive a copy, please call me at 212-521-4800, and we will make sure to provide you with one.

There will be an audio replay of the call available from approximately noon Eastern Time today through midnight on August 17th. The replay can be accessed by dialing 800-642-1687 or 706-645-9291. The pass code you will need for both numbers is 81548995. Today's call is also be available through the Investor Information section of www.renre.com and will be archived on RenaissanceRe's website through midnight on October 5, 2011.

Before we begin, I am obliged to caution that today's discussion may contain forward-looking statements and actual results may differ materially from those discussed. Additional information regarding the factors shaping these outcomes can be found in RenaissanceRe's SEC filings to which we direct you.

With me to discuss today’s results are Neill Currie, Chief Executive Officer; Jeff Kelly, Executive Vice President and Chief Financial Officer; and Kevin O'Donnell, Executive Vice President and Global Chief Underwriting Officer.

I'd now like to turn the call over to Neill. Neill?

Neill Currie President and Chief Executive Officer

Thanks Peter. Good morning everyone. RenaissanceRe reported net income of $25 million and a loss on an operating basis of $10 million for the quarter. Book value per share was up slightly 0.5%. Our results were impacted by severe weather-related losses in the US and what is turning out to be our costliest first six months ever.

However, we were able to find a book of business and new opportunities that we are quite pleased with. Anytime of year when people tend to focus on hurricanes is worth remembering what I said on our last call, that is a leading reinsurer of major catastrophic risk around the world, we have exposure to and expect to have losses from a wide variety of events.

On an aggregate basis, we anticipate and prepare for losses such as we have experienced from the recent historic series of tornadoes in the U.S. Our sympathies go out to the many people living in communities affected by the storms in April and May. We remain focused on being there for our clients, when they need us and promptly paying claims.

On the last call, I mentioned that I expected to see a gradual increase in demand for our product over time. We have started to see a firming of the market at the June 1 and July 1 renewals. And as the implications of continued loss activity and model changes are absorbed, we anticipate this trend will continue.

In the Florida market, discussion seemed to indicate that by and large not enough time had elapsed for the impact of the new vendor models to filter through to portfolios. However, we were able to work with our clients to assess their business risk based upon our own updated model. Our clients find this feedback to be valuable and appreciate the fact that we treat each customer as being unique, frankly because they are.

Once again our ability to take a lead in that market through our investment and technology, our customer and broker relationships and our strong capital position enabled us to assemble a good book of business.

Our leading position in property catastrophe is very helpful in obtaining the signed lines we design own programs in Florida and of course other geographic areas as well. While we are comfortable with our own exposure in Florida, the environment for the Florida homeowners insurance companies remains delicate.

We see signs of improvement in comparison with the year ago in par from the incremental positive changes that have taken place in legislation. We are hopeful that this continues over the coming years, so that both private companies and the Florida Insurance System as a whole will be better equipped to withstand major catastrophic events.

Our international books saw considerable price increases inline with increased perception of risk in those areas that we were affected by the events of late 2010 and early 2011. We expect that the heightened awareness for the potential for large unexpected losses together with the gradual adoption of new vendor cat models will add to the momentum for price firming through the renewals in 2012.

Looking forward, our highly rated balance sheets, flexible capital structure, and substantial capacity position is quite well for opportunities to come. When we take into account our joint ventures, such as Top Layer Re and DaVinci Re, we were able to bring about $8 billion of capital to bear in the catastrophic marketplace.

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