RenaissanceRe Holdings Ltd. (RNR)

RNR 
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RenaissanceRe Holdings Ltd. (RNR)

Barclays Global Financial Services Conference Call

September 10, 2012 2:45 pm ET

Executives

Jeffrey D. Kelly – Executive Vice President and Chief Financial Officer

Analysts

Jay H. Gelb – Barclays Capital, Inc.

Presentation

Jay H. Gelb – Barclays Capital, Inc.

Hi, everyone. I am Jay Gelb from Barclays. We’re very pleased to have with us today RenaissanceRe. Renaissance is a leading global provider of property catastrophe and specialty reinsurance coverage with a notable and superior long-term track record of book value growth. We’re very pleased to have with us today RenaissanceRe’s Chief Financial Officer, Jeff Kelly. So with that, I'll turn it over to Jeff.

Jeffrey D. Kelly

Thanks Jay, and good afternoon everybody. I will apologize in advance, as I was just telling Jay in addition to living in a climate prone to moles and other allergies, I managed to get a headcold over the weekend from which I am recovering, so hopefully that won't cause me too much unpleasantness here.

So as Jay said, I am the Chief Financial Officer of RenaissanceRe and I have the distinct pleasure of talking to you today about what I think is a really unique company with a really unique history, and I can tell you that, it is an incredibly interesting, intense and fun place to work, in addition to not being in a bad location in Bermuda.

So before I get started, let me call your attention to the Safe Harbor statement on the screen covering forward-looking statements, as well as the fact that I'll be using some non-GAAP measures and financial performance in the presentation.

One of the areas for which I have responsibility at RenaissanceRe is corporate strategy. So today I thought I’d start with a bit of background on the company and our history, and then give you some insight into our corporate strategy, business unit strategy and how we think about the role of investments and capital management within that strategy. So with that let me give you a little bit of background on the history of the company.

As Jay said, at RenaissanceRe we are a global provider of property and cat specialty reinsurance through our store office in Bermuda, and right now only property cat and specialty reinsurance, but also some insurance coverage’s via our Lloyd’s operation. I think some people have typically thought RenaissanceRe as a Florida specialist, but I suspect after the events of 2011, they were dissuaded of that misinterpretation.

Our business model is to match what we believe are attractive risks with the right capital to support it. Sometimes it’s our own, sometimes it comes from third parties but more often they’re not as the mixture of the two each and every time. Company was founded in 1993 and has a market capitalization just under $4 billion. We've enjoyed strong financial performance over our history with tangible book value per share, plus change in accumulated dividends which is our primary financial target having grown at a compound annual growth rate of 20% since our inception as a public company.

Finally, we have some of the strongest financial strength and enterprise risk management ratings in our industry that I think attest to the competitive strengths of the company, as well as that financial performance.

Only about 3% of companies in our industry have earned an excellent enterprise risk management rating. Okay with that as background, let me shift to a description of our corporate strategy. I think it's rather simple and fundamentally unchanged since our inception some almost 20 years ago now.

Here's the summary of our business, our mission is to produce superior financial returns for our shareholders. The higher risk, that’s our – where we’re laser focused. Superior returns come from being a leader, not a follower hence our vision statement to be a leader in the businesses in which we operate. We think that the leader in the businesses in which we’re involved is the best underwriter, hence the identity that we have adopted.

We avoid businesses where being the best underwriter isn’t likely to produce the best returns necessarily and we think this is a critical difference in our business model. Our strategy to be the best underwriter is to operate the company through a single system to match risk and capital. In the slide that follow, I’ll touch on each of these in a little bit more detail.

So on the surface our business model is simple, we match desirable risk with efficient capital. We take risks in multiple forms and deploy capital in multiple forms. Ultimately if we match desirable risk in the most efficient capital, we'll have a single portfolio that over time will outperform the market. It’s important to note that we operate the company as a single risk taking book. We are not a collection of traders each with their own profit and loss statements.

Over 19 years we’ve invested in building a system that accurately accesses and measures risk and accesses, engages the most efficient forms of capital and to match them effectively. Some parts of the system we believe have been imitated over the years on both the capital and the risk management side. But we believe our business model remains distinctive and indeed business models that have integrated systems are the most durable form of competitive advantage.

So on the next slide I want to expand a little bit more on that green box in the middle there between most efficient capital and accessing the most desirable risk which is focused on our risk-taking capabilities and our culture at the company.

Read the rest of this transcript for free on seekingalpha.com