RenaissanceRe Holdings Ltd. (RNR)

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RenaissanceRe Holdings Ltd. (RNR)

Q2 FY08 Earnings Call

July 30, 2008, 9:30 AM ET


David Lilly - Kekst and Company

Neill A. Currie - President and CEO

Kevin J. O'Donnell - Sr. VP and President, Renaissance Reinsurance Ltd.

William J. Ashley - President and CEO, Glencoe Group Holdings Ltd.

Fred R. Donner - EVP and CFO


Vinay Misquith - Credit Suisse

Brian Meredith - UBS Securities

Alain Karaoglan - Banc of America Securities

William Wilt - Morgan Stanley

Jay Cohen - Merrill Lynch

Joshua Shankar - Citigroup

Chuck Hamilton - FTN Midwest Securities

Gary Ransom - Fox-Pitt, Kelton



Good morning. My name is Jacky and I will be your conference operator today. At this time, I would like to welcome everyone to the RenaissanceRe Second Quarter 2008 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 period. [Operator Instructions]. Thank you.

Now, I will turn the floor over to David Lilly.

David Lilly - Kekst and Company

Good morning. Thank you for joining our second quarter 2008 financial results conference call. Yesterday, after the market closed, we issued our quarterly release. If you didn't get a copy, please call me at 212-521-4800 and we'll make sure to provide you with one.

There will be an audio replay of the call available at 2 O'clock PM Eastern Time today through August May 13th at midnight. The replay can be accessed by dialing 800-642-1687 or 706-645-9291. The passcode you will need for both numbers is 54802724. Today's call is also available through the Investors section of and will be archived on RenaissanceRe's website through midnight on October 8, 2008.

Before we begin, I'm 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; Fred Donner, Chief Financial Officer; Kevin O'Donnell, President of Renaissance Reinsurance Limited and Bill Ashley, President and Chief Executive Officer of Glencoe Group Holdings Limited.

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

Neill A. Currie - President and Chief Executive Officer

Thank you, David. Good morning everyone. Thanks for joining us. I am pleased to report another solid quarter with an annualized operating return on equity of over 23%. This was accomplished despite softening insurance and reinsurance markets in a very challenging economic environment. While part of our success is a result of favorable loss experience, the advantage of being a market leader with strong relationships and experienced, disciplined underwriters enabled us to produce the portfolio of business that generated these returns.

Of course, our goal is to continue to generate attractive portfolios. And I'm pleased to say our team did a great job during the June 1 renewals. Our seasoned professionals, who have been through markets like this before, assembled an enviable portfolio of business.

Our strengths from a marketing and underwriting standpoint offset lower investment results. Losses from private equity investments contributed to these lower results. In 2007, our gains from this portfolio were higher than we expected. This quarter they were lower. Over time, results from these investments have been quite attractive, and while results will be lumpy, we remain comfortable with our portfolio.

We continue to exercise diligence in capital management this quarter, repurchasing stock at prices we felt to be very attractive. Over time, this method of returning capital to shareholders should maximize total returns.

In our last call, I'll refer to our strategy of taking advantage of the opportunities that markets like this provide us to focus on positioning our business for the future. This involves looking at how we apply our core competencies to new opportunities, exploring how we further improve the way we run our operations and thinking creatively about how we can advance our business model.

During the quarter, we took several steps in these areas. We completed the acquisition of Agro National, strengthening our operating platform in a marketplace which we believe has significant long-term appeal. And we continue to recruit talented executives to expand the depth of experience in our Individual Risk, Reinsurance and ventures teams.

We continue to take a broad view of how we can best protect our clients from risks they face as well as extending the value of our franchise for our shareholders. To expand on this point a little bit, as many of you are aware, part of the franchise value of RenRe are the scientists and researchers we employee across our organization. Many of these scientists are housed in our subsidiary, WeatherPredict Consulting, which is a leader in global tropical cyclone prediction using our in-house technology.

Our team of scientists provides valuable information and insight to our business units, helping them to manage risks posed by atmospheric events. A natural extension of our business is our work in risk mitigation, which we believe presents the most promise for protecting property owners and insurers from preventable loss. You've already heard about the RenaissanceRe Wall of Wind which is making meaningful contributions to wind engineering research.

During the first half of '08, we also hosted Hurricane risk management forums in Florida and Rhode Island and we bought together scientists, policy makers, regulators, insurers and others to share ideas and to better understand the immense potential benefits of mitigation. We feel these efforts will make homes and commercial buildings safer and over time lead to lower insured and reinsured expected losses.

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