Bermuda-based reinsurer Renaissance Re Holdings Ltd. reported 2008 third-quarter income dropped 253 percent because of turmoil in the financial markets and the impact of hurricane losses in the United States.
The company's bottom line for the third quarter saw a shift of $364 million, from net income of $144 million last year, to a net loss of $220 million this year.
The company reported a net loss per share for the quarter of $3.79, compared to a net income of $1.85 a share in 2007.
Net premiums written increased to $194.4 million, up from $149.2 million a year ago, and net premiums earned increased to $379.3 million from $367.1 million.
But the 2008 third quarter saw $535.3 million in net claims and claim expenses incurred, compared to a 2007 third-quarter figure of $131.7 million.
The third-quarter combined ratio jumped to 163.4, up from 60.6 in 2007.
On the investment side, Renaissance Re reported net realized losses on investments of $87.6 million for the quarter, compared to net realized gains of $1.6 million a year ago. Third-quarter net investment income was $15.8 million for 2008 compared to $95.6 million last year.
For the first nine months, Renaissance Re reported net income of $73.6 million, compared to $539.7 million a year ago, sending net income per share down to 65 cents, compared to $7.02 in 2007.
"The combination of the U.S. hurricanes and turmoil in the financial markets resulted in a decrease in our tangible book value per share this quarter, but also served to reinforce our position as a market leader," Renaissance Re CEO Neill A. Currie said in a statement.
"Our brokers and clients value our financial strength and proven willingness to pay claims quickly, as well as our ability to provide substantial reinsurance capacity in these turbulent times," he said.
"We anticipate that additional opportunities will emerge with the expected decline in industry capital and continued stress in the financial markets," he added. "As we look ahead to 2009 and the upcoming Jan. 1 renewal season, our strong ratings, solid balance sheet and experienced underwriting team, coupled with our proven risk management systems, position us well to capture these opportunities."
In a conference call, Kevin O'Donnell, senior vice president of Renaissance Re, said, "I feel optimistic about the Jan. 1 renewals. We're having a lot of broker and customer meetings, and it's interesting to note that the discussions are much more about the availability of capacity rather than the price of capacity."
He said he expects overall gross written premium to increase by 7 percent next year.
A Bank of America analysis called the company the best reinsuer in the industry.
"It has a stellar track record of generating an ROE in excess of 20 percent on average since inception," the analyst's note said. "We believe this is the stock to own and put away for the long term. The company's culture, track record, reputation and skills have allowed it to build a differentiated franchise and to take advantage of the best opportunities available in a softening market."
The analyst added that Renaissance Re is in "the sweet spot" to take advantage of dislocation in the property reinsurance arena in 2009.
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