RNR - Earnings call transcript Q3 2017 | RenaissanceRe Holdings Ltd.

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Operator

Good morning. My name is Kim and I will be your conference operator today. At this time, I would like to welcome everyone to the RenaissanceRe Third Quarter 2017 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. you. Thank Instructions] [Operator may conference. you begin Hill, your Peter

Peter Hill

Good quarter Yesterday, XXXX thank you release. after our third for joining quarterly financial our market we morning closed, and the issued results conference call.

a you sure midnight PM or an Eastern about make you audio copy, If of provide December receive please me X. call and to will at There one. through X:XX the Time on call The with +XXXX-XXX-XXXX. replay today we’ll XXX-XXX-XXXX be from didn’t call can available passcode accessed through be on dialing XXX-XXX-XXXX through on numbers www.renre.com Today’s replay need RenaissanceRe’s will XXXXXXXX. the of midnight both archived January is The for will section by you available be X. and website Investor is Information also

caution discussed. begin, discussion actual obliged today’s and statements we may those may forward-looking I’m differ from results to that materially contain Before

these the O’Donnell, Chief and With SEC Executive we and Financial to regarding Kevin? which turn factors information Vice like would the Kevin. Bob today’s Officer. Additional are to can discuss shaping RenaissanceRe’s over in call Executive now President be Officer; filings and Chief to to results you. found direct Qutub, outcomes I us President Kevin

Kevin O’Donnell

today’s and call. Thanks, for quarter night, all thank third Peter, we released you Last joining earnings.

it book book know, value XX%. share a value you per a of was in in in resulting tangible our As accumulated of busy and a reduction quarter, reduction a XX.X% plus dividends

Mexico the performance validates of third in not earthquakes. Harvey, and strategy. risk was both difficult, catastrophic driver our although and and surprising multiple Maria Hurricanes namely events course The was view quarter, our the Irma our long-term City This quarter, and the of occurring of

claims significant Mexico, deepest our affected the many. a extend the And is to is U.S. would hope in to speeding it Caribbean, a returned and especially In goes the large a life little of capital. discussion I normal speaks. greater of towards still markets by loss role paid events everyone on number impact first we sympathies I strategy, increased their RenaissanceRe Bob way the to to gross-to-net discuss in loss to I’ll quarter, cost the that events. But retro large and risk not for of QX like after moving and would Before recovery. on already of like the address our have the QX my detail

strategy QX large gross-to-net loss and by Our million of net a impact the events. large for tested the We well. performed negative events loss QX was preannounced $XXX

that events, to ceded in losses $XXX number saw position million. about our to premiums. by that capital on you retrocessionaires This $X.X of are with gross means, shared As two-thirds offset our of an will release, now think have effectively third-party reinstatement excess gross be we our closer these earnings however, is billion. been

sometimes clients. on to capital, forward to QX highly some still expected on The impaired be addition especially have In future. events, only not it’s renews. the our and the sometimes locked of heavily retro to in share trade Using we is seller to continue before large past. we retro our system, increases own, a The efficient or problem most is hardened business. quarters and costing happily us will markets be a collateralized a and it’s up. elastic. portion will they will we seller these the rate. premium, retro abundant We’ve remaining could will preserving Investors of the however, to their disruption the the to source been large retro. markets ability XX% efficient January to the able experiencing third-party from the capital of and was price market need demand as this of of a market absorbed This substantial program highly recapitalize our retro the funds available, of our Even if large transition for material in agree have in material This the in to dependent cause we’re our profit three from strategy loss large X, when and integrated significant of our offer And our reinvest. perspective losses capacity is buyer recoveries, capacity that after roughly retro sufficiently, have associated capital of XX% sometimes a retro

retro is our increasing, weighted of of cost is decreasing. average cost the capital While

shares gives high-cost to years, last of replace a at taken the several the own were This and our lower do so. to interest preferred at cost. we sufficiently to more capital option rates risk, debt us Over we paid have record-low if advantage of put

levels. of the in this in is especially billion previous the lines $XX insured billion. of drought sustainably on long-term premium Another losses could ceded XX the having and the When of with It expected worldwide was U.S. our stand come billion put reason partners. billion. time aligned the many be can in $XX Eight if we $XX count need last capital, To to we XXXX a basis into trades the $XX the two This appears retro catastrophic have the business this billion. part drought the to and rates than grow us extended opportunities is however, provides under that, years, in long-term of exposed and losses. low being flexibility and it on both saying there under the categories, aren’t have events, because over. now I sources is falling year-after-year, our think have $XXX insured of long-term XX% potential That in over been long-term reached with third-year between catastrophic fueled This on profits Having is losses large has as as that capacity by more over many partners. in three annual we Even traditional market our XXXX. have perspective, when we augment on Around us capacity, for short-term market years, arise. we alongside allowed I trended to is partners. own

when of a amount in not the last variance of significant can a cluster, there’s this the confused outliers. year’s are lack XXXX results and like So volatility. for Years be low

However, appreciate. there more far is our than in sector a many volatility

needs the loss similar its companies P&C in long almost to impact haven’t to at every will rate go up to offset other have business as to The industry capital property in XX expect property deals. this have decreases. with writing diversifying low worse, we risk prices Making property help We Industry, every cost to affected paid and least, loss of been too matters beyond sector, XXXX, years. volatility affected reach And for cat cat a now. line

vendor and needed quarter capital which underwriters were should not accordingly. skillful models a substitute This were underwriting. was Allocators business of adjust and cannot volatile ours a better which is the for to are and positioned to return good reminder be determine, that able expectations

Looking hopeful that greater XXXX. ahead, we are XXXX opportunities will provide than

about trade are optimistic I’ll our and willing up at for business financials, prospects and in in open turn the and ready profitable both share platforms form look position January call I’ll are preferential for capital, With to before Bob? it all our rated the the growth and to back Bob our and our for more X, forward across collateralized performance we efficient desire. come to that, we market. and questions. We our sheets unequaled a access a customers With on over to on our bit balance

Robert Qutub

good and Kevin, Thanks, morning, everyone.

the Included and assumed reached continue to present transparent As throughout events significant loss largest ceded, caused Kevin as XX-year Recall the effort recorded Mexico combined that single the In loss contracts our third in to redeemable for the financial consolidated the aggregate affected in sum $XXX net RenaissanceRe’s regions figure losses the to profit of opening or and estimates net interests. points losses negative the for also and remarks, associated results. and meaningful incurred, reinstatement XXXX. the damage to earned Maria the with wide-scale $XX respective earthquake. impact and provide a of City large history. net produce impact $XXX they the million and claim Harvey, in negative included an From and with quarter challenges. net aggregate our insured was impact We million Hurricanes quarter earned contracts these million included associated QX were in quarter, in noted his quarter Irma It lost of loss the of an we impact negative quarter. noncontrolling loss retention expenses claims negative events cumulative the humanitarian to results disclosures, includes net under during perspective, commissions our premiums

largely third responsible losses the large Our events from aggregate would contracts. these best losses of quarter triggering under be for in estimate the cat

our losses I There Kevin. and additional the to specific impact are in and in you retro to I’ll activities investment before the features event with give our meaningful an remains losses performance overview turn the respect highlight events the few of financial loss to or book. back contracts, time, uncertainly quarter. of of traditional this segment a some over aggregate However, like the our At metrics cat estimate given limit attributable large provide results, portfolio from to necessarily capital and a it I’d for our detail then sense. the not of aggregate a themselves and our of

and of per reported a common reported ROE net September common of For On and negative diluted loss million, operating an $XXX annualized an negative XX, of the XX.X%. $XX.XX share, share. of X.X% $XX.XX basis, ended ROE million, we loss quarter year-to-date operating or a XXXX, annualized diluted per or we an $XXX

X.X% value our dividends tangible our our per XX%. including quarter, book including the per book XX.X% tangible by dividends share by book decreased decreased X.X%. a share accumulated value by our accumulated basis, On decreased year-to-date value share During value book per decreased and and

website. refer For and year-to-date supplement, we earnings and be found our of our additional issued night you last financial and quarterly which I to would details can on results, release our

Casualty Within Let XXXX XXX% shift large to the by the our of me premiums associated compared our third Specialty. reinstatement beginning and up gross with segment, written now were with of quarter property of premiums included segment, quarter events. XXXX the $XXX and Property followed the segment third to million for results,

class catastrophe our class written would still XX%, our XX%. and our property have new impact select written business deals premiums gross up The other certain number mainly on participation XXXX, premiums segment of business our to increase of XX%, due attractive. we in business was transactions increased increased found and the class property other Excluding up Property reinstatement a with of of in of

Our see discipline, prevailing given during does market some major the able of quarter, but backup slightly, typically to exercising and book we terms grow not renewals underwriting were including catastrophe the business while line third coverage, conditions.

underwriting to compared and underwriting of incurred XX% of loss performed loss and Property ratio Our a combined $XXX comparative our occurrence the Property combined combined the points underwriting combined Property our large as $XXX of QX $XXX ratio ratio losses for events. million income the of XXX%, the dominated million of in by segment in catastrophe following an to in quarter. Property These segment added the the and the underwriting segment. our quarter. Overall, in impact The in million expected, XXX results of were a segment events large

the to continue have we execute strategy right people, to We cycles. systems through and market believe,

third quarter. Moving and gross lines decrease a grow XXXX. our was not did increase to contract able within on where large financial quarter business, premiums selectively result were of new We reinsurance in of lines of XXXX business. were the Specialty this a written relative that casualty multi-year of Casualty offsetting the up gross existing the in quarter certain segment, mortgage third reoccur in-force written of our in X% of business to primarily premiums the on written and to current Mostly the third XXXX, quarter in

our Irma, Specialty Casualty in and and Positively Mexico of comparative in of Specialty the in quarter of With XXXX, top in these results an City quarter. conditions. ratio. XX% results underwriting compared Casualty and third Casualty in ratio ceded of segment, the were Specialty the were in Harvey, Specialty and was quarter during earthquake, driver line, a underwriting having Casualty which accident our key The the on decrease income and continue and segment experienced in we underwriting $XX growth to premiums we’ve quarter million loss of of underwriting during relatively in given of to a expense down Specialty flat. the Hurricanes premiums segment $XX million was to-date XX% the current Maria impacting and up earned a segment. the our strategy, execute ratio year and X-point the the Net underwriting XXX% combined drove million the impact market the expenses Casualty combined current gross-to-net $X ratio of A incurred combined

As the business. while reserve for a our continue base, overall events, that to we the of to important expense following comfortable to and loss book and existing we It’s continue reserves number quarter saw a growing return leverage of selectively processes our this trends – remain of developing note that with evaluate our significant adequacy.

to million. total of investment an was unrealized investments of we $XX and Turning quarter, this generating million portfolio on annualized on income result X.X%. $XX recorded $XX third investment In in total gains of the investment investments. return and result Included of our net realized million, net

realized Our unrealized perform equity returns. portfolio continued generating gained, both to and markets during positive delivered the as quarter, well

invested maturity rates increases and tightening the income which credit of impacted from the average portfolio, quarter mainly quarter. our assets, Net Our events a from benefited unrealized the and losses some investment in net modest quarter. for was comprised investment in third spreads our interest also is included bond the higher fixed cat in income securities during by

remains high The degree to XX% of with our maturity of risk, investment to XXXX, and investments yield the liquidity and short-term exposure. portfolio credit a fixed X.X% investments on September and allocated conservative duration and maturity was X.X end compared years or of with interest short-term to quarter. modest and with Our investment portfolio rate, flat fixed the the XX, last less credit income duration was at to respect

our produced the we positive continue again, and ventures we be companies long-term overall the by Our with unit, returns satisfied portfolio us, managed investment for fundamentals strategic to of own.

Now to the management capital quarter. our turning during activities

testament strategy strong. that Following capital to remains liquid a string of capital sheet significant our cat balance management remains and a our events, is position it our

arise. pursue activity Our strategic management also as gives in capital flexibility access may the to capital to us investments they

enhance continues to deploy efforts. the our believe deploy. we supported venture high-quality, and Overall, joint strategic to transactions developed management franchise. the with capital again, Once and trusted new actions to build our quickly capital investors, that we investment unique market recognize market relationships our is it needed cat actively ventures we Our as agility vehicles property immediately partners They evolving our where our long-term well with can team for looking and long-term as an leadership stepped most. up expose capital bring additional a reflect have underwriting a

customers. capital For to example, $XXX in from efficiently Upsilon of we raised million investors quickly DaVinci and new additional third-party equity and received funds support its core

On we to the the of shares, Harvey, prior to our million repurchase brings for year-to-date front, arrival $XX share purchases which $XXX in total $XXXX quarter, the active our market Hurricane of million during were common the repurchasing million.

not approach changed. has Our capital management to

mention results meet business underwriting the we commencing the that financial our and to may We our risk for serve, will pricing Lloyds our to up this first conditions time, getting separately that level With hurdles. manage as no capital segment appropriate. the our at like I many will our potential Casualty markets results platform. XXXX we segments in return foremost in we improved and of underwriting Lloyds quarter disclose the look would Specialty into business and deploy At opportunities longer and our of of Property picked with supplement, a first and with platform

resulted wildfires. major significant our potentially transparency those have to loss. appropriate results call. They by into brings billion earnings associated from to life to and across caused finally, this turning I billion, $X of would will throughout loss of ranging disclosure With call with still continue underwriting locations higher. extend this in damage feel commentary deepest estimates a loss and before line all for and our to devastating And the on It market our Lloyds anywhere and to the California our is we billion portions $X like provide we state. days affected $X organization. the in other is such, industry very Kevin, perspective, to sympathies billion what to early $X initial As segment back platforms From

is assessment, loss our the There’s complexity these significant of sources continue work closer the from expectation As we our estimates. of and nature other to monitor early turn magnitude participants uncertainty with respect in given as initial that, it clients, that, and will Kevin. losses, will available. higher-end information to like events, to back and with And call the to industry of industry the these we industry becomes come to I’d losses the through public

Kevin O’Donnell

hurricanes. Thanks, Bob. comments time we’ll – hurricane with U.S. land major with third I’ll my a this year last the landfall and major Maria. the in in Irma for in divide the Wilma, was up falling We’ve made questions. it hurricane Property this we year Harvey, then last had quarter, open The time XXXX another then and drought three, broke U.S. in starting Casualty

in We including also records City. the third as storm such earthquakes Mexico in had Multiple days. XX several large hurricane named experiencing quarter fell

major record, X addition, were wind and and that driven hurricanes waters shear formation. and warm or This conditions storm four by including a Category was while In five for X not near low otherwise there reached season perfect strength.

large both XXth consequently landfall Harvey, impacts U.S. with a primary X on Category a was and flood more case, market storms in the these characteristics, internationally. wide made different This XXXX typically storm. which August as really broad concentrated will As the of a of on Unlike loss Starting ranging in as wind the affecting conditions, and retro very have reinsurance hurricanes, more risks and industry is Texas different event. in than Florida hit will very losses geographies develop affect such the a differently. different each had and events swap the of will QX

Harvey plus predominantly looks inches the a broad including small, Chesapeake a commercial the in to flood field fill to which is up for XX put region. industry enough around XX is relatively XX and on event, wind a Texas return water Bay. a loss expanse this Louisiana Harvey auto Houston. Even be fell Gulf which market side, rainfall residential of about a significant XX rain to over gallons a is over of year dumped the in exposed perspective, Harvey To record both trillion the of $XX period to its billion While is private is though loss. and

affect cat all property primarily So our businesses. our will it while this loss Casualty and other affects Property book,

many than in to Southeast for U.S. billion XX of Irma is is XXX been the landfall year Keys with as industry all about hurricane in one XX second claim the Florida to in severity Next it in X return have true Cat loss miles Category a appears to $XX relatively on be heavily as a Florida storm. was a deductibles. in Cat period around not Keys event a Average which loss. Then billion a Marco low there had hurricane rather a South it East have would the north X, in and to was Everglades over over predominantly would up Category landfall Irma as as then potential applicable outside Irma Irma the event landfall cases X a handful Cuba, the which is though be Coast XX made September a coming over flooding. $XXX If of made tracked under than a storm. made wind a looks even Florida would of cause on have the X. likelihood more weekend significant populated This a Island

Hurricane period industry Category Rico be XXX strong as quarter hurricanes as XXth a loss to billion storm. Puerto third landfall Puerto which a looks least plus September the Maria was return X in as go is year Rico. Finally, for on at which Maria least $XX in made far as

another U.S. it Maria say longer is average expect quarter. to we territory Puerto that beyond Due losses Caribbean, proposition located Rico our in take as large While we the infrastructure than this will reinsurance extends that the often will develop. to impact had U.S. a that again price opportunity issues and of demonstrate companies. value U.S. many I to fully dollars insurance

speed reach As the the take. to we had along storm, likely it this prepaying to our responding and the be our predict underwriters strengthening likely rapidly is and of addition affected. our each the made our process we our with provide was experience most events developing, of most event scientists to able and quarters just systems track clients of sure for team hurricanes testament of post our these. of After were would of out to clients closely decades monitored to weather core in its their run against footprints industry our those proprietary and potential to event, to The Throughout portfolios like people in brokers skill claims, database.

experienced This and not including does as loss long are over originally Third That earthquake uncommon extended destructive losses said an in several thought. to appear it’s development period. also not City. quarter be very nature large tail as earthquakes significant Mexico have to

for monitoring there’s are opportunity and closely other identify claims. to this in We this in companies the but and to will Today however there taking process. is fraudulent has to fraud still acutely minimize aware Insurance issues creep steps are Florida later both Texas and of benefits of fraud. problem occurred, begin indication that for of little be adjuster signs been and assignment

demands Irma, was Harvey the competition intense time the short a around for adjusters, significant and to companies surge pay saw also for driving Due We span their adjuster to insurance loss services. fees fees. up need there between

the models, events. our all within of the time understanding it view not loss frequency address around were in strengths of result and third-quarter I how and spent vendor consequently loss commercially of our of the will tail expectations events These to expectations. of events. briefly the driver big resources risk loss incorporates QX were large catastrophe We a not would considerable expenses. the models While independent adjustment like available in weaknesses extreme increased our

loss the we this our the models. potential we and of Harvey, in faced to Puerto vulnerability event, major a is to this example, For in captured while Maria, losses consistent not understood more sufficiently the best potential that believe superior book but operating net were being We we shareholder to gross premiums through. continues segment, flat our leverage improved percentage In this in ratio quarter XX% of so that earned aspiration surprising. we operating hurricanes underwriter In relatively growth mortgage recognize Casualty our Rico results value. approach as and the flood is experienced as earn This Casualty expense with strong about was tail for down in written not always our significant with quarter-on-quarter, again X point. be premium

also large While is affected the this lesser losses experienced business segment. the although maximizing value. Property its and benefits with the to a long-term on our Casualty view this segment Casualty recognize and from than books. I I’m toward QX extent by loss energy we’ve a portfolio primarily shareholder built and events, in take segment Overall, loss pleased marine

gross-to-net on As value. know cede we margins our focused to and in positions been which compressing downside. long-term hard strategy carpet on business the to you premiums one-third this Similar Property, have limit gross this working of build team attractive on upfront book is our to gives

we This the the this space. keeping on quarter enjoyed Casualty loss especially significant marine. in as recoveries, close benefit a trends We’ve in saw been retro eye strategy of

market auto attractive is with underweighted a which For strategy commercial more that and example the than our overweight is we’ve of risk, financial been constructing consistent average. portfolio

Casualty areas trend accelerate. our challenging casualty will business certain market will forward, addition Going some lines the loss the the by positive more and of is in adjust a QX proposition that events, large the to we to value in affected a key we of beyond aspect of anticipate property Being commitment proposition. products over want time our periods reinsurer customers is this cover cat a to their provide believe who exposure-based reasonably able long value wide at makes risks consistent a credible range of who prices. to to to suite essential the of

business I Over value. accretive the shareholder believe long-term, to is this

contribute strategy. quarter. to and Our this to broader again, Once to ability gross-to-net returns execute positive had our by the our to investments both ventures our example managed for results our strategic unit ventures unit continues

if our raise capital DV ready raised is As to Bob a Upsilon Xst vehicle in Xst, noted, funds fully at to core on and at customer. our venture existing opportunities Also October funded attractive we able deal joint DaVinci to were October business an present. grow so with we renew and support to additional

of ready to partners to aspect will benefit January alongside trade appreciate bring in to approach XXXX. is offers and the a our the consistent venture at long-term capital, opportunities they to position transact. there attractive we in We have be Upsilon The We’re extent with opportunity we partners. with Xst, in joint to our opportunities also any multiple forward aligned will in are remain that our market have us but currently aligned will in new key

hope with realize with both The a capital. to of third events. and beyond services and Xst our partner many achieved, the in customers have to also high. long-term opportunity adjust you includes before low, our extends with and for a continue capabilities efficient value quarter leadership that that trading the Whatever In will the after nor to the forward XXXX trusted to I’ll where and platform, it great we our rates equilibrium to will people Thank value-added was the unsuppressed is too not at is demonstrate turn our industry. too value however, proposition that questions. point price the future, large access over January At customers our the

Operator

Fargo. from Your Wells [Operator line comes question Greenspan of first from Elyse the Instructions]

Your line open. is

Elyse Greenspan

heading Hi, the all shaping pricing Kevin, do first clients, have you question, of renewals? on color the hurricanes of discussions environment the the kind price expectations you And around up? into outlook. of But what good just with X.X kind the My morning. do see I and how kind appreciate based on

Kevin O’Donnell

Elyse. Thanks,

Firstly, are in XXXX prices going up.

a broad made comments affected. about being there think, industry I I So the of swath the

look affected Harvey, affected different a there’s by of you by by are then at Maria affected different. Irma, If and the again, those pool insurers insurance

to harder from into I loss predict more layers, about the – market to When little strategy. what and price I going how just worry much will a further about move it’s about less away affected price as So XXXX. our look the you ourselves shift. and change we positioned And think always back way changes, will I

our GAAP our So I and our capital refinancing we mentioned, preferreds. cost by lowered debt

strong So coming GAAP a with we’re in position. capital

Our that model model, capital same ceded XXXX, is cheapest for the of deploy the in did, on be economic the that economic is available had in capital The In used form underwriters economic purchasing assumed a the were because that and that – we which was cost representing the we supporting we’ve in capital believe the retro higher made is, assumptions to capital capital portfolio. reason we that difference to our the unlikely model. ceded in different capital our our XXXX. model

So news because we us, we expected have cheaper and that’s have GAAP capital higher margins. for good

So of between greater, capital in cost will our shareholders. is which the the the ignore of the opportunities the benefit and our spread market

So be overall I’m change market think, concerned change about pricing I in will market, while in reasonably the the less the broad.

I in else anyone to than opportunities. And have bring unlimited and capital we think, efficient the unrestricted we have better market. those to access access to

Elyse Greenspan

that Okay. get Casualty if been business, maybe and margin in and And within capital the your do the away XXX%. shifting towards business, lot specifically from catastrophe excess then Obviously, that, have a Specialty your with outlook. How margins as business a there’s you say Casualty think and does of you a Specialty better? about potentially Property market Property and business, putting more better Cat

Kevin O’Donnell

sustainable over we that’s in But glimmers of believe increased a our in the I underwriting will about and we not I with that think, and over market the discipline talking being the about about seeing I years, just XX where start we’re casualty space, assumed. have So at believe, effect some risk let on in capital. sustainable I X I’ll a about November are few long-term hope think margins. it talk renewals, XX thinking margin. casualty years then We’ve the of me had casualty,

I cedesare confidence which that rate think, focused the about I rate the books. primary will there’s two for proportional: reasonable accelerate our as appropriate and nurture casualty on pricing book companies areas be to on books, levels. second in enhancement of is their is insurance encouraging thinking have at increases is to ourbenefit; some whether primary for the will have we’ll One continue long-term much the

for us respond to to each. both longer clarity will so more little we regard of to a well. market or writing are as property favorably write better, pressures take whether have if as will it think to casualty, With cedes more I will

the low, allocation continue find in it and the Our if and opportunity to cat, property remains as business particularly quite our low, Specialty be drives we cap the distributions. of – to more will tail cat capital Casualty property

our property capital room perspective. and on and for returns more Specialty Casualty the creates a a basis, quite look Casualty we Specialty allocation marginal good. So more write from And still

a about for So Specialty. And Casualty I I allocation we’re capital strong look perspective, and a and both think, optimistic from very standalone we’re returns think, property in better position.

Elyse Greenspan

investment Okay, you surprise when great. in about funds And then lost will invest guys cat within we your quarter? your – portfolio in on the that the X%

Robert Qutub

impact. funds this do we events expect No, to about talked in we were would The cat take like that an losses unrealized.

down can yield $XX where it it and You million supplemental, annualized. see was was net in again, in our reflected our investment about

Elyse Greenspan

net quarter. versus growth did How you of Kevin, question, last the much the one then the And give the traditional RenRe was losses for third-party for market? versus cede great. Okay,

Kevin O’Donnell

recovery? mean, I how much collateralized it’s talking, You’re of

Elyse Greenspan

Yes.

Kevin O’Donnell

recovery $X.X collateralized roughly is recovery of I think, about of I think, it’s billion against, billion $X.X total it ballpark.

Robert Qutub

Incremental right.

Elyse Greenspan

Thank Okay. much. very you

Kevin O’Donnell

you. Thank Yes.

Operator

Your the Morgan next Stanley. Kai comes of from line question Pan from

open. is line Your

Kai Pan

Thank you, morning. and good

Kevin O’Donnell

Good morning.

Kai Pan

So lost the capital more you’ve $XXX to that. question about on market that than first DaVinci raised million and return

capital readily So that out there. should available show alternative you the

the impact potential deploy that expectation pricing just increases. of duration when magnitude and that would of your you capital? would the I what price So with reloading, discuss capital provider you kind wonder that for

Kevin O’Donnell

to talk about that? Do want you

Robert Qutub

One for so. was referring is of the that the clarification, for seven the it’s XXX, thing XXX. DaVinci kind you’re loss on on page just just close interest noncontrolling to supplemental, the in investors, for clarification as actual

Kevin O’Donnell

Yes.

market. of layman’s DaVinci the terms, kind facing capped size effectively the same in we So

the out I think then process is put about to capital prior to the the to as year the with we usual kind raise at to levels earnings. there’s in end refund the is of the a sheet investors, to was balance be events. dividend And of the it back event, normal capital call when back an the our honest, where DaVinci business

type from opportunities has going a slightly So DaVinci different – we perspective, think I we that into are But of think it’s vehicle. good year-end.

a one for of expect collateralized more raise funds. not of traditional been long the capital. would doing some as a with as with traditional people we’re part us So who’ve is normal This managing our process capital time of

Kai Pan

show a wondering, capital from markets? is that alternative just broader still risk sign of for I’m And the appetite

Kevin O’Donnell

we So to consider be closed. DaVinci effectively

have in well. we – as interest DaVinci, but have we get we substantial do So into investors trying to that year have last

underwritten honest, investors for was but for is the high take, to high to very to in risk be cede, XXXX XXXX, think I to it as well. So that have our appetite share

Kai Pan

you the gross I your retro would then from of have strategy, the like your be that? your able rising of potential two-third to grow market. or exposure given gross-to-net gross costs And the wonder like just maintain you to recover Okay. retro,

Kevin O’Donnell

gross absolutely, That’s our we exposure, book a gross – like maintain that net the wrote. The we the we question. book Yes, great like to more.

to portfolio. So enhance used and the optimize we retro the

risk would in mentioned the be more as between a of retro is I probably think, purchase to it. accurate comments, I that As about think that split there my the we way – we share

risk We’re about XX% trading consider XX% share partners, more of is the to a we of I long-term is, be what account. that

perfect a they have partner consider just be to much XX% like elasticity it The that participate market capital that account in dependent. is very be XXXX the and to renew will will alongside as we I better trading in in price XXXX. capital us We whether did

consistent build book through net from we because have same our we to we swings customer-facing capital as and that retro the are our capital. others, risk appetite subjected make trading manage So a not to sure partner and client-facing

Kai Pan

loss may segment. on is one, And Property last in underlying ratio your Great. the I if

lot large particular increased year-over-year. in like non-cat like there it just of is are losses, So you I’m which wondering your looks sort not including a disclosure? if

Kevin O’Donnell

only out property property from other other But put the highly the where to difficult that you’re in within other conjunction that, have be of segment, as capacity our property I break representation. – cat specifically extract property because think cat component the cat Property referring much with – are if is are provide written. nutritional that’s other I in a linked, we to it’s property would And to property which reserving lines of out property a our and think, think, I a segment. we the Property

property when look I actually ratio about the look less book, So it loss the allegation the that cat. at segment between perspective of of property I a worried from other and performance I’m at property and

Kai Pan

much. well thank so great, you Okay,

Kevin O’Donnell

thank Kai. Yes, you

Operator

Your Amit next from comes line Kumar question Buckingham. from of the

Your line is open.

Amit Kumar

Good name Thanks better. I that and morning, like

be guess the then you you at the et the or of before in buying renewal? conditions HIM. discussions Just XXXX Obviously and a back cetera, thought cycles, after of were X/X, to revisiting up opine the capital with sort come management. that look and market management that on on you’ll renewal going thinking are would X/X revisit X/X, different discussion able later Based X/X we to you the capital process I

Robert Qutub

that of There to is parts couple question.

me prepared out, to in Let the off were, in capital. we start with as quarter returning comments to you my deploy here the pointed as are capital looking text fourth opposed

of And about opportunity. advantage the balance being sheets feel taking and comfortable so our we fully capitalized

those be and themselves I opportunities think our returning for early decisions XXXX We what really look and it’s capital. in in then XXXX capital, what will then. present XXXX can to on Regarding later deploy opportunities on

the capital question relationship the will is there. of between returning second the The context second and parity is in of really your – be a increases will part really the how there rate the question �� what is that and

Kevin O’Donnell

or our recreated renewals, we to revisited, so potentially expectation to capital that major process and looking we had change renewal. periodically XXXX the will more normal downward allocating the the mentioned or of purchases I price inform portfolios is each back. shares we’ve adjusting assumptions and to it capital think between That already full ultimately our X/X prior for the upward you based had for whether our X/X, underwriting integrated X/X, are management, gets on business highly and our

Amit Kumar

I capital. The upwards second would’ve did down had pricing what on optimistic of overall curious, or the probably obviously you the losses drifting industry sounded was, bit than a you I the on industry percent as view time question more on sort a progresses. total losses have thought of equation based I’m

the the figure that? lot but to missing seems some are alternative trying is here math and curious opinion know portion market, are losses a on even at today, of it think I of into and we out going scratching I you still when what had on the look know us getting so it based our if I that was the there, you numbers not of somewhat head an the that

Kevin O’Donnell

the you gross of to nature been and recorded, at at between billion, what confusion look disappearing of your the level our is would the shared are XX%. say The roughly if these of is, I losses. at thing prepaid $X.X I about kind what’s loss we we highest

lot So how there’s as to been these one events. a believes by of latitude they’ve impacted

potentially will that often low it be fact close bit it but the compared a the loss seem the a is does tends periods wide it is gap to a surprising isn’t little at time, So to over as – after a there levels why relatively what gap and close little if we’re bit bigger. billion believe $XXX be shortly to I will in

to component as here a it. question is, touched there support usually is going there going you to into there as be is a the question I XXXX much market an to how though capital important think big what’s is but opportunity, to

from the into is into up is demand for dynamics rated XXXX. think going collateral going much events capital for on are the is lack I the and capital of to most as how XXXX also combined perspective, adding much the supply capital to uncertainty the the overall rated very impaired, carriers and transparency from estimate and solid loss footing locked markets how

Amit Kumar

the questions point there has you one retrospect taken you you longer on what acquisition in plans? before, what achieve is casualty know point. the your some I outlined Fair achieving then question, it have I day or would would’ve were this would book. final know think on the you get asked have to already to And do in thought And I a Platinum initial

Kevin O’Donnell

we a purchased We – I of Platinum we’ve objectives list and that put that goals each the achieved when we’ve made we out of feel outlined.

we question the too what to the think that we hope achieve. set low I then for bar So

much is had been is platform of company because the position stronger our us that at where on of not lot we benefit look executed I I of casualty feel we’re a XXXX in the I Platinum. of that and would when strong think into purchasing going have because we a that Platinum.

Amit Kumar

Fair here. Thanks luck the for and point. good answers I’ll stop future. the for

Kevin O’Donnell

you. Thank

Operator

from next from Shanker the question comes of line Bank. Your Deutsche Josh

open. Your line is

Josh Shanker

Thank you.

the Forgot queue, everyone out good Year. but New of luck the to get my asked in questions,

Kevin O’Donnell

Josh. Thanks

Robert Qutub

josh. Thanks

Operator

from Your comes next question the UBS. Meredith of Brian line from

is line Your open.

Brian Meredith

Hi, here couple for questions a of you.

cheap probably think meaningfully need you there without of increase Kevin, reinsurance just out forward? be going there I’m one, benefit the business? do much on not net your it that’s curious, rate exposure cat you how to going retros Can First property the

Kevin O’Donnell

an that’s question. think iterative I

in I at trading will XXXX, purchase differently. probably so statement we we will we’ll won’t have think did, but protection income look retro, likely I we any not have we have XXXX, account more it’s structure than than retro, we that

are something that’s being So be statement will we because we’ll the statement two, XXXX must cost the low. taking way thing paid risk adequate. well, ask exchange assuming make taking and I of purchasing the was think of for is, for at we’ll higher more because purchased retro income – what volatility volatility more exposing ROE spread between again taking that our for we’d exchange we’ll that I look in the in sure a XXXX natural for be one, think are we and we down capital retro, lot definitely changing If a and we’ll in and more be income risk we be than be capital are it;

Brian Meredith

you kind your think right and it is, of Got better way reinsurance cost okay of underpriced to is relative now, capital? cat how maybe you, property of stating

Kevin O’Donnell

using understand going structure the we underpriced. market reducing sure how on target don’t only every and capital is we operate feel be it’s our deal Look margin marginal it’s make go I we’re and again are we’ll in. or continue understand but as our night to margin not portfolio, as every at or existing portfolios our the enhancing how again, rerun book in, to as a whether we book, our we we way the So, we’ll so

Brian Meredith

just I’m was mentioned what XXXX sense. you didn’t that And makes you, this of the happen, look happened in time? that have the if kind loss this you then okay areas implications just going to and Got back curious, why different outside thought of KRW impacted at again so you

Kevin O’Donnell

than go say. I’ll react the rate to need there that’s tends nature declines. years importantly to had beast. you less we’ve there rates is, cat XXXX One more and is Two than the U.S. events market for enhancements events, back of the But rate were much just was of if non-U.S. in several to things more actually frankly XXXX higher where

balance there are we to need conversations and the think recognition And fighting the where we’re to we’re just getting we’re come in better buyer So seller. least to prices the an a to equilibrium, with fact we’re a point the clients, too at at it’s push more to high, margins is I of having market. that our not buyers’ been that them looking receptive a between

Brian Meredith

be of better as rates for here, were them? parallel would very Right, a kind cheap KRW

Kevin O’Donnell

a we and bit see quite KRW. in of actually Yes did movement a

I think…

Brian Meredith

U.S.? But not outside the

Kevin O’Donnell

Correct.

change. the I rate you predict my layers, further think it more So loss affected as comments, I is in from as difficult to said move

much at where our return not is footprint cat attractive to pretty reinsurance rates is at for there’s on think in international the our I looking business gotten that within a have low because point primary point profile. this fitting

has rates sure even And more account. over years a think upside internationally our there. to going both pretty do got retro with move substantially, come the the several U.S. to international of we’ve we’ve it’s us Most reasonable from think retract I risk bunch I will last rate that international. retro changes, So write I’m not taken and

Brian Meredith

lot reinsurers? other be one one that one or quick of the California And a for sense. multiple is so here, Makes going event events wildfires, to

Kevin O’Donnell

be to That’s figured a near-term. question that is probably the going out in

for as about events. event pretty to retro, event. it’s – we’ve I probably to discrete determine connect think, seen they’re fires or multiple are wordings before, There how complicated. consensus single whether There about the one like it’s –

it it’s For sometime out. to insurance figure reinsurance, to or take going

that of be But going that, of contamination loss of buildings our the on I of how additive remediation have some becoming they’re we’re to soil reports increasingly, hearing and cost. color be smoke easy mean, about toxicity that more topic as to to that’s the a been homes think damage I is adjacent also, could destructive. to just handled, how to then thinking It’s insurers remediating pretty give of it. totally And the to is losses. the see those the complicated generally

source they potentially utilities of that. uncertainty also the casualty then can of by there’s and component. potentially but are of to this whether component the to to loss, a deemed played finally, increase there’s the ignition, a been role And have that be through So property lower as segregation

out. But So trying to this play much things answered ultimately I there’s monitoring and play we’re still to these how will all about think, how it’s be going through. determine to

Brian Meredith

Great. Thank you.

Kevin O’Donnell

Sure.

Operator

Your next comes Jay the from America. of from Bank Cohen line question of

Your line is open.

Jay Cohen

Yes, couple of questions.

a coverage the the that they Some you annual duration? backup in third of wrote shorter quarter, or are those policies, for

Kevin O’Donnell

more The the short were ones duration. – substantial meaningful ones

Jay Cohen

So third premium year we kind being a should a aspect? than reinstatement, of standpoint, just quarter next the from other comp modeling of tough sort think about the from a

Kevin O’Donnell

a looks accurate. we XXXX. Unless quarter, like I have it think, third that’s

Jay Cohen

Let’s hope not.

to ratio. expense bonus the lower question, due accruals? expense was assume ratio Second of I lower some

Robert Qutub

other really down: of high what basis; to talked cost exist notably five, the effectively events in we been Casualty XXX Platinum, factors and – One, element have that’s are costs to was burn just think printed driving that But operational business. one-time our our four two focus from there growing acquisition was on operation, quarter, what last the in drop we the like our XXXs that most to were rate corporate platform the down saw XXXX, cost, on last XXXs a the that question and you this and you so The costs, Specialty. the which leverage quarter, time again that I trying and we’ve and what’s on No, ratio, four corporate asked, mean, that from to the look acquisition at five year. see expense ratios with low comparative the integrated I is – can doesn’t the expenses the over on about,

Jay Cohen

these quarter your in you of the change bonus So because accruals third didn’t losses?

Robert Qutub

think I the be to at are accruals bonus the in going the the determined quarter. fourth of end year

Jay Cohen

target then last that I number? guess, for debt-to-capital, helpful. a that’s Okay, plus And capital, do debt have to preferred you question,

Robert Qutub

what was Where are capital we into that, funded feel we if needed said we’re see to balance the very we Right our opportunities comments I fully capital to significant. coming more ready that, in access those deploy now, comfortable opportunities, sheets we even have earlier my proved year. and more

Jay Cohen

a So this that’s not constrain at point?

Robert Qutub

No, no.

Jay Cohen

Okay. Thanks.

Kevin O’Donnell

you. Thank

Operator

Your next Meyer question comes of Shields KBW. the from from line

is line Your open.

Meyer Shields

were you and cost participants. you is heard is that that’s retro assessment from about underpriced there risk? other going Was capital last of new when talking your or inconsistent up a not retro the what Thanks. of market mentioned with Kevin, year, economic we’ve costs,

Kevin O’Donnell

we XX% our our is, made expected XX% I ceded comment premium. the and So of of profit

would ourselves. have written retro, may think, than we for capital I very a that So do, one we a model can but make They determination. different was not have

I XXXX. – into in purchased in XXXX, I what looking purchase we think, from XXXX, what Meyer, we a inform we’ll not think,

So renewals have. have portfolio with the account as optimize of basis us that I trading or to at don’t the a to construct not that the series on either a gross do do it look and ceded having will look we up – coming that we opportunities

than an it lines it’s I comparison than from So think, certain in other business. is it’s of year-to-year, important less

Meyer Shields

mean from overall? market perspective, you the Do your not

Kevin O’Donnell

our correct. perspective, From

to book. I potentially retro or on rely think, write there gross number are a others their fair

look retro We’re rely account happy our write optimize trading that. to to and gross that on

Meyer Shields

Okay, that makes sense.

surge The there or that? surge adjusters, about like talked demand for second, Is costs in like material demand I guess, actual I anything Irma. following guess, claimed smaller point, you particularly

Kevin O’Donnell

so in less be widespread is severe broad I think, something see in you demands think I like than to more more going events, substantial when damage damage other surge.

a is I surge moving So difficulty I element think on think Rico, about lot The get. that bad the potentially there’s the infrastructure, important Harvey be that. loss. around negative getting of for Irma can lack materials loss I put of materials extraordinarily a demand of really things difficulty of of going and honestly, how Puerto there. to SKU I overall that think The

Meyer Shields

I that’s Okay, one question last if can. And helpful.

Kevin O’Donnell

Yes.

Meyer Shields

okay. think, No, very much. you Thank I

Kevin O’Donnell

Thanks, Okay. Meyer.

Robert Qutub

Thank you.

Operator

Your next from line Balyasny. comes the form Gutterman of question Ian

Your line open. is

Ian Gutterman

share basis you’re and your looked on I gross Kevin, thank maybe so what and back a XXXX and Hi, gross you. basis, guess, on and forth. XXXX Sandy went first, X%, this was a market X%. low I typically, and even at time And low

share of there have hey take definitely Is it’s you much Is exposure more bigger Southeastern any a just wind So than course retro, we or been that? to would of has normally or bigger a loss. customer change how there of Northeast, have where the foreign you sort in than it post-Platinum, position story more share? a Caribbean quakes in and sort take we the more of a something can book gross diversified

Kevin O’Donnell

Yes, to never targeted it’s time-to-time. us know, I bogie I estimate kind for a think of that’s we’ve used from losses X%, to

no has book. shift way in the composed structural there So that the we’ve been

use optimize to that the important try net market portfolio. it to the a protect the keep is retro pace and do think I we to consistent to

customer on in pricing the then uncertainty So balance that transferring it there to not we’re our and sheet. capital the providing the managing certainty

that as we’ve in see don’t I a done. So shift anything

point aggregate just built There’s that way we’ve in probably a a set of I structural quarter. the it’s would there’s of that from nothing a the unique frankly, to outcome say, I set portfolio. shift think, losses a in

Ian Gutterman

want I to just make Perfect, sure.

under we you? if development us Is give sense more against limit sort more see can covers, disclosed $XXX were basically, and So a close. that of, could gap between of to see left those to the from gross aggregate there the billion start the to the go – start you numbers you book

Kevin O’Donnell

wouldn’t left as to is aggregates. in there gross under more limit some the those point yes, those a exposed particularly being of change So, to loss. I

a analysis top down the the normal up. well losses, to we went of think, through I our as estimate process bottom as

estimates. at those have than So best at is our and loss with the reporting higher individually aggregate up we time. Often, estimate our came been contracts each this customer’s of best looked significantly

do those don’t than the different have So of to exposure events. occurrence think, to we we I the each uniquely within losses

Ian Gutterman

in the are those storms it. Got contracts? you wildfires named those some And or of could for also only, get

Kevin O’Donnell

contracts respond the The to wildfires as those – wildfires can well.

occurrence aggregates that and a then all new net But of an separate take as is reasons this the the can that is to loss point. events include of portion kind them of we there’s detail the out do of one time events the forget a – So retention. occur, and them forgetting contract life you loss the more not and over

Ian Gutterman

Right.

Kevin O’Donnell

actually previous some because subsequent them can if can back event. go be moved So it and events the needs to events new adjust to happen, to of lower, be

Ian Gutterman

Yes.

Kevin O’Donnell

artificially to development could in that they’re to continue separately not So be disclosed if the build events. favorable and allocated

Ian Gutterman

That makes sense.

follow-up I much I And line, Mitchell think the top missing losses. more dramatic the that’s it’s case, be that, mean, one, it arguably are on yes, always I So know asked, half the lot idea there seems a to on seem a of losses just to this but right? missing.

Kevin O’Donnell

Yes.

Ian Gutterman

reported a of got of sort clients there big one have coming aspect you more of have reporting can in such hear time put are Are past, was for and see maybe it are there I or what slower get heavier expect. there IBNR, you obviously, some while maybe to who is are I sort you need in they how that us telling I and closer Is other a sense decent the different? of the trying numbers this to what’s things up But a you that a to because reporters that you get in was gap? were slow, picking see, you story. your for people guess,

Kevin O’Donnell

broad the coverage events of traditional each take It’s Irma, we most is of overall cats. of perspective. of on an kind reasonably I’ll If the Irma touch losses. me kind the modest get and Let and

So assessment be. what as type will it’s a to more the traditional of much loss

a to chance report. where main much City we role always occurred, that all play I my the little because with in of we earthquake, that smaller of flood our was know. than it’s longer takes probably mentioned think as there believe I Harvey the more higher a scientists initially again Mexican that earthquake think a As is a what – have Mexico could I is liquefaction expected. event comments, And

than I is a kind tricky saying that some And slower thing one. is expected, that’s large think probably Harvey there losses with are losses the watch Harvey just I’m if see little major not to risk to been a Maria of from emerge of risk emerge. then those

the all between of think far mentioned it’s there I Maria sheets for potential balance where for reported what’s So is disconnect the and earlier. ones what’s I the the biggest ultimately so reasons on recognized probably

largely this shared. additionally a so our retro across many think there complicated up quarter, are events is I risk when exposure, with is it to come a very programs even in us for So events net the

you four. against first your when Harvey an that. happened – as allocation are then optimization So Mexico, you’re you two put retro across doing between Maria, Irma feeling optimization happened Once

with the depending as having ceded distributed. think are many lot growth So but number movement allocations the events this is as going be how the on then I potentially reported a on much of it there and between net necessarily to not numbers, about thinking the net

Ian Gutterman

that That sense. makes makes sense,

we I as and if say that think. and else being you lot is as less is therefore are let’s hypothetical normal conservative can the throw industry a just being and everyone accurate than loss guys So

only not to models it’s over the gotten it models, we’ve XX, is Let’s now we that just three – need comes does cat and the possible that? they to in estimating there just say all it need are to about sort XXX, like us have of indicating overestimated actually XX events, them down. most anything Is go XX maybe cat to under five opposite to tell cat used have anything the where models up, models of these of went the events cat the at,

Kevin O’Donnell

of models the of modeling loss. than making think the different an industry the cat cat estimate I firms

Ian Gutterman

Okay.

Kevin O’Donnell

but model, about when what will have loss return an may the return period to a we events, We then these and when for assessment that’s – think putting talked We periods going loss making that’s So as it. periods I industry return right. our loss the wrong, reasonably to accurate. us is think ratio into be industry on we the

RMS between I reporting, just the There’s thoroughly big California assessing knowing reporting were pretty is which a AR is state. the they interesting is even and think wildfires. loss that, I is and a difference what So what take think model

I extract estimate of from loss using separate to to needs one model. the insured precision can one think, the the their property

Ian Gutterman

it. Got

years capital percent XX what XX? on ask and as know, for the And only I shifts Okay. is to or can if up your change expect last as maybe the disclosure of cat real the your would next or whatever, a EP unrepresentative at of you look book XX, last XX cats, your P&L’s I just proxy, buying you then and and more us, or point But simpler for you or way a that. is years no, things a know you that’s less, in I way more maybe them But I to reasonable that. were divide just going retro not probably a if like terrible add a last just that to this or by losses it? or is there say, I’m get quick is, starting do one something or to

Kevin O’Donnell

I’ve never done that.

Ian Gutterman

Okay.

Kevin O’Donnell

So look it. take a at

very much of of write simply, XX. than has the just loss risk we think I lower a expected

in as So better to to exposed. timeline the you a need is book understanding how have would a longer order

think it a what timeframes. buy robust I more longer set – to to a much I about were approach call model to sarcastic book, myself of cat I it, if So burning understand in would more the using tend would a cost much doing event kind to

Ian Gutterman

Of but course, you something I’m just the answers. Thank have trying you to for to, understand. use All I that right. access I thank

Kevin O’Donnell

thanks. Okay,

Robert Qutub

Ian. Thanks,

Operator

session. our And this the concludes turn O’Donnell. back Kevin I’ll to call over question-and-answer

Kevin O’Donnell

it attention informative We participation you call. that speaking Thank quarter after to we and much your look you for you forward Thank the in for and you. your hope found close. the to very

Operator

conference call. today’s concludes this And

disconnect. now may You

RenaissanceRe (RNR) 1 Nov 172017 Q3 Earnings call transcript