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RENAISSANCERE HOLDINGS LTD (RNR)·Q4 2024 Earnings Summary

Executive Summary

  • GAAP loss driven by investment marks despite strong operating performance: Q4 diluted EPS was $(3.95) on a GAAP net loss of $(198.5)m; operating EPS was $8.06 with $406.9m operating income as underwriting and net investment income remained solid .
  • Cat events were the swing factor: Hurricane Milton reduced net income by ~$270.5m and added 13.9 pts to the consolidated combined ratio; consolidated CR rose to 91.7% (adj. 89.4%) versus 76.0% (adj. 73.6%) in Q4 2023 .
  • Capital deployment and fee/investment engines remained strengths: share repurchases totaled $462.3m in Q4; fee income grew 9% YoY to $77.1m; net investment income rose 13.8% YoY to $428.8m (portfolio YTM 5.4%, duration 2.9) .
  • Outlook: Management expects Q1 2025 headwinds from the California wildfires (~1.5% of industry insured loss; ~$750m pre‑tax at a $50B industry loss), lower Q1 performance fees, but stable retained NII and firming property-cat pricing at coming renewals .

What Went Well and What Went Wrong

What Went Well

  • Strong operating profitability despite catastrophe loss and marks: operating income $406.9m, operating ROAE 16.0% .
  • Property segment resilient: Q4 property combined ratio 71.6% (adj. 69.2%) with $266.9m underwriting income, aided by substantial prior-year favorable development in property lines .
  • Diversified earnings drivers: fee income $77.1m (+8.9% YoY) and net investment income $428.8m (+13.8% YoY) supported results; portfolio YTM 5.4%, duration 2.9 years .
  • Management quote: “We delivered another strong year… tangible book value per share plus change in accumulated dividends – was 26%… Looking forward, we believe our strong capital and liquidity positions will allow us to capture additional opportunities…” — Kevin O’Donnell, CEO .

What Went Wrong

  • GAAP loss from market volatility: $(630.3)m net realized/unrealized losses (mainly fixed maturities) drove total investment result to $(201.5)m in Q4 .
  • Catastrophe impact: Hurricane Milton cut Q4 net income by $(270.5)m and lifted the consolidated CR by 13.9 pts; property cat experienced significant current accident-year losses .
  • Casualty pressure: Casualty & Specialty combined ratio was 103.7% (adj. 101.3%) on higher current-year loss ratios in general casualty; management continues to manage exposure and expects mid‑ to upper‑90s adjusted CR on average over time .
  • FX and derivative losses: Q4 net FX loss $(48.4)m; higher losses on investment-related derivatives amid rate moves .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Diluted EPS (GAAP) ($)30.43 9.41 22.62 (3.95)
Operating EPS (Diluted) ($)11.77 12.41 10.23 8.06
Total Revenues ($mm)3,240.3 2,828.5 3,973.8 2,293.4
Net Premiums Earned ($mm)2,249.4 2,541.3 2,583.0 2,527.6
Underwriting Income ($mm)541.0 479.3 393.8 208.6
Net Investment Income ($mm)377.0 410.8 423.9 428.8
Net Realized & Unrealized Gains/Losses ($mm)585.9 (127.6) 943.7 (630.3)
Combined Ratio (%)76.0 81.1 84.8 91.7
Adjusted Combined Ratio (%)73.6 78.6 82.4 89.4
Fee Income ($mm)70.8 84.1 82.1 77.1

Segment performance (Q4 comparison)

MetricProperty Q4 2023Property Q4 2024C&S Q4 2023C&S Q4 2024
Net Premiums Earned ($mm)884.3 938.7 1,365.1 1,588.9
Underwriting Income ($mm)503.6 266.9 37.4 (58.3)
Combined Ratio (%)43.1 71.6 97.3 103.7
Adjusted Combined Ratio (%)41.7 69.2 94.3 101.3

Additional KPIs

KPIQ4 2023Q4 2024
Book Value per Share ($)165.20 195.77
Quarterly Change in BVPS (%)23.6 (3.1)
Tangible BVPS + Accum. Dividends ($)168.39 205.26
Annualized ROAE (%)83.5 (7.8)
Annualized Operating ROAE (%)33.0 16.0
Share Repurchases (QTD, $mm)n/a462.3
Portfolio YTM (%)5.8 5.4
Duration (years)2.6 2.9

Notes: Hurricane Milton net negative impact on net income $(270.5)m; consolidated CR +13.9 pts .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Casualty & Specialty Adjusted CROngoing (avg)n/aMid‑ to upper‑90s on average Maintained qualitative outlook
Other Property Net Premiums EarnedQ1 2025n/a≈$375m New datapoint
Casualty & Specialty Net Premiums EarnedQ1 2025n/a≈$1.5B New datapoint
Fee Income – Management feesQ1 2025~$50m/quarter (run‑rate) ≈$45m in Q1, recapture over time Lower near‑term
Fee Income – Performance feesQ1 2025n/aDown significantly Lower near‑term
Retained Net Investment IncomeQ1 2025n/aAbout flat vs Q4 Stable
Property‑Cat Pricing1/1/2025; 2025 outlookn/a1/1 rates down high‑single digits; expect upward pressure post‑wildfires Mixed: recent down, outlook firming
Bermuda Corporate Income Tax2025n/aBegin accruing 15% tax; DTA ~$670m New regime

Earnings Call Themes & Trends

TopicQ2 2024 (prior)Q3 2024 (prior)Q4 2024 (current)Trend
Property-cat loss environment & pricingCR 53.9% (adj. 51.7%); moderate large-loss impact; strong property profitability Large losses +12.7 pts; property CR 60.3% (adj. 58.1%); rates attractive Milton hit; property CR 71.6% (adj. 69.2%); 1/1 rates down HSD but expect firming post‑wildfires Firming expected
Casualty trend/reservingC&S CR 98.2% (adj. 95.6%); higher current‑year loss ratio C&S CR 100.1% (adj. 97.7%); expense ratio up C&S CR 103.7% (adj. 101.3%); GL pressure; confident reserves, reduce riskier programs Cautious, proactive
Capital managementRepurchased $108.5m; ongoing returns Repurchased $106.8m; authorization increased Repurchased $462.3m; added $137.7m in Jan-25 Accelerating buybacks
Investment income & portfolioNII $410.8m; YTM 6.0%, dur 2.8y NII $423.9m; strong MTM gains NII $428.8m; MTM losses; retained NII to stay ~flat Stable NII at high yields
Third‑party capital & feesFee income $84.1m; growth in DaVinci/Fontana Fee income $82.1m; growth continues Fee income $77.1m; Q1 mgmt fees ~$45m, performance fees down Near‑term dip on wildfires
Regulatory/tax——Begin accruing Bermuda 15% tax in 2025; DTA ~$670m New tax headwind

Management Commentary

  • Strategy and capital: “Our primary metric… was 26%… our long-term partnership approach was rewarded… we retained our attractive underwriting book… strong capital and liquidity positions will allow us to capture additional opportunities” — Kevin O’Donnell, CEO .
  • California wildfires: “Tail event… we currently estimate our pre‑tax net negative impact will be approximately 1.5% of the aggregate industry insured loss… about $750 million based on a $50 billion aggregate industry insured loss” .
  • Market outlook: “Property cat rates were down high single digits [at 1/1]. We found some opportunities to grow… we expect an improving market for property catastrophe reinsurance, with upward pressure on rates” — Kevin O’Donnell; David Marra .
  • Q4 dynamics: “Operating income of $407 million… property segment adjusted CR of 69% with 49 pts from large events (42 pts Milton)… retained net investment income up 15%… repurchased $600 million since last call” — Robert Qutub, CFO .

Q&A Highlights

  • Casualty/general liability trends: Management reiterated use of ~10–12% trend in GL; higher current-year picks reflect prudence amid uncertainty; expect improvement if primary rate increases (>trend) persist. “We’ve added a buffer… if rates/claims management persist, it should come back as prior-year favorable” .
  • Reserve comfort and mix: Added to general liability reserves (2019–2022 cohorts), offset by favorable in other specialty and property; comfortable aggregate reserve position .
  • Property pricing trajectory: Most U.S. cat renewals are in Q2; loss-impacted programs expected to see firming vs 1/1 declines; Florida likely flat to up due to Milton .
  • Wildfire loss mechanics/NCI: Loss flows from gross to net with reinstatement premiums and then through noncontrolling interests in vehicles (e.g., DaVinci), reducing the portion attributable to common shareholders .
  • Capital partners: Vehicles well-capitalized; no broad need to raise capital; ability to redeploy dividends and maintain capacity into 2025 .

Estimates Context

  • S&P Global consensus: We attempted to retrieve EPS and revenue consensus for Q4 2024 and the two prior quarters, but access was unavailable due to S&P Global request limits at query time. As a result, we cannot provide a definitive beat/miss vs Wall Street consensus for this quarter. If you want, we can re-run later for estimate comparisons.

Key Takeaways for Investors

  • Near-term: Expect headline pressure from California wildfire guidance (Q1 2025 pre‑tax impact ~1.5% of industry loss), softer Q1 fee income, but stable retained net investment income; any signs of faster firming in Q2 renewals could be a positive catalyst .
  • Medium-term: Property-cat opportunity set remains favorable post a tail wildfire event; RNR is positioned with capital and preferential signings to deploy at improved terms .
  • Quality of earnings: Operating profitability remains robust and diversified (underwriting/investments/fees), cushioning GAAP volatility from mark‑to‑market investment swings .
  • Casualty risk management: C&S headwinds are being actively managed (exposure reductions where trends are worst; higher initial picks); management continues to target mid‑ to upper‑90s adjusted CR over time .
  • Capital returns: Accelerated buybacks demonstrate confidence and balance sheet strength; repurchases of $462.3m in Q4 and $137.7m in January 2025 support per‑share value compounding .
  • Book value compounding: Despite Q4 investment marks, FY24 BVPS rose to $195.77 and tangible BVPS+div to $205.26; continued growth hinges on underwriting discipline and stable NII .
  • Watch items: Evolution of wildfire industry loss estimates (sensitivity near 1.5% share), Q2 renewal pricing/pruned aggregate covers, and C&S loss trend vs primary rate momentum .