RenaissanceRe Reports Q2 Operating Income of $143.1 Million; Gain from 2003 Numbers

July 27, 2004

Bermuda-based RenaissanceRe Holdings Ltd. reported net operating income available to common shareholders of $143.1 million for the second quarter of 2004, versus $130.5 million for the comparable period in 2003.

Operating income excludes realized investment gains (losses) of ($26.9) million and $49.7 million in the second quarters of 2004 and 2003, respectively. Operating income per common share grew to $2.00 in the second quarter of 2004, from $1.84 per common share in the second quarter of 2003. Net income available to common shareholders was $116.2 million or $1.62 per common share in the quarter, compared to $180.2 million or $2.54 per common share for the same quarter of 2003. The decline in net income resulted primarily from normal course investment activities, with the change in realized investment gains (losses) reflecting the broadly favorable investment environment of 2003 compared with the rising interest rate environment of this past second quarter.

James Stanard, chairman and CEO, commented: “Our strong premium growth reflects two conflicting trends. First, Renaissance has preferred positions on various attractive reinsurance and insurance programs as a result of our strong customer relationships and credit ratings. Second, however, we continue to see price declines, and increasingly have had to turn down business that does not meet our return requirements. For 2004 we have increased estimates of our managed specialty reinsurance premium growth to over 30% compared to 2003; for our individual risk business we are maintaining our estimates of 30% growth; and for cat reinsurance we continue to expect gross managed premium declines of 5% or more. Our current expectation for 2005 is that we will continue to see growth in the individual risk business, but we will likely see a flattening of specialty reinsurance premium and further decreases in cat reinsurance premium.

“In light of the low losses in the first half of the year, we have raised our operating EPS guidance for 2004 to a range of $6.95 to $7.25 compared with our previous range of $6.10 to $6.50. These earnings estimates assume normal loss activity in the second half of the year.”

Gross premiums written for the second quarter of 2004 were $326.9 million, compared to $212.6 million for the same quarter of 2003. Gross premiums written include $215.3 million attributable to the company’s Reinsurance segment in the second quarter of 2004, compared to $114.9 million in the comparable 2003 period; and $111.6 million attributable to the company’s Individual Risk segment in the second quarter of 2004, compared to $97.7 million for the same quarter of 2003.

Net premiums written for the second quarter of 2004 were $262.8 million, compared to $160.2 million for the same quarter of 2003. Net premiums written include $153.2 million attributable to the company’s Reinsurance segment in the second quarter of 2004, compared to $65.4 million for the same quarter of 2003; and $109.7 million attributable to the company’s Individual Risk segment in the second quarter of 2004, compared to $94.8 million for the same quarter of 2003.

Net premiums earned for the second quarter of 2004 were $344.0 million, compared to $275.5 million for the same quarter of 2003. Net premiums earned include $235.9 million in net premiums earned for the company’s Reinsurance segment in the second quarter of 2004, compared to $208.9 million for the same quarter of 2003; and $108.1 million in net premiums earned for the company’s Individual Risk segment in the second quarter of 2004, compared to $66.6 million for the same quarter of 2003.

Premiums for the second quarter of 2004 include $34.2 million of gross written premiums, $38.3 million of net written premiums and $53.7 million of net premiums earned by the company’s consolidated joint venture, DaVinci Re during the second quarter of 2004, compared to $17.1 million of gross written premiums, $19.0 million of net written premiums and $46.7 million of net premiums earned by DaVinci Re during the second quarter of 2003.

Total managed cat premiums written, representing gross catastrophe premiums written by Renaissance Reinsurance and by related joint ventures, were $175.5 million for the second quarter of 2004, compared to $103.8 million for the same quarter of 2003, representing an increase of 69.1%. The increase was primarily due to timing differences. See the attached supplemental financial data for additional information regarding managed premiums.

During the quarter, income from the DaVinci joint venture and other fee income was $37.9 million, compared to $31.6 million during the second quarter of 2003. Of this, $23.9 million reflects fees and profit commissions, compared to $15.6 million in the second quarter of 2003, and $15.7 million reflects equity in earnings of unconsolidated ventures and DaVinci, versus $16.5 million in the comparable quarter of 2003.

For the second quarter of 2004, the company generated a combined ratio of 58.5%, a loss ratio of 35.1% and an expense ratio of 23.4%, compared to a combined ratio, loss ratio and expense ratio of 57.0%, 36.3% and 20.7%, respectively, for the second quarter of 2003. The increase in the expense ratio primarily relates to the increased scale of the company’s Individual Risk segment, which typically generates higher expense ratios than the Reinsurance segment.

For the quarter, the company’s Reinsurance segment generated a loss ratio of 27.6% and an expense ratio of 16.3%, compared to 29.2% and 16.9%, respectively, during the second quarter of 2003. For the quarter, the company’s Individual Risk segment generated a loss ratio of 51.5% and an expense ratio of 38.8%, compared to 58.5% and 32.6%, respectively, during the second quarter of 2003.

During the quarter, the company recorded favorable development on prior year reserves of $29.7 million or a benefit of 8.6 percentage points to the company’s quarterly loss ratio. The company’s Reinsurance segment contributed $27.4 million of favorable development, and the company’s Individual Risk segment contributed $2.3 million of favorable development. Net recovered losses for the quarter were $7.8 million. The company had net recoveries in the second quarter due to the timing of collections on certain reinsurance recoverables.

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