Q1 2017 catastrophe premiums up at RenRe, DaVinci profits decline

by Artemis on May 3, 2017

Bermuda domiciled reinsurer RenaissanceRe (RenRe) has reported growth in its managed catastrophe premiums in the first-quarter of 2017, to $426.8 million, although its net income was negatively impacted by a decline in the profitability of its third-party sidecar vehicle, DaVinci Re.

The reinsurer operates a number of joint-ventures and third-party backed reinsurance vehicles, collateralised reinsurance or insurance-linked securities (ILS) funds within its Ventures unit, of which the performance and impact on the firm’s results are included in its managed catastrophe premiums segment.

The firm’s Q1 2017 results show that gross catastrophe premiums written increased from roughly $373 million in 2016 to $414.4 million. And managed catastrophe premiums increased by 13.6%, or $51.1 million to $426.8 million, compared with $375.7 million in Q1 2016.

Artemis discussed earlier this year how RenRe’s managed catastrophe premiums declined by almost 50% in the fourth-quarter of 2016 and by over 4% for the full-year 2016, and with reinsurance market conditions remaining challenging it’s positive to see the trend reverse in the opening quarter of the year.

DaVinci Re is one of the catastrophe vehicles that RenRe operates, and during the first-quarter gross written premiums increased from $114.5 million in 2016, to $116.6 million. Net realized gains on investments and declined from the $15.2 million in Q1 2016 to just over $2 million in 2017, meaning that total revenues of DaVinci Re in Q1 2017 fell by almost $15 million, to $66.3 million.

As a result, net income for DaVinci Re shareholders declined to $41.2 million, compared with $56.5 million a year earlier.

This saw RenRe report net income attributable to non-controlling interests, or third-party shareholders and investors in some of its vehicles, in Q1 2017 was $34.3 million, compared with $44.6 million a year earlier.

The firm says the decline is “principally due to a decrease in the profitability of DaVinci Re,” which was partially offset “by a decrease in the company’s ownership in DaVinci Re to 22.6%,” from the 24% stake held at the end of the first-quarter in 2016.

DaVinci Re recorded a combined ratio of 41.4% in the quarter, compared with 38.4% a year earlier.

Top Layer Re, which is also included in the firm’s managed catastrophe premiums segment, reported catastrophe premiums of $12.3 million in the quarter, compared with $11 million a year earlier.

RenRe has been reducing its stake in its DaVinci Re vehicle in recent times, and despite the vehicle reporting lower profitability than the same period last year, it clearly remains an important part of the firm’s overall business strategy, and shows the benefits of utilising the efficient glut of third-party reinsurance capital and ILS vehicles to supplement and support traditional balance sheets.

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