RenaissanceRe, the Bermuda headquartered reinsurer and third-party reinsurance capital manager, has pre-announced an expectation that losses from winter storm Uri will have a net negative impact of around $180 million on its first-quarter 2021 results.
Because of this, RenaissanceRe (RenRe) is forecasting that it will report a net loss for the first-quarter, but with nominal operating income also available to its common shareholders from the period.
The $180 million of winter Storm Uri losses are net, so after RenRe has taken into account its retrocessional reinsurance arrangements and also any share of losses attributable to investors in its third-party capital structures, joint-ventures and insurance-linked securities (ILS) funds.
Given the size of the industry loss from winter storm Uri and the related freeze loss in Texas, it is natural to assume that RenRe will pass on a share of its losses from the weather event to third-party reinsurance capital providers it is partnered with.
RenRe noted that winter Storm Uri drove a major wind and ice storm across the U.S. in February 2021, causing widespread damage in many areas, including Texas.
Kevin J. O’Donnell, President and Chief Executive Officer of RenaissanceRe, said, “We extend our sympathies to all those affected by Winter Storm Uri. Consistent with our track record, we will support our customers in understanding and managing this U.S. winter storm while helping communities recover through rapid payment of claims. We are in a strong capital position heading into the mid-year renewals and anticipate additional opportunities to write attractive risk.”
RenRe had previously said that it is optimistic on prospects for the Florida reinsurance renewals and the mid-year will be a key point for the company, as it looks to deploy capital.
The reinsurance company highlighted that its ultimate net loss from winter storm Uri could differ from the estimate, perhaps materially, highlighting “meaningful uncertainty”, explaining that the nature of the event means there is uncertainty related to “the contingent nature of business interruption and other exposures,” as well as “potential uncertainties relating to reinsurance recoveries.”