RenaissanceRe Reports Operating Income of $94.2 Million for the First Quarter of 2009 or $1.52 Per Common Share

RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $94.2 million in first quarter operating income available to common shareholders compared to $147.8 million in the first quarter of 2008. Operating income excludes net realized gains on investments of $3.1 million and net realized losses on investments of $10.7 million in the first quarters of 2009 and 2008, respectively. Operating income available to common shareholders per diluted common share was $1.52 in the first quarter of 2009, compared to $2.21 in the first quarter of 2008. Net income available to common shareholders was $97.3 million or $1.57 per diluted common share in the quarter, compared to net income available to common shareholders of $137.2 million or $2.05 per diluted common share for the same quarter of 2008. The Company reported an annualized operating return on average common equity of 15.5% and an annualized return on average common equity of 16.0% in the first quarter of 2009, compared to 21.3% and 19.7%, respectively, in the first quarter of 2008. Book value per common share increased to $39.65 at March 31, 2009, a 2.3% increase in the first quarter of 2009, compared to a 2.7% increase in the first quarter of 2008.

Neill A. Currie, CEO, commented: "We generated an annualized operating ROE of over 15% and 2.3% growth in book value per share in the quarter. Although below our expectations in a light catastrophe quarter, our results also reflect over 20% growth in our managed catastrophe premiums due to a successful January 1^st renewal season, fueled by improving market conditions and increasing demand for property catastrophe reinsurance.”

Mr. Currie added: "We are seeing an increasing flow of new business opportunities, particularly within our specialty reinsurance unit and Individual Risk segment. Our strong financial resources, excellent ratings, reputation for superior underwriting and client service along with our ongoing efforts to build out our business capabilities, position us well to capture these opportunities.”

FIRST QUARTER 2009 RESULTS

Underwriting Results

Gross premiums written for the first quarter of 2009 increased 13.5% to $598.3 million, compared to $527.0 million for the first quarter of 2008. The increase in gross premiums written was primarily driven by an increase in gross premiums written in the Company’s catastrophe unit, and partially offset by decreases in both the Company’s specialty unit and Individual Risk segment as discussed in more detail below. The Company generated $131.2 million of underwriting income and had a combined ratio of 56.5% in the first quarter of 2009, compared to $150.2 million of underwriting income and a 51.4% combined ratio in the first quarter of 2008, principally driven by an increase in net claims and claim expenses incurred during the quarter as a result of unfavorable development on prior years reserves within the Company’s Individual Risk segment. The Company’s unfavorable development on prior years reserves totaled $7.3 million in the first quarter of 2009, compared to $45.1 million of favorable development in the first quarter of 2008, and was principally due to higher than expected claims emergence on the 2008 crop year for the Company’s multi-peril crop business in its Individual Risk segment and partially offset by favorable development in the Company’s Reinsurance segment.

Reinsurance Segment

Gross premiums written for the Company’s Reinsurance segment increased $89.2 million, or 20.1%, to $532.9 million in the first quarter of 2009, compared to $443.7 million in the first quarter of 2008, due to growth in gross premiums written in the Company’s catastrophe unit which benefited from the impact of improving market conditions and the inception of several new programs in the quarter. The Company’s catastrophe premiums increased $97.3 million, or 26.7%, to $461.4 million in the first quarter of 2009, compared to $364.1 million in the first quarter of 2008. The Company’s specialty reinsurance premiums decreased $8.1 million, or 10.2%, to $71.5 million in the first quarter of 2009, compared to $79.6 million in the first quarter of 2008. The Company’s specialty reinsurance premiums are prone to significant volatility due to the timing of contract inception and also due to the business being characterized by a relatively small number of relatively large transactions.

The Company’s Reinsurance segment generated $161.3 million of underwriting income and had a combined ratio of 28.6% in the first quarter of 2009, compared to $145.5 million of underwriting income and a 37.3% combined ratio in the first quarter of 2008. The increase in underwriting income in the first quarter of 2009 was primarily due to the comparably low level of insured catastrophe events in the quarter. The Reinsurance segment experienced $24.7 million of favorable development on prior year reserves in the first quarter of 2009, compared to $23.5 million of favorable development in the first quarter of 2008. The favorable development in the first quarter of 2009 was principally attributable to reduced estimated ultimate losses on certain small catastrophes within the Company’s catastrophe unit and lower than expected claims emergence in the Company’s specialty reinsurance unit.

Individual Risk Segment

Gross premiums written for the Company’s Individual Risk segment decreased $15.7 million, or 19.4%, to $65.1 million in the first quarter of 2009, compared to $80.8 million in the first quarter of 2008. The decrease was primarily due to the Company’s prior decisions to terminate several program manager relationships and a commercial property quota share contract as a result of the then softening market conditions, resulting in reduced commercial property and commercial multi-line gross premiums written. Gross premiums written in the Company’s Individual Risk segment can fluctuate, perhaps significantly between quarters and between years based on several factors, including, without limitation, the timing of the inception or cessation of new program managers and quota share reinsurance contracts, including whether or not the Company has portfolio transfers in, or portfolio transfers out, of quota share reinsurance contracts of in-force books of business.

The Individual Risk segment incurred an underwriting loss of $30.1 million and had a combined ratio of 139.7% in the first quarter of 2009, compared to $4.7 million of underwriting income and a 93.9% combined ratio in the first quarter of 2008. The decrease in underwriting income and increase in the combined ratio in the first quarter of 2009 compared to the first quarter of 2008 were primarily due to an increase in net claims and claim expenses as a result of unfavorable development on prior years reserves of $32.0 million, compared to favorable development of $21.6 million on prior year reserves in the first quarter of 2008, and partially offset by a decrease in current accident year net claims and claim expenses of $19.0 million. The unfavorable loss reserve development in the first quarter of 2009 was primarily due to a $27.3 million increase in prior year losses in the Company’s multi-peril crop insurance line of business related to the 2008 crop year due to an increase in the severity of reported losses incurred during 2008 and reported during the first quarter of 2009. The net impact of this unfavorable development, after considering corresponding changes in net earned premium and related acquisition costs for the 2008 crop year, was a reduction in underwriting income of $25.8 million and an increase in the Company’s combined ratio of 33.7 percentage points. Current accident year losses were $37.6 million during the first quarter of 2009, compared to $56.7 million in the first quarter of 2008, primarily due to a decrease in net claims and claim expenses in the Company’s commercial property line of business.

Investments

Returns on the Company’s investment portfolio were lower in the first quarter of 2009 compared to the first quarter of 2008, principally due to lower average invested assets in the Company’s fixed maturity investments available for sale portfolio combined with lower total returns on the Company’s fixed maturity investments available for sale and short term investments. The Company’s total investment result, which includes the sum of net investment income, net realized gains and losses on investments and the net change in unrealized holding gains on fixed maturity investments available for sale, was $39.8 million in the first quarter of 2009, compared to $65.6 million in the first quarter of 2008, a decrease of $25.7 million.

Net investment income was $42.1 million in the first quarter of 2009, compared to net investment income of $52.5 million in the first quarter of 2008. The $10.4 million decrease was principally driven by $16.0 million and $10.4 million decreases in net investment income from the Company’s short term investments and fixed maturity investments available for sale, respectively, as discussed above, combined with a $17.8 million decrease in net investment income from hedge funds and private equity investments, and partially offset by a $36.3 million increase in net investment income from the Company’s other investments, principally senior secured bank loan funds and non-U.S. fixed income funds. The Company’s hedge fund, private equity and other investments are accounted for at fair value with the change in fair value recorded in net investment income which included net unrealized losses of $17.0 million in the first quarter of 2009, compared to $25.3 million of net unrealized losses in the first quarter of 2008.

Net realized gains on investments were $3.1 million in the first quarter of 2009 compared to net realized losses on investments of $10.7 million in the first quarter of 2008, an improvement of $13.8 million. Included in net realized gains for the first quarter of 2009 is $19.0 million of other than temporary impairments, compared to $25.4 million in the first quarter of 2008. Included in other than temporary impairment charges are impairment charges for which the Company believes it will not be able to recover the full principal amount if the impaired security is held to maturity, of $nil and $0.4 million for the first quarters of 2009 and 2008, respectively. The Company had essentially no fixed maturity investments available for sale in an unrealized loss position at March 31, 2009.

Other Items

• The Company’s cash flows from operations were $140.1 million for the first quarter of 2009, compared to $276.8 million for the first quarter of 2008.
• The Company’s other loss of $14.8 million incurred during the first quarter of 2009 is primarily the result of a negative mark-to-market on the Company’s Platinum warrant of $13.7 million. In addition, other loss in the first quarter of 2009 reflected $4.8 million of other income related to the Company’s weather and energy derivatives trading activities compared to $15.3 million in the first quarter of 2008.
• During the first quarter of 2009, the Company incurred $10.2 million in net foreign exchange losses, compared to net foreign exchange gains of $4.9 million in the first quarter of 2008. The $15.1 million decrease in net foreign exchange (losses) gains is a result of changes to the U.S. Dollar during the quarter against other major currencies with which the Company does business resulting in unfavorable foreign exchange translations on the Company’s net non-U.S. dollar denominated monetary assets and liabilities.

This press release includes certain non-GAAP financial measures including "operating income”, "operating income available to RenaissanceRe common shareholders per common share – diluted”, "operating return on average common equity – annualized” and "managed catastrophe premiums”. A reconciliation of such measures to the most comparable GAAP figures in accordance with Regulation G is presented in the attached supplemental financial data.

Please refer to the "Investor Information – Financial Reports – Financial Supplements” section of the Company's website at www.renre.com for a copy of the Financial Supplement which includes additional information on the Company’s financial performance.

RenaissanceRe Holdings Ltd. will host a conference call on Thursday, April 30, 2009 at 9:30 a.m. (ET) to discuss this release. Live broadcast of the conference call will be available through the "Investor Information – Company Webcasts” section of the Company’s website at www.renre.com.

RenaissanceRe Holdings Ltd. is a global provider of reinsurance and insurance. The Company’s business consists of two segments: (1) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain joint ventures and other investments managed by the Company’s subsidiary RenaissanceRe Ventures Ltd., and (2) Individual Risk, which includes primary insurance and quota share reinsurance.

Cautionary Statement under "Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995: Statements made in this news release contain information about the Company's future business prospects. These statements may be considered "forward-looking." These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements. For further information regarding cautionary statements and factors affecting future results, please refer to RenaissanceRe Holdings Ltd.’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2008 and its quarterly reports on Form 10-Q.

Comments on Regulation G

In addition to the GAAP financial measures set forth in this Press Release, the Company has included certain non-GAAP financial measures in this Press Release within the meaning of Regulation G. The Company has provided these financial measurements in previous investor communications and the Company’s management believes that these measurements are important to investors and other interested persons, and that investors and such other persons benefit from having a consistent basis for comparison between quarters and for the comparison with other companies within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP measures in assessing the Company’s overall financial performance.

The Company uses "operating income” as a measure to evaluate the underlying fundamentals of its operations and believes it to be a useful measure of its corporate performance. "Operating income” as used herein differs from "net income available to RenaissanceRe common shareholders,” which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized gains and losses on investments. The Company's management believes that "operating income” is useful to investors because it more accurately measures and predicts the Company's results of operations by removing the variability arising from fluctuations in the Company’s investment portfolio, which is not considered by management to be a relevant indicator of business operations. The Company also uses "operating income” to calculate "operating income per common share – diluted” and "operating return on average common equity – annualized”. The following is a reconciliation of: 1) net income available to RenaissanceRe common shareholders to operating income available to RenaissanceRe common shareholders; 2) net income available to RenaissanceRe common shareholders per common share – diluted to operating income available to RenaissanceRe common shareholders per common share – diluted; and 3) return on average common equity – annualized to operating return on average common equity – annualized:

The Company has also included in this Press Release "managed catastrophe premiums.” "Managed catastrophe premiums” is defined as gross catastrophe premiums written by Renaissance Reinsurance and its related joint ventures. "Managed catastrophe premiums” differ from total catastrophe premiums, which the Company believes is the most directly comparable GAAP measure, due to the inclusion of catastrophe premiums written on behalf of the Company’s joint venture Top Layer Re, which is accounted for under the equity method of accounting. The Company’s management believes "managed catastrophe premiums” is useful to investors and other interested parties because it provides a measure of total catastrophe reinsurance premiums assumed by the Company through its consolidated subsidiaries and related joint ventures.