RenRe Reports Q3 Operating Loss of $372 Million; Increases Hurricane Loss Estimates

Bermuda’s RenaissanceRe Holdings Ltd. reported a net operating loss attributable to common shareholders of $372 million for the third quarter of 2004, versus net operating income available to common shareholders of $112 million for the comparable period in 2003.

Even Chairman and CEO James N. Stanard’s fabled mathematical models apparently failed to predict the hurricanes that struck Florida. RenRe acknowledged that the “net loss resulted primarily from the negative impact of $520 million sustained during the quarter from hurricanes Charley, Frances, Ivan and Jeanne.” The company said “overall net losses attributable to common shareholders was $357 million or ($5.10) per common share in the quarter, compared to net income available to common shareholders of $113 million or $1.59 per common share for the same quarter of 2003.”

“Our third quarter results were obviously dominated by the four large hurricanes,” Stanard commented. “We have recorded a negative impact in the quarter from these events of $520 million, an increase from the $425 million that we had previously reported on a preliminary basis. We raised our estimates based on an increase in our assumption of total industry losses in the U.S. and Caribbean, to over $30 billion. Our results remain consistent with the assessment from our risk management system, and reflect our decision to have a relatively large share of the Florida market.”

Stanard confirmed that the losses would substantially impact RenRe’s yearly results. “In light of the catastrophe losses that we have sustained in this quarter, we have reduced our operating EPS guidance for 2004 to a range of $0.75 to $0.95 compared with our previous range of $6.95 to $7.25,” he stated. “These earnings estimates assume normal loss activity for the remainder of the year and include an expected benefit of $20 million as we begin to record the value of our Platinum warrant through our income statement in the fourth quarter, as required by generally accepted accounting principles.”

Stanard also indicated: “For 2005, we are projecting operating EPS of $6.30 to $6.70, assuming normal loss activity. We project roughly flat premium in catastrophe and specialty reinsurance, excluding backup covers and reinstatements written in 2004. We continue to foresee strong growth in the Individual Risk unit of over 40 percent as we add additional program managers. Some of the growth that we had expected in Individual Risk in 2004 is now projected in 2005 due to later inceptions of two programs.”

The complete report is available on the company’s Web site at: http://www.renre.com.