RenaissanceRe Reports Operating Income of $147.8 Million for the First Quarter of 2008 or $2.21 Per Common Share

RenaissanceRe Holdings Ltd. (NYSE: RNR) today reported $147.8 million in first quarter operating income available to common shareholders compared to $186.7 million in the first quarter of 2007. Operating income excludes net realized losses on investments of $10.7 million and net realized gains on investments of $4.1 million in the first quarters of 2008 and 2007, respectively. Operating income per diluted common share was $2.21 in the first quarter of 2008, compared to $2.57 in the first quarter of 2007. Net income available to common shareholders was $137.2 million or $2.05 per diluted common share in the quarter, compared to net income available to common shareholders of $190.8 million or $2.63 per diluted common share for the same quarter of 2007. The Company reported an annualized operating return on average common equity of 21.3% and an annualized return on average common equity of 19.7% in the first quarter of 2008, compared to 29.1% and 29.7%, respectively, in the first quarter of 2007. Book value per common share increased to $42.14 at March 31, 2008, a 2.7% increase in the first quarter of 2008, compared to a 6.8% increase in the first quarter of 2007. Neill A. Currie, CEO, commented: "I am pleased to report another solid quarter with an annualized operating ROE of over 21% and almost 3% growth in book value per share, inclusive of the impact of share buybacks. We continue to actively manage capital and returned over $239 million to our shareholders through share buybacks during the quarter, bringing our total purchases to date to over $460 million since the start of 2007.” Mr. Currie added, "We remain disciplined in our underwriting given current market conditions, while continuing to build out our franchise and capabilities through strategic hires, additional modeling capabilities and strategic new investments. These initiatives further enhance our ability to react quickly and grow our portfolio when the right opportunities present themselves.” FIRST QUARTER 2008 RESULTS Underwriting Results Gross premiums written for the first quarter of 2008 were $527.0 million compared to $632.7 million for the first quarter of 2007. The decrease in gross premiums written was primarily driven by a reduction in business written in several lines of business due to softening market conditions in the Company’s Reinsurance and Individual Risk segments compared to the first quarter of 2007, combined with the prior termination of a program manager and a quota share relationship in the Company’s Individual Risk segment. As described in more detail below, the Company generated $150.2 million of underwriting income and had a combined ratio of 51.4% in the first quarter of 2008, compared to $124.4 million of underwriting income and a 65.6% combined ratio in the first quarter of 2007, principally driven by lower insured catastrophic events compared to the first quarter of 2007, which was impacted by European windstorm Kyrill. The relatively low level of insured catastrophe losses offset a $53.7 million decrease in net premiums earned which was driven by lower gross premiums written and the impact of higher ceded premiums written. In addition, the Company experienced $45.1 million of favorable development on prior year reserves in the first quarter of 2008, compared to $47.1 million of favorable development in the first quarter of 2007, primarily due to lower than expected claims emergence in the Company’s specialty reinsurance unit and Individual Risk segment, including a decrease in net claims and claim expenses associated with the close of the 2007 crop year for the Company’s multi-peril crop business. Reinsurance Segment Gross premiums written for the Company’s Reinsurance segment decreased $72.2 million, or 14.0%, to $443.7 million in the first quarter of 2008, compared to the first quarter of 2007, due primarily to the impact of softening market conditions across all lines of business. The Company’s managed catastrophe premiums decreased $31.1 million, or 7.2%, from the first quarter of 2007 and the Company’s specialty reinsurance premiums decreased $37.4 million, or 32.0%, from the first quarter of 2007. The Reinsurance segment generated $145.5 million of underwriting income and had a combined ratio of 37.3% in the first quarter of 2008, compared to $116.1 million of underwriting income and a 54.4% combined ratio in the first quarter of 2007. The increase in underwriting income in the first quarter of 2008 was primarily due to the comparably low level of insured catastrophic events in the quarter. The Reinsurance segment experienced $23.5 million of favorable development on prior year reserves in the first quarter of 2008, compared to $30.3 million of favorable development in the first quarter of 2007. The favorable development in the first quarters of 2008 and 2007 was principally attributable to 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 $42.5 million, or 34.5%, to $80.8 million in the first quarter of 2008, compared to $123.3 million in the first quarter of 2007. The decrease was due to a combination of factors including the prior termination of a commercial multi-line program and a commercial property quota share relationship. The premium from these relationships was included in the Individual Risk segment’s gross premiums written for the first quarter of 2007, but not in the first quarter of 2008. In addition, the Company’s participation in a personal lines property quota share relationship decreased in the second quarter of 2007 and as a result the gross premiums written from this relationship are down in the first quarter of 2008. Finally, the overall softening of market conditions with respect to property and casualty premium rates has resulted in a decrease in gross premiums written across the Company’s commercial multi-line, commercial property and personal property lines of business as the Company has maintained its underwriting discipline. Offsetting the decreases in gross premiums written noted above was the addition of two new programs which incepted in late 2007, and anticipated growth in the Company’s multi-peril crop insurance program on a full year basis, both of which would be expected to favorably impact the Company’s Individual Risk gross premiums written in 2008. As a result, the Company is maintaining its full year forecast of a 5% decrease in gross premiums written in 2008, compared to 2007. 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 generated $4.7 million of underwriting income and had a combined ratio of 93.9% in the first quarter of 2008, compared to $8.3 million of underwriting income and a 92.3% combined ratio in the first quarter of 2007. The decrease in underwriting income in the first quarter of 2008 compared to the first quarter of 2007 was primarily due to a $31.2 million decrease in net premiums earned, offset by an $18.8 million decrease in net claims and claim expenses as well as an $8.8 million decrease in underwriting expenses. The Individual Risk segment experienced favorable development of $21.6 million and $16.8 million on prior year reserves in the first quarters of 2008 and 2007, respectively, principally attributable to lower than expected claims emergence. The favorable development in the first quarter of 2008 includes $16.4 million attributable to the close of the 2007 crop year for the Company’s multi-peril crop insurance program. This portion of the favorable development was mostly offset by the combination of a $12.1 million decrease in net premiums earned and $1.4 million of additional profit related acquisition expenses, resulting in a $2.9 million net favorable underwriting impact in the first quarter of 2008. Other Items Net investment income for the first quarter of 2008 was $52.5 million, compared to $108.0 million for the same quarter in 2007 as a result of lower returns in the Company’s investment portfolio. Other investments incurred a loss of $16.4 million in the first quarter of 2008 compared with net investment income of $37.0 million in the first quarter of 2007. Included in net investment income from other investments is a $1.9 million net investment loss from hedge funds and private equity investments in the first quarter of 2008 compared to $28.5 million of net investment income in the first quarter of 2007. In addition, net investment income includes a $14.4 million loss from other investments, primarily arising from the Company’s investments in senior secured bank loan funds and non-U.S. fixed income funds, compared to $8.6 million of income in the first quarter of 2007. During the first quarter of 2008, the Company incurred $25.4 million of other than temporary impairments on the Company’s fixed maturity investments available for sale, compared to $1.5 million in the first quarter of 2007. The Company’s cash flows from operations were $276.8 million for the first quarter of 2008, compared to $150.6 million for the first quarter of 2007. During the first quarter of 2008, the Company repurchased approximately 4.3 million common shares in open market transactions at an aggregate cost of $239.6 million and at an average share price of $56.11. This press release includes certain non-GAAP financial measures including "operating income”, "operating income per common share – diluted”, "operating return on average common equity – annualized” and "managed catastrophe premium”. 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 Wednesday, April 30, 2008 at 10:30 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, 2007. RenaissanceRe Holdings Ltd. and Subsidiaries Summary Consolidated Statements of Operations For the three months ended March 31, 2008 and 2007 (in thousands of United States Dollars, except per share amounts) (Unaudited)     Three months ended March 31, 2008 March 31, 2007 Revenues Gross premiums written $ 527,038 $ 632,729   Net premiums written $ 403,116 $ 571,027 Increase in unearned premiums   (94,202)   (208,409)   Net premiums earned 308,914 362,618 Net investment income 52,503 108,015 Net foreign exchange gains 4,936 5,167 Equity in earnings of other ventures 6,250 10,701 Other income (loss) 8,012 (2,203) Net realized (losses) gains on investments   (10,670)   4,085   Total revenues   369,945   488,383   Expenses Net claims and claim expenses incurred 82,156 145,992 Acquisition expenses 46,428 63,729 Operational expenses 30,113 28,524 Corporate expenses 8,703 7,004 Interest expense   6,804   11,979   Total expenses   174,204   257,228   Income before minority interest and taxes 195,741 231,155 Minority interest - DaVinciRe   (40,315)   (29,107)   Income before taxes 155,426 202,048 Income tax expense   (7,686)   (107)   Net income 147,740 201,941 Dividends on preference shares   (10,575)   (11,136)   Net income available to common shareholders $ 137,165 $ 190,805   Operating income available to common shareholders per Common Share - diluted (1) $ 2.21 $ 2.57   Net income available to common shareholders per Common Share - basic $ 2.09 $ 2.68 Net income available to common shareholders per Common Share - diluted $ 2.05 $ 2.63   Average shares outstanding - basic 65,528 71,281 Average shares outstanding - diluted 66,803 72,514   Net claims and claim expense ratio 26.6% 40.2% Underwriting expense ratio   24.8%   25.4%   Combined ratio   51.4%   65.6%   Operating return on average common equity - annualized (1)   21.3%   29.1%   (1) See Comments on Regulation G for a reconciliation of non-GAAP financial measures. RenaissanceRe Holdings Ltd. and Subsidiaries Summary Consolidated Balance Sheets (in thousands of United States Dollars, except per share amounts)     At March 31, 2008 December 31, 2007 (Unaudited) (Audited) Assets Fixed maturity investments available for sale, at fair value $ 3,816,518 $ 3,914,363 Short term investments, at fair value 1,565,589 1,821,549 Other investments, at fair value 858,621 807,864 Investments in other ventures, under equity method   99,466   90,572   Total investments 6,340,194 6,634,348 Cash and cash equivalents 335,409 330,226 Premiums receivable 499,384 475,075 Ceded reinsurance balances 122,631 107,916 Losses recoverable 151,555 183,275 Accrued investment income 36,337 39,084 Deferred acquisition costs 106,310 104,212 Receivable for investments sold 349,835 144,037 Other secured assets 107,784 90,488 Other assets   120,503   177,694   Total assets $ 8,169,942 $ 8,286,355   Liabilities, Minority Interest and Shareholders' Equity Liabilities Reserve for claims and claim expenses $ 1,986,006 $ 2,028,496 Reserve for unearned premiums 673,991 563,336 Debt 450,999 451,951 Reinsurance balances payable 263,700 275,430 Payable for investments purchased 387,838 422,974 Other secured liabilities 106,420 88,920 Other liabilities   156,185   162,294   Total liabilities   4,025,139   3,993,401   Minority interest - DaVinciRe 758,851 815,451   Shareholders' Equity Preference shares 650,000 650,000 Common shares 64,927 68,920 Additional paid-in capital - 107,867 Accumulated other comprehensive income 65,363 44,719 Retained earnings   2,605,662   2,605,997   Total shareholders' equity   3,385,952   3,477,503   Total liabilities, minority interest and shareholders' equity $ 8,169,942 $ 8,286,355   Book value per common share (unaudited) $ 42.14 $ 41.03   Common shares outstanding   64,927   68,920 RenaissanceRe Holdings Ltd. and Subsidiaries Supplemental Financial Data - Segment Information (in thousands of United States Dollars) (Unaudited)           Three months ended March 31, 2008 Reinsurance Individual Risk Eliminations (1) Other Total   Gross premiums written $ 443,728 $ 80,821 $ 2,489 $ - $ 527,038   Net premiums written $ 342,920 $ 60,196 - $ 403,116   Net premiums earned $ 232,227 $ 76,687 - $ 308,914 Net claims and claim expenses incurred 47,069 35,087 - 82,156 Acquisition expenses 18,515 27,913 - 46,428 Operational expenses 21,139 8,974 - 30,113   Underwriting income $ 145,504 $ 4,713 - 150,217 Net investment income 52,503 52,503 Equity in earnings of other ventures 6,250 6,250 Other income 8,012 8,012 Interest and preference share dividends (17,379) (17,379) Minority interest - DaVinciRe (40,315) (40,315) Other items, net (11,453) (11,453) Net realized losses on investments (10,670) (10,670)   Net income available to common shareholders $ (13,052) $ 137,165   Net claims and claim expenses incurred - current accident year $ 70,576 $ 56,665 $ 127,241 Net claims and claim expenses incurred - prior accident years (23,507) (21,578) (45,085)   Net claims and claim expenses incurred - total $ 47,069 $ 35,087 $ 82,156   Net claims and claim expense ratio - current accident year 30.4% 73.9% 41.2% Net claims and claim expense ratio - prior accident years (10.1%) (28.1%) (14.6%)   Net claims and claim expense ratio - calendar year 20.3% 45.8% 26.6% Underwriting expense ratio 17.0% 48.1% 24.8%   Combined ratio 37.3% 93.9% 51.4%   (1)Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment.   Three months ended March 31, 2007 Reinsurance Individual Risk Eliminations (1) Other Total   Gross premiums written $ 515,967 $ 123,316 $ (6,554) $ - $ 632,729   Net premiums written $ 476,219 $ 94,808 - $ 571,027   Net premiums earned $ 254,779 $ 107,839 - $ 362,618 Net claims and claim expenses incurred 92,127 53,865 - 145,992 Acquisition expenses 28,362 35,367 - 63,729 Operational expenses 18,191 10,333 - 28,524   Underwriting income $ 116,099 $ 8,274 - 124,373 Net investment income 108,015 108,015 Equity in earnings of other ventures 10,701 10,701 Other loss (2,203) (2,203) Interest and preference share dividends (23,115) (23,115) Minority interest - DaVinciRe (29,107) (29,107) Other items, net (1,944) (1,944) Net realized gains on investments 4,085 4,085   Net income available to common shareholders $ 66,432 $ 190,805   Net claims and claim expenses incurred - current accident year $ 122,406 $ 70,659 $ 193,065 Net claims and claim expenses incurred - prior accident years (30,279) (16,794) (47,073)   Net claims and claim expenses incurred - total $ 92,127 $ 53,865 $ 145,992   Net claims and claim expense ratio - current accident year 48.0% 65.5% 53.2% Net claims and claim expense ratio - prior accident years (11.9%) (15.6%) (13.0%)   Net claims and claim expense ratio - calendar year 36.1% 49.9% 40.2% Underwriting expense ratio 18.3% 42.4% 25.4%   Combined ratio 54.4% 92.3% 65.6%   (1)Represents gross premiums ceded from the Individual Risk segment to the Reinsurance segment. RenaissanceRe Holdings Ltd. and Subsidiaries Supplemental Financial Data - Gross Premiums Written Analysis (in thousands of United States Dollars) (Unaudited)     Three months ended Reinsurance Segment March 31, 2008 March 31, 2007   Renaissance catastrophe premiums $ 224,968 $ 240,027 Renaissance specialty premiums 75,463 107,590   Total Renaissance premiums 300,431 347,617   DaVinci catastrophe premiums 139,178 158,937 DaVinci specialty premiums 4,119 9,413   Total DaVinci premiums 143,297 168,350   Total Reinsurance premiums $ 443,728 $ 515,967   Total specialty premiums $ 79,582 $ 117,003   Total catastrophe premiums $ 364,146 $ 398,964   Catastrophe premiums written on behalf of our joint venture, Top Layer Re (1) 31,621 36,903 Catastrophe premiums assumed from the Individual Risk segment 2,489 (6,554)   Total managed catastrophe premiums (2) 398,256 429,313   Managed premiums assumed for fully-collateralized joint ventures - 6,435   Total managed catastrophe premiums, net of fully-collateralized joint ventures (2) $ 398,256 $ 435,748   (1)Top Layer Re is accounted for under the equity method of accounting. (2)See Comments on Regulation G for a reconciliation of non-GAAP financial measures.   Three months ended Individual Risk Segment March 31, 2008 March 31, 2007   Commercial multi-line $ 31,384 $ 47,890 Multi-peril crop 5,372 11,251 Commercial property 30,853 42,505 Personal lines property 13,212 21,670 Total Individual Risk premiums $ 80,821 $ 123,316 RenaissanceRe Holdings Ltd. and Subsidiaries Supplemental Financial Data - Securitized Assets (in thousands of United States Dollars) (Unaudited)                   Vintage Year as a % of Total Securitized Assets Fair Value % of Portfolio 2008 2007 2006 2005 2004 2003 & Prior % of Total Securitized Assets   Total investments $ 6,340,190 100.0%   Mortgage-backed securities: (1) Residential mortgage-backed securities Agency securities $ 539,041 8.5% 1.0% 3.9% 2.3% 0.6% 0.4% 0.3% 30.5% Non-agency securities 167,178 2.6% 0.0% 0.7% 0.8% 0.5% 0.5% 0.1% 9.5% Non-agency securities - Alt A 65,132 1.0% 0.0% 0.3% 0.2% 0.3% 0.1% 0.1% 3.7% Non-agency securities - Sub-prime - 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%   Total residential mortgage-backed securities 771,351 12.1% 1.0% 4.9% 3.3% 1.4% 1.0% 0.5% 43.7%   Commercial mortgage-backed securities 434,858 6.9% 0.0% 1.2% 1.0% 1.1% 0.3% 3.3% 24.6%   Total mortgage-backed securities 1,206,209 19.0% 1.0% 6.1% 4.3% 2.5% 1.3% 3.8% 68.3%   Asset-backed securities: (1) Auto 204,867 3.2% 0.0% 0.5% 1.4% 1.3% 0.0% 0.0% 11.6% Credit cards 201,838 3.2% 0.0% 0.9% 0.7% 0.5% 0.0% 1.1% 11.4% Other 153,524 2.4% 0.0% 0.8% 0.0% 0.6% 0.1% 0.9% 8.7%   Total asset-backed securities 560,229 8.8% 0.0% 2.2% 2.1% 2.4% 0.1% 2.0% 31.7%   Total securitized assets $ 1,766,438 27.8% 1.0% 8.3% 6.4% 4.9% 1.4% 5.8% 100.0%   (1) All of the Company's mortgage-backed and asset-backed securities are rated AAA. 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 common shareholders,” which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized gains and losses on the Company’s 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 common shareholders to operating income available to common shareholders; 2) net income available to common shareholders per common share – diluted to operating income available to common shareholders per common share – diluted; and 3) return on average common equity – annualized to operating return on average common equity – annualized:   Three months ended (in thousands of United States dollars, except for per share amounts) March 31, 2008   March 31, 2007   Net income available to common shareholders $ 137,165 $ 190,805 Adjustment for net realized losses (gains) on investments   10,670   (4,085)   Operating income available to common shareholders $ 147,835 $ 186,720   Net income available to common shareholders per common share - diluted $ 2.05 $ 2.63 Adjustment for net realized losses (gains) on investments   0.16   (0.06)   Operating income available to common shareholders per common share - diluted $ 2.21 $ 2.57   Return on average common equity - annualized 19.7% 29.7% Adjustment for net realized losses (gains) on investments   1.6%   (0.6%)   Operating return on average common equity - annualized   21.3%   29.1% The Company has also included in this Press Release "managed catastrophe premiums” and "managed catastrophe premiums, net of fully-collateralized joint ventures.” "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. "Managed catastrophe premiums, net of fully-collateralized joint ventures” differ from total catastrophe premiums, which the Company believes is the most directly comparable GAAP measure, due to: 1) 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; and 2) the deduction of catastrophe premiums that are written by the Company and ceded directly to the Company’s fully-collateralized joint ventures which include Starbound Reinsurance Ltd., Starbound Reinsurance II Ltd. and Timicuan Reinsurance Ltd. 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. The Company believes "managed catastrophe premiums, net of fully-collateralized joint ventures” is also a useful measure 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, net of catastrophe premiums written directly on behalf of the Company’s fully-collateralized joint ventures.