Jonathan Kent, Business Editor

Bermudian reinsurer RenaissanceRe Holdings Ltd’s first-quarter profit fell by nearly a quarter as it increased reserves by more than $20 million in its specialty reinsurance segment.

RenRe said net income for the January-through-March period was $128 million, compared to $167.8 million in the first quarter of 2015.

Operating income of $66.3 million, or $1.51 per share, fell well short of the $2.66 consensus forecast of analysts tracked by Yahoo Finance.

The specialty reinsurance segment grew significantly in size with RenRe’s acquisition of Platinum Underwriters in March last year and in the first quarter of this year generated $369 million in gross premiums — more than 40 per cent of the total written by RenRe.

The company said the specialty reinsurance segment made an underwriting loss of $32,000, compared to underwriting income of $21.3 million in the same period last year. The swing to a loss in this segment was largely the result of a “$20.8 million increase in reserves for claims and claim expenses associated with a small number of relatively large losses primarily from the 2015 accident year”, the company stated.

Kevin O’Donnell, RenRe’s chief executive officer, said: “While we benefited from low catastrophe loss activity in our catastrophe reinsurance segment, we also experienced an unusually large aggregation of event-specific loss activity within our specialty reinsurance segment.”

Overall, gross premiums written soared 34 per cent to $862.1 million, driven by a $244.7 million increase in specialty reinsurance segment.

RenRe’s combined ratio — the proportion of premium dollars spent on claims and expenses — was 70.3 per cent in the first quarter, up from 55.9 per cent in the same period last year, as underwriting income fell by $25.7 million to $105.2 million.

The annualised return on equity was 11.8 per cent.

Mr O’Donnell said: “The risk markets around the world are currently challenging and volatile. This volatility benefited our net income during the first quarter with mark-to-market investment gains.”

The company’s total investment result — the sum of net investment income and net realised and unrealised gains on investments — was $90.2 million in the first quarter of 2016, compared to $81.3 million in 2015, an increase of $9 million. This was driven primarily by unrealised gains in the company’s fixed-maturity investments, which rose as US treasury yield fell.