Tax writedown drives RenRe to $3.5m loss
RenaissanceRe Holdings Ltd reported a net loss of $3.5 million for the fourth quarter of last year, as a one-off writedown related to US tax cuts weighed on results.
The Bermudian insurer and reinsurer also took a hit from California wildfires during the quarter but also reduced its estimate of losses related to third-quarter catastrophes.
As a result of the reduction in the US corporate tax rate from 35 per cent to 21 per cent that took effect at the start of this year, RenRe wrote down a portion of its US deferred tax assets at adding $36.7 million to its fourth-quarter loss.
And its businesses recorded strong growth, with gross premiums written gaining 26.2 per cent, to total $407.8 million.
RenRe recorded operating income of $1.05 per share, beating the 76 cents per share consensus of analysts tracked by Yahoo Finance.
For the full year, RenRe recorded a net loss of $244.8 million, an underwriting loss of $651.5 million and a combined ratio of 137.9 per cent in one of the most expensive years on record for natural catastrophes.
In the fourth quarter, wildfires in California resulted in an underwriting loss of $154.4 million, while a further $49.6 million of losses emanated from aggregate loss contracts.
Offsetting these losses was a $53.5 million positive impact from a reduction in estimated losses from hurricanes Harvey, Irma and Maria plus the Mexico City earthquake, which all took place in the third quarter.
The company’s underwriting loss for the fourth quarter was $10.4 million and the combined ratio, representing the proportion of premium dollars spent on claims and expenses, was 102.5 per cent.
RenRe booked a total investment gain of $65.7 million in the fourth quarter, a return of 2.6 per cent.
Kevin O’Donnell, RenRe’s chief executive officer, said: “In 2017, we experienced solid growth across our segments, while performing well in the face of the year’s catastrophe losses and benefiting from our gross-to-net strategy.
“We ended the year on a positive note, with strong execution at the January 1 renewals allowing us to construct a more attractive portfolio.
“Looking forward, I am confident that we will see continued opportunities to grow in 2018 while maintaining underwriting discipline and maximising shareholder value.”
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