Bermuda reinsurer RenaissanceRe Holdings Ltd. made a net loss of $55.2 million in the fourth quarter of 2008 as investment losses wiped out underwriting profits.

The loss broke down to 91 cents per share, compared to net income of $62.2 million, or 88 cents per share in the same period in 2007.

RenRe chief executive officer Neill Currie said: "Our results reflect the impact of a tumultuous investment environment, as negative total returns in our investment portfolio for the quarter overshadowed very strong operating results.

"These strong results include over $200 million of underwriting profits and a 36 percent combined ratio, driven in part by a low level of insured catastrophe losses and favourable reserve development. We generated $193.0 million of operating income and a 7.4 percent operating return on equity for the year."

For the full year, the company made a net loss of $13.3 million, or 21 cents per share, compared to net income of $569.6 million, or $7.93 per share in 2007.

Gross premiums written for the fourth quarter of 2008 were $161.6 million, a $39.4 million increase from the same period in 2007, driven by increases in both insurance and reinsurance sectors. Underwriting income was $205.7 million, compared to $177.3 million a year earlier. Combined ratio — the percentage of premium dollars spent on claims and expenses — was 36.1 percent in the quarter, compared to 47.3 percent in 2007.

The company experienced $104.2 million of favourable development on prior year reserves in the fourth quarter of 2008, compared to $106.8 million in the fourth quarter of 2007.

RenRe said returns on its investment portfolio were down significantly in the fourth quarter, principally due to widening credit spreads as a result of the turmoil in the financial markets.

This environment produced realised and unrealised losses within the company's fixed maturity investments available for sale combined with lower returns within the company's other investments.

RenRe's total investment result, which includes the sum of net investment loss, net realised losses on investments and the net change in unrealised holding gains on fixed maturity investments available for sale, was negative $104.2 million in the fourth quarter and negative $152.7 million for the year.

The company's full-year results were negatively impacted by the $276.2 million paid out in relation to hurricanes Gustav and Ike.

Mr. Currie added: "The results of our January 1 renewals reflect an improving pricing environment. With our well-capitalised balance sheet, strong ratings at all of our operating subsidiaries and continued investments in our people, infrastructure and product offerings, we are well positioned to execute on the opportunities we see in 2009 and beyond."