RenaissanceRe Holdings Ltd. anticipates a slowdown in growth this year as it tackles increased competition and softer prices in its main catastrophe reinsurance business, the company said yesterday.

Analysts responded positively to the company's more cautious strategy and to its fourth-quarter results.

"We are moving into a softening market environment, where discipline will be critical for long-term success," said James Stanard, RenaissanceRe's chairman and chief executive, in a statement.

As in previous soft markets, the Bermuda-based firm will reject business that doesn't meet profitability targets, Mr. Stanard added.

Because of this, premiums in the company's main catastrophe reinsurance unit will decline 15 percent in 2005, he explained. That's down from a previous forecast called for premiums coming in flat with last year.

RenaissanceRe also projected 2005 growth of ten percent and 35 percent respectively in its specialty and individual risk divisions.

"We believe management will be able to successfully manage its capital in a softening pricing environment," said Alain Karaoglan, analyst at Deutsche Bank, in a note to investors.

As the company turns away potentially unprofitable business, it will likely end up with more spare cash that could be used for share buybacks and dividends, Mr. Karaoglan said, pointing out that the firm followed a similar strategy in the late 1990s, during the last downturn in the insurance rate cycle.

For the fourth quarter, RenaissanceRe reported operating income of $189 million, or $2.62 per share, topping analysts' estimates. The profit excluded realised investment gains and losses.

The company took a $50 million charge in the December quarter to pay for losses stemming from third quarter claims after last year's unprecedented Florida hurricane season.

For the year, RenaissanceRe expects profit to be in a range of $6.30 to $6.70 per share. Operating income amounted to $1.53 per share in 2004.

Return on equity, a measure of how efficiently a company uses the money given to it by shareholders, will be generated at a rate in the "high teens," Mr. Stanard said.

RenaissanceRe said on Feb. 22 that it plans to restate its 2001, 2002 and 2003 results to correct for accounting errors. The changes will boost 2001 net income by $20.6 million, cut 2002 earnings by $21.9 million, and lift 2003 profit by $1.3 million, the company said.