RenaissanceRe Holdings Ltd.

Ladies and gentlemen, thank you for standing by, and welcome to the Renaissance Re second quarter 2020 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please limit questions to one question and one follow-up. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Keith McHugh, Senior Vice President, Finance and Investor Relations. Thank you. Please go ahead, sir.

Good morning. Thank you for joining our second quarter financial results conference call. Yesterday, after the market closed, we issued our quarterly release. If you didn't receive a copy, please call me at 441-239-4830, and we'll make sure to provide you with one. There will be an audio replay of the call available from about 2 p.m. Eastern time today through midnight on August 27th. The replay can be accessed by dialing 855-859-2056, U.S. toll free, or 1-404-537-3406 internationally. The passcode you will need for both numbers is 344-9228. Today's call is also available through the investor information section of www.renry.com and will be archived on Renaissance Re's website through midnight on August 27, 2020. Before we begin, I'm obliged to caution that today's discussion may contain forward-looking statements and actual results may differ materially from those discussed. Additional information regarding the factor shaping these outcomes can be found in Renaissance Re's SEC filings to which we direct you. With us to discuss today's results are Kevin O'Donnell, President and Chief Executive Officer, and Bob Qutub, Executive Vice President and Chief Financial Officer. I'd now like to turn the call over to Kevin. Kevin?

Thanks, Keith. Good morning, and thank you for joining today's call. I'm glad to report that we had strong performance both financially and operationally in the second quarter. For me, three accomplishments in particular stand out. First, we raised over $1 billion of new common equity, building a fortress balance sheet in anticipation of significant future opportunities. Second, our three-category approach to managing our COVID-19 exposure proved sound, with reported claims developing in lines with expectations. Finally, We executed disciplined and focused renewals across property and casualty, working constructively with our customers and brokers to achieve rate adequacy and improve terms and conditions. I will address each of these accomplishments in greater detail and discuss the quarter more generally. As usual, Bob will also update you on our financial performance for the quarter. Beginning with our capital rates, throughout our 27-year history, we have placed a high bar to raising common equity. Post-IPO, we have only issued common shares on one other occasion, not concurrent with an acquisition. To raising equity, I believe we need to answer at least three questions. Why now? Why equity? And why a billion? First, why now? We are confident in our ability to execute into an improved market and believe the opportunity will persist for several years. Prior to the emergence of COVID-19, P&C markets were already experiencing constrained supply and elevated demand, resulting in upward pressure on rates. Numerous factors led to this supply-demand imbalance. Property markets had experienced three consecutive years of elevated catastrophe activity, resulting in large losses and substantial trapped ILS capital. Casualty markets were beset by significant loss inflation caused by historically large jury verdicts and increasing frequency of severity. This pre-existing rate trend was accelerated by COVID-19 and the deep economic recession that followed. COVID-19 will be among the largest insured losses in history. The loss will develop slowly and will add uncertainty, which drives demand for reinsurance as buyers look to reduce volatility. At the same time, the increase in demand has been mirrored by a reduction in supply caused by increased underwriting discipline and dislocated retro markets. This confluence of factors has resulted in material rate increases that will impact almost all lines for an extended period and which we expect will create opportunities for us over the next several years. For all the reasons, we concluded that this was the ideal time to raise new equity. Second, why did we choose equity? Our strategy is to use our integrated system to match desirable risk with efficient capital. Throughout our history, we have been innovators in preferentially accessing the most efficient forms of capital, depending on market conditions, flexing between common, preferred, cat bonds, retro, sidecars, and dedicated third-party capital, as well as senior debt, credit revolvers, and LOCs. Each form of capital is selected to maximize its efficiency relative to the risk it is deployed against. Given our current conditions, common equity was the best option. It is permanent. It is flexible capital fully available for underwriting that we can deploy in order to maximize long-term shareholder value. And finally, why a billion? On our previous earnings call, we told you we already had excess capital. But we chose this amount as we believe it gives us the increased scale necessary to maximize the market opportunity we are expecting. We ran multiple pro formas to determine the size of this opportunity and feel confident that we can deploy the capital we raised while maintaining a prudent buffer. We envisioned two main opportunities to deploy the capital we raised. Opportunity one is growing into an improving market, and opportunity two is retaining more risk. Our first and best opportunity is to grow into an improving market. We have a long-term demonstrated track record of profitable growth and believe that current conditions afford us considerable options to grow our business by deploying more equity. With a Fortress balance sheet, we can provide our customers with certainty of execution. Many insurers are concerned about their ability to purchase sufficient reinsurance in retro next year. This results in a reluctance to take new risk or renew existing business even at attractive rates. Approximately half of our business renews at January 1st, and we're already having productive conversations with our customers ahead of this important renewal. Providing certainty of execution makes us a first-call market for both new and large opportunities and gives us preferential access to private deals. Our second deployment opportunity is to retain more risk. A key component of our growth strategy is the flexibility to grow and shrink the amount of risk we share with others in order to construct the most efficient underwriting portfolio. As market conditions have evolved, our customers are increasingly seeking the stable, flexible, long-term capacity that a rated balance sheet can provide. With additional common equity on our balance sheet, we are able to offer more rated capacity, which enhances the flexibility of solutions we are able to provide to our customers. As retro rates rise and the ILS market faces challenges, we will share less risk and sell more retro, exposing more of our capital, and should be able to do so in a manner that increasingly contributes to our bottom line. Shifting to COVID-19. Last quarter I explained our three-category approach to managing our COVID-19 exposures. To date, reported losses have developed largely as expected within this framework. If you recall, I categorized our potential COVID-19 exposure as falling into one of three distinct categories. Category one includes event-like losses closely linked to the virus, such as event contingency, event-based casualty class, and certain types of accident and health. We booked full limit losses for canceled events through the end of the year and excluded COVID-19 from future renewals. In the second quarter, we began to receive claim notifications against these reserves as events have been canceled or postponed, which have been in line with expectations. To be clear, however, we have not canceled events in 2021. Category 2 covers well-understood economic risks. These include losses caused by recession and are risks we are paid to take. Last quarter, we increased certain loss ratios in our casualty and specialty book to reflect the elevated risk related to COVID-19. We continue to monitor our credit portfolio, including mortgage for COVID-19 losses. While the likelihood of loss has risen, the current situation is fundamentally different than the great financial crisis. Loans are of higher quality, regulations are tighter, and the housing market is underbuilt. In addition, the U.S. government has extended the largest and most comprehensive forbearance measures in history. For these reasons, we believe that our mortgage book is adequately reserved. And category three is the known unknowns, primarily business interruption. As has been widely reported, coverage of pandemic business interruption risk under property policies has been controversial, except where communicable disease coverage extensions have been provided. Policyholders generally have not paid for the benefit of protection, and it follows that pandemic losses should not be covered. Our students continue to advise us that they have minimal exposure to business interruption losses and intend to fight any and all attempts by the plaintiff's bar to impose liability. We continue to stay closely connected with our students on these exposures and our monitoring court actions in Europe and the U.S. Finally, before I turn it over to Bob, there's one more item I'd like to address. As we announced several weeks ago at Ditch a Dut, has departed and I have assumed interim responsibility for our ventures business. I am excited to have the opportunity to work closely with our talented ventures team at a time we are seeing many opportunities to profitably deploy partner capital. We thank Aditya for his 12 years of service and wish him continued success. Our ventures unit is one of the oldest and most respected ILS managers in the business. It has grown to play a critical role in our growth to net strategy and integrated system, which it will continue to do so going forward. Despite third-party capital markets becoming increasingly dislocated, we successfully raised over $250 million of capital, including our aligned participation for Upsilon, Medici, and Vermeer balance sheets in support of the mid-year renewals. Our ability to do so is a result of superior underwriting, excellent enterprise risk management, and investor confidence in our aligned approach. We greatly value the trust that our partner capital has placed in us to deliver high-quality portfolios of risk, and I'm confident that we can continue to earn that trust in the future. With that, I'll provide an update on the renewals for our segments at the end of the call, but first let me turn it over to Bob to talk about our financial performance.