RenaissanceRe Holdings Ltd.

Ladies and gentlemen, thank you for standing by, and welcome to the Renaissance III's first quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker 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 be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to Mr. Keith McHugh. Senior Vice President, Finance and Investor Relations. Thank you. Please go ahead, sir.

Good morning. Thank you for joining our first 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 May 29th. The replay can be accessed by dialing 855-859-2056, U.S. toll-free, or 1-404-537-34006 internationally. The passcode you will need for both numbers is 654-4178. 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 May 29th, 2021. 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 factors 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 Cutub, Executive Vice President and Chief Financial Officer. I'd now like to turn the call over to Kevin.

Kevin? Thanks, Keith. Good morning, everyone, and thank you for joining today's call. As you saw in our earnings release last night, our financial results were impacted by winter storm URI losses in the United States, as well as mark-to-market losses in our investment portfolio. As a result, we reported annualized return on average common equity of negative 17%, and annualized operating return on average common equity of positive 0.3%. Despite the challenges of the quarter, I am pleased with our performance and excited regarding our future business prospects. I believe that we continue to execute our long-term strategy, and the measures we took this quarter will provide a strong foundation for growth and profitability of our business over the next several years. Specifically, I'd like to highlight three of these measures. First, we grew premiums materially in both property and casualty specialty in an improving market. Our growth was greatest in the lines where we saw the highest rate increases and expect the most sustainable long-term profitability. And third, we thoughtfully managed our excess capital by repurchasing shares at attractive prices. To begin with, opportunities to grow do not come frequently. and you need the skill to recognize these opportunities as well as the determination to act decisively when they do. January 1 was one such opportunity. By employing our flexible platform, we grew our gross written premiums in the quarter by 26%, or 537 million, and net premiums by 37%, or 475 million, both after adjusting for reinstatement premiums. As we discussed last quarter, We expect to grow net written premiums by at least $1 billion in 2021, with a little over half of this growth in our casualty and specialty book and the balance mostly coming from other property. This quarter, we also increased the contribution from property catastrophe to our business through a combination of increased ownership in DaVinci and proportionally less seated spend. This combination of growing top line while retaining more of the bottom line resulted in us fully deploying the $1.1 billion we raised last June. We did so while keeping tail risk consistent with prior years on a percentage of equity basis. This strong top-line growth we delivered is the direct result of the diligent execution of our long-term strategy, which is to match desirable risk with efficient capital through the application of our three superiors, superior customer relationships, superior risk selection, and superior capital management. While we are a leader in property CAD, we find casualty and specialty and other property particularly attractive at this point in the cycle and continue extending our leadership into these businesses. There are three main reasons why the other property and casualty and specialty businesses are appealing to us. First, they are experiencing significant above-trend rate increases, which should provide attractive long-term underwriting returns. Second, we believe we have a competitive advantage in selecting the best risks in these businesses and monitoring their performance. And third, we have preferential access due to the trusted relationships and strong value proposition that we've developed with our customers over many years. Starting with rate trends, on previous calls, I've said that we believe we are in a hard market, and this hard market differs from many in the past, however, as it is not driven by a lack of reinsurance capital. Rather, it is an insurance underwriting hard market. Climate change, modeling malpractice, and social inflation have increased loss costs, while historically low interest rates have decreased investment income. As a consequence, strong underwriting results are necessary to generate sufficient returns on equity. Due to this necessity, we have seen rate increases exceeding trend across the insurance industry for several years now. These rate increases are approaching adequacy, and because they are necessary for profitability, they should persist. Both our property and specialty bring us closer to this insurance risk where we can benefit directly from improvements in underlying insurance rates as well as more stringent underwriting from improved terms and conditions on risks such as communicable disease and silent cyber. So while reinsurance markets have been stable with sufficient capital to fill programs, it is still possible to realize substantial rate increases by getting closer to the business. Second, we believe we have a competitive advantage in selecting the best risks and monitoring their performance. An important aspect of our strategy is maintaining the capability to selectively choose among risks. We have sufficient scale to access business while still retaining the flexibility to increase on the best deals and decrease on the worst. Ultimately, we believe this affords us better margins. Over the last several years, we've methodically built the necessary infrastructure to access both other property and casualty business, leveraging our industry-leading risk and capital management technology and underwriting expertise. There are some different strategic considerations, however, between other property and casualty. For example, we are increasingly positioning the other property book to serve as an alternative means to assume catastrophe risk. Currently, our increase in exposure to catastrophe perils is largely emerging from the other property business, where we have tripled premiums over the last two years. Other property differs from property cat excessive loss business in that it employs quota shares, per-risk treaties, delegated authorities, and other pro-rata approaches. By taking property risk in the form our customers increasingly choose to see it, we move closer to the risk while helping students better manage their net risk. In addition to catastrophe risk, however, these pro-rata approaches are also exposed to attritional loss. This involves a different underwriting skill that requires substantial monitoring of our partner's performance over the life of the relationship. Building the system and infrastructure necessary to evaluate catastrophe risk as well as monitor attritional risk has taken many years and much effort. Since we are capable of underwriting both, this enhances our value proposition and puts us in a preferential position to work with customers and access the best risk. It is similar with our casualty business. We have invested in our casualty tools and methodically grown both organically and through strategic acquisition. As rate and profit margins have improved, we have expanded our positions and our customers have rewarded us with larger portions of existing programs or access to new lines. Casualty is exposed to different risks than property and typically has a complementary risk curve, lower volatility, and a narrow dispersion between good and bad years, which increases our capital efficiency. Over time, we expect capital usage to increase, but as long as our peak exposure remains property catastrophe, casualty should remain extremely efficient. At the January 1 renewal, for example, only a small amount of capital we deployed was needed to support casualty. Because of this, and provided we write profitable business, the return on required capital for casualty should be attractive. In addition to the underwriting income that we earn on casualty, it brings substantial float, which is the premium paid to us that we invest as we monitor loss trends. This asset leverage contributes meaningfully to our earnings through investment income, while also reducing operating earnings volatility. Since 2018, our casualty reserves have more than doubled to $6 billion, and currently the duration of casualty liabilities is longer than property liabilities, so it allows us to extend the average duration of our invested assets and consequently improve returns. This combination of underwriting income and investment return not only drives profit, but also buffers volatility. While we have grown casualty top line materially, you have yet to see this reflected in increased profitability. The higher rates from the business we wrote over the last several years will be gradually recognized going forward as the business seasons and confident grows that rate exceeds trend. This should result in decreasing loss ratios reflected in our financials over time. The third distinguishing factor in the other property and casualty business is that CEDANS want to work with well-known, reliable reinsurers that demonstrate robust enterprise risk management, high ratings, and proven experience. They want long-term partners with strong value proposition who respect relationships and do not behave transactionally. They also want reinsurers with access to multiple forms of capital that can bring innovative, large-scale solutions to solve their biggest problems. We believe this set of traits characterizes the reinsurer of the future, the way reinsurers increasingly need to be structured in order to be optimized for a changed market. We have worked hard to embody this ideal and as a consequence are able to trade even more broadly with our best partners, accessing the most desirable risk on the best terms. Our third big success for the quarter was the proactive steps we took to reallocate our excess capital primarily through share repurchases. In my letter to shareholders from 2015, I explained our strong preference for share repurchases to manage excess capital. Even after deploying over a billion of capital at the January 1 renewal, we continued to hold more than ample dry powder to capture additional underwriting opportunities this year. At the same time, we believe that our share price did not reflect the significant improvements in rates we have been experiencing, nor the strength of the earnings engine we have built. Bob will discuss these repurchases in greater detail, but we viewed it as an attractive opportunity to reallocate a portion of our excess capital in a way that we expect to be accretive to shareholders over the long term before i hand it over to bob i'd like to briefly comment on our plans to return to working from our offices we have always had a strong collaborative culture and i believe we work best when we work together we will be diligent in planning our return to our offices following best practices and always putting the safety of our employees and other stakeholders first. That said, I look forward to when we can return to our pre-pandemic operating model. That concludes my opening comments. I'll provide more detail on the segment performance at the end of the call, but first, Bob, we'll discuss our financial performance for the quarter.