RenaissanceRe Invests With Success: Fool by Numbers

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On May 1, reinsurer RenaissanceRe (NYSE: RNR) released first-quarter earnings for the period ended March 31.

• The combined ratio increased nearly 12 points because of the windstorm Kyrill, which accounted for $71.9 million of losses and added 21.1 points to the loss ratio.

• Both RenaissanceRe and Montpelier Re (NYSE: MRH) owe much of their success to surging investment income. RenRe's investment income grew 34%, with about a third of that increase a result of growth in hedge and private equity fund returns.

• In the latest quarter, book value per share increased 6.7% to $36.71.

(Figures in thousands, except per-share data)

Income Statement Highlights

	Q1 2007	Q1 2006	Change
Premiums Earned	$362,618	$351,672	3.1%
Investment Income	$108,015	$80,434	34.3%
Net Income	$190,805	$178,980	6.6%
EPS	$2.63	$2.49	5.6%

Get back to basics with a look at an insurer's income statement.

Ratio Checkup

	Q1 2007	Q1 2006	Change*
Loss Ratio	40.2%	28.2%	12.0
Expense Ratio	25.4%	25.5%	(0.1)
Combined Ratio	65.6%	53.7%	11.9
Operating Return on Equity	29.1%	42.7%	(13.6)

*Expressed in percentage points.

What do these ratios mean?

Balance Sheet Highlights

Assets	Q1 2007	Q1 2006	Change
Investments	$6,199,025	$5,403,150	14.7%
Cash and Equivalents	$270,608	$240,684	12.4%

Liabilities	Q1 2007	Q1 2006	Change
Loss Reserve	$2,109,864	$2,419,252	(12.8%)
Unearned Premiums	$768,882	$853,629	(9.9%)
Long-Term Debt	$450,000	$603,093	(25.4%)

Learn your way around an insurer's balance sheet.

Related Foolishness:

• Montpelier Re Basks in Fair Weather
• Rounding the Second Curve: Part 2
• Relying on RenRe's Reputation

Montpelier Re is a recommendation of Motley Fool Hidden Gems and Motley Fool Stock Advisor. Try any one of our investing services free for 30 days.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

Fool contributor Emil Lee is an analyst and a disciple of value investing. He owns shares in Montpelier Re. Emil appreciates your comments, concerns, and complaints. The Motley Fool has a disclosure policy.