Bermuda-based RenaissanceRe Holdings Ltd. announced today it expects to record two charges totaling $181.7 million that will impact its fourth-quarter 2007 results.

One charge will result in a write-off of its total $126.7 million investment in ChannelRe Holdings Ltd., a privately held financial guaranty reinsurer, and a second $55 million charge to increase incurred but not reported (IBNR) reserves for subprime-related exposures in its casualty clash reinsurance book of business.

Ratings agencies A.M. Best Co. and Standard & Poor's said the announcement would not affect the company's ratings.

A.M. Best commented that the issuer credit rating of “a-minus” and all associated debt ratings of RenaissanceRe Holdings Ltd. as well as the financial strength rating of “A-plus (Superior)” and issuer credit rating of “double-a-minus” of the lead company, Renaissance Reinsurance Ltd., are unchanged.

A.M. Best said the remaining ratings and outlook on all RenaissanceRe affiliates also are unchanged.

Standard & Poor's Ratings Services said that its ratings of “A (stable)” on RenaissanceRe Holdings Ltd. and related entities also were not affected by the company's announcement.

S&P said the full write-down of the investment is appropriate given that ChannelRe is expected to record fourth-quarter unrealized mark-to-market losses on its financial guaranty contracts that will exceed its shareholders' equity.

Ren Re accounts for its 32.7 percent interest in ChannelRe under the equity method of accounting, and its share of these charges results in a reduction in its carried value of ChannelRe to zero, Best said.

Standard & Poor's said it has entirely written off the investment in ChannelRe and no credit was given in Ren Re's risk-adjusted capital adequacy ratio, which is expected to remain extremely strong at year-end 2007.

The expected increase of $55 million in Ren Re's IBNR reflects its estimated losses related to subprime exposures in its casualty clash reinsurance book, S&P said.

These policies were principally written on a claims-made basis and the ultimate losses are expected to be contained within the posted reserves.

Although these two charges are material, Standard & Poor's said it still expects the reinsurer to report a profit in fourth-quarter and full-year 2007 and in addition anticipates an ROE of more than 15 percent in 2007.

S&P said the charge arises principally from ChannelRe's estimate of its fourth-quarter unrealized mark-to-market losses from financial guaranty contracts accounted for as derivatives under generally accepted accounting principles, based on information recently furnished to ChannelRe by its sole cedant.

The company said it anticipates reporting profitable results for the fourth quarter of 2007 and the full year, inclusive of these charges. The company also said it expects to issue its earnings release and financial supplement following the close of market on Feb. 5.

At the same time, PartnerRe Ltd. also announced that it expects to record a non-operating charge of $74 million to write down its total investment in ChannelRe.

PartnerRe owns a 20 percent equity interest in ChannelRe. At Sept. 30, 2007, the carrying value of the company's investment in ChannelRe was $74 million.

RenaissanceRe Holdings Ltd. provides reinsurance and insurance, with reinsurance managed by subsidiary RenaissanceRe Ventures Ltd., and individual risk, which includes primary insurance and quota share reinsurance.

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