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What changed in RENAISSANCERE HOLDINGS LTD's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of RENAISSANCERE HOLDINGS LTD's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+653 added−606 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-08)

Top changes in RENAISSANCERE HOLDINGS LTD's 2023 10-K

653 paragraphs added · 606 removed · 487 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

156 edited+45 added−19 removed194 unchanged
Biggest changeThe following table sets forth the amounts and percentages of our gross premiums written allocated to the territory of coverage exposure: Year ended December 31, 2022 2021 2020 (in thousands, except percentages) Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Property Segment U.S. and Caribbean $ 2,343,830 25.5 % $ 2,257,088 28.8 % $ 1,683,538 29.0 % Worldwide 1,053,369 11.4 % 1,188,737 15.2 % 889,917 15.3 % Japan 104,767 1.1 % 114,981 1.5 % 102,228 1.8 % Australia and New Zealand 86,080 0.9 % 69,188 0.9 % 40,243 0.7 % Europe 62,998 0.7 % 253,678 3.2 % 189,587 3.3 % Worldwide (excluding U.S.) (1) 37,436 0.4 % 34,742 0.4 % 62,058 1.1 % Other 45,761 0.5 % 40,310 0.5 % 31,571 0.5 % Total Property Segment 3,734,241 40.5 % 3,958,724 50.5 % 2,999,142 51.7 % Casualty and Specialty Segment U.S. and Caribbean 2,556,466 27.7 % 1,721,663 22.0 % 1,248,981 21.5 % Worldwide 2,328,030 25.3 % 1,746,450 22.3 % 1,315,386 22.6 % Europe 327,831 3.6 % 217,721 2.8 % 121,369 2.1 % Worldwide (excluding U.S.) (1) 177,746 1.9 % 108,376 1.4 % 56,225 1.0 % Australia and New Zealand 35,973 0.4 % 29,001 0.4 % 12,429 0.2 % Other 53,253 0.6 % 51,863 0.6 % 52,633 0.9 % Total Casualty and Specialty Segment 5,479,299 59.5 % 3,875,074 49.5 % 2,807,023 48.3 % Total gross premiums written $ 9,213,540 100.0 % $ 7,833,798 100.0 % $ 5,806,165 100.0 % (1) The category “Worldwide (excluding U.S.)” consists of contracts that cover more than one geographic region (other than the U.S.).
Biggest changeThe following table sets forth the amounts and percentages of our gross premiums written by territory of coverage exposure: Year ended December 31, 2023 2022 2021 (in thousands, except percentages) Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Property Segment U.S. and Caribbean $ 2,303,013 26.0 % $ 2,343,830 25.5 % $ 2,257,088 28.8 % Worldwide 798,623 9.0 % 1,053,369 11.4 % 1,188,737 15.2 % Japan 85,823 1.0 % 104,767 1.1 % 114,981 1.5 % Australia and New Zealand 70,107 0.8 % 86,080 0.9 % 69,188 0.9 % Europe 163,500 1.9 % 62,998 0.7 % 253,678 3.2 % Worldwide (excluding U.S.) (1) 70,646 0.8 % 37,436 0.4 % 34,742 0.4 % Other 70,702 0.8 % 45,761 0.5 % 40,310 0.5 % Total Property Segment 3,562,414 40.3 % 3,734,241 40.5 % 3,958,724 50.5 % Casualty and Specialty Segment U.S. and Caribbean 2,333,096 26.3 % 2,556,466 27.7 % 1,721,663 22.0 % Worldwide 2,280,687 25.7 % 2,328,030 25.3 % 1,746,450 22.3 % Europe 197,228 2.2 % 327,831 3.6 % 217,721 2.8 % Worldwide (excluding U.S.) (1) 130,334 1.5 % 177,746 1.9 % 108,376 1.4 % Australia and New Zealand 27,397 0.3 % 35,973 0.4 % 29,001 0.4 % Other 331,210 3.7 % 53,253 0.6 % 51,863 0.6 % Total Casualty and Specialty Segment 5,299,952 59.7 % 5,479,299 59.5 % 3,875,074 49.5 % Total gross premiums written $ 8,862,366 100.0 % $ 9,213,540 100.0 % $ 7,833,798 100.0 % (1) The category “Worldwide (excluding U.S.)” consists of contracts that cover more than one geographic region (other than the U.S.).
In lines with catastrophe risk, such as marine, energy and terrorism, we seek to directly leverage our skill in modeling property reinsurance risks, and aim to appropriately estimate and manage the correlations between these casualty and specialty lines and our property reinsurance portfolio.
In casualty and specialty lines with catastrophe risk, such as marine, energy and terrorism, we seek to directly leverage our skill in modeling property reinsurance risks, and aim to appropriately estimate and manage the correlations between these casualty and specialty lines and our property reinsurance portfolio.
Change of Control . Prior approval from the PRA and the FCA is required before any person or entity, together with its associates, acquires “control” of a regulated insurer, reinsurer or Lloyd’s managing agent or corporate member.
Change of Control . Prior approval from the PRA, the FCA, and Lloyd’s is required before any person or entity, together with its associates, acquires “control” of a regulated insurer, reinsurer, Lloyd’s managing agent, or corporate member.
Net claims and claim expense ratio Net claims and claim expenses incurred expressed as a percentage of net earned premiums.
Net claims and claim expense ratio Net claims and claim expenses incurred expressed as a percentage of net premiums earned.
We actively encourage open dialogue with our employees, and conduct regular surveys to measure employee satisfaction and engagement, allowing us to ensure that lower-scoring areas are addressed and clear guidance and support is provided. 18 Diversity, Equity and Inclusion Initiatives We believe that by seeking diversity, creating equity and practicing inclusion we will build an even stronger culture and company.
We actively encourage open dialogue with our employees, and conduct regular surveys to measure employee satisfaction and engagement, allowing us to ensure that lower-scoring areas are addressed and clear guidance and support is provided. Diversity, Equity and Inclusion Initiatives We believe that by seeking diversity, creating equity and practicing inclusion we will build an even stronger culture and company.
In particular, we believe our strategy, high performance culture, and commitment to our customers and capital partners help us to differentiate ourselves by offering specialized services and products at times and in markets where capacity and alternatives may be limited. 4 UNDERWRITING SEGMENTS Underwriting Income Our first driver of profit is underwriting income, which we earn on our core underwriting business.
In particular, we believe our strategy, high performance culture, and commitment to our customers and capital partners help us to differentiate ourselves by offering specialized services and products at times and in markets where capacity and alternatives may be limited. UNDERWRITING SEGMENTS Underwriting Income Our first driver of profit is underwriting income, which we earn on our core underwriting business.
We address other areas of operational risk through our business continuity and incident response program, human resource practices such as motivating and retaining top talent, our strict tax protocols and our legal and regulatory policies and procedures. Environmental and Climate Change Matters Our principal economic exposures arise from our coverages for natural disasters and catastrophes.
We address other areas of operational risk through our business continuity and incident response program, human resource practices such as motivating and retaining top talent, our strict tax protocols and our legal and regulatory policies and procedures. 15 Environmental and Climate Change Matters Our principal economic exposures arise from our coverages for natural disasters and catastrophes.
REGULATION Most countries and all U.S. states regulate (re)insurance business to varying degrees. We currently operate in Australia, Bermuda, Ireland, Singapore, Switzerland, the U.K. and the U.S. Our operating subsidiaries are principally regulated by the regulatory authorities of their respective jurisdictions, and may also be subject to regulation in the jurisdictions of their ceding companies.
REGULATION Most countries and all U.S. states regulate (re)insurance business to varying degrees. We currently operate in Australia, Bermuda, Canada, Ireland, Singapore, Switzerland, the U.K. and the U.S. Our operating subsidiaries are principally regulated by the regulatory authorities of their respective jurisdictions, and may also be subject to regulation in the jurisdictions of their ceding companies.
The underlying risk models integrated into our underwriting and REMS© framework are a combination of internally constructed and commercially available models. We use commercially available models to assist with validating and stress testing our base model and REMS© results. 12 Before we bind a (re)insurance risk, exposure data, historical loss information and other risk data is gathered from customers.
The underlying risk models integrated into our underwriting and REMS© framework are a combination of internally constructed and commercially available models. We use commercially available models to assist with validating and stress testing our base model and REMS© results. Before we bind a (re)insurance risk, exposure data, historical loss information and other risk data is gathered from customers.
Our investment portfolio includes both investments that we make on behalf of the Company and whose investment results are fully retained by the Company, as well as investments that we manage on behalf of our joint ventures and managed funds, in which we retain only a partial economic interest. The majority of our investments are highly-rated fixed income securities.
Our investment portfolio includes both investments that we make on behalf of the Company and whose investment results are fully 11 retained by the Company, as well as investments that we manage on behalf of our joint ventures and managed funds, in which we retain only a partial economic interest. The majority of our investments are highly-rated fixed income securities.
This information is used in day-to-day decision making for 14 underwriting, investments and operations and is also reviewed quarterly from both a unit level and consolidated financial position perspective. We also regularly assess, monitor and review our regulatory risk capital and related constraints. • Reserve Risk. Reserve risk is a subcomponent of assumed risk.
This information is used in day-to-day decision making for underwriting, investments and operations and is also reviewed quarterly from both a unit level and consolidated financial position perspective. We also regularly assess, monitor and review our regulatory risk capital and related constraints. • Reserve Risk. Reserve risk is a subcomponent of assumed risk.
The third line of defense, our Internal Audit team, reports to the Audit Committee of the Board of Directors and provides independent, objective assurance as to the assessment of the adequacy and effectiveness of our internal control systems and also coordinates risk-based audits and compliance reviews and other specific initiatives to evaluate and address risk within targeted areas of our business.
The third line of defense, our Internal Audit team, reports to the Audit Committee of the Board and provides independent, objective assurance as to the assessment of the adequacy and effectiveness of our internal control systems and also coordinates risk-based audits and compliance reviews and other specific initiatives to evaluate and address risk within targeted areas of our business.
We define operational risk to include the risk we fail to create, manage, control or mitigate the people, processes, structures or functions required to execute our strategic and tactical plans and assemble an optimized portfolio of assumed risk, and to adjust to and comply with the evolving requirements of business environment risk applicable to us.
We define operational risk to include the risk that we fail to create, manage, control or mitigate the people, processes, structures or functions required to execute our strategic and tactical plans and assemble an optimized portfolio of assumed risk, and to adjust to and comply with the evolving requirements of business environment risk applicable to us.
The Corporate Governance and Human Capital Management Committee of our Board of Directors is actively engaged in the oversight of our employees, work environment, DEI initiatives and compensation practices, and receives regular updates from management on progress and developments, and our executive management team and Corporate Governance and Human Capital Management Committee receive regular reports on progress against our annual human resources tactical plans.
The Corporate Governance and Human Capital Management Committee of our Board is actively engaged in the oversight of our employees, work environment, DEI initiatives and compensation practices, and receives regular updates from management on progress and developments, and our executive management team and Corporate Governance and Human Capital Management Committee receive regular reports on progress against our annual human resources tactical plans.
Although reinsurance contract terms and rates are generally not subject to regulation by state insurance authorities, a U.S. insurance company ordinarily will enter into a reinsurance agreement only if it can obtain credit on its statutory financial statements for the reinsurance ceded.
Although reinsurance contract terms and rates are generally not subject to regulation by state insurance authorities, a U.S. insurance company ordinarily will enter into a reinsurance agreement only if it can obtain 22 credit on its statutory financial statements for the reinsurance ceded.
Additional restrictions apply to any dividend and any reduction in statutory capital over applicable thresholds. 20 Income Taxes . Currently, neither we nor our shareholders are required to pay Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax in respect of our shares.
Additional restrictions apply to any dividend and any reduction in statutory capital over applicable thresholds. Income Taxes . Currently, neither we nor our shareholders are required to pay Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax in respect of our shares.
We provide property, casualty and specialty reinsurance and certain insurance solutions to customers, principally through intermediaries. Established in 1993, we have offices in Bermuda, Australia, Ireland, Singapore, Switzerland, the U.K., and the U.S. We are one of the world’s leading providers of property and casualty and specialty reinsurance.
We provide property, casualty and specialty reinsurance and certain insurance solutions to customers, principally through intermediaries. Established in 1993, we have offices in Bermuda, Australia, Canada, Ireland, Singapore, Switzerland, the U.K., and the U.S. We are one of the world’s leading providers of property, casualty and specialty reinsurance solutions.
MARKETING We believe that our modeling and technical expertise, the risk management products we provide to our customers, and our reputation for paying claims promptly has enabled us to become a provider of first choice in many lines of business to our customers worldwide.
MARKETING We believe that our modeling and technical expertise, the risk management products we provide to our customers, and our reputation for paying valid claims promptly has enabled us to become a provider of first choice in many lines of business to our customers worldwide.
If Lloyd’s determines that the Central Fund needs to be increased, it has the power to assess premium levies on current Lloyd’s members up to 5% of a member’s underwriting capacity in any one year. 23 PRA and FCA Regulation.
If Lloyd’s determines that the Central Fund needs to be increased, it has the power to assess premium levies on current Lloyd’s members up to 5% of a member’s underwriting capacity in any one year. PRA and FCA Regulation.
The underwriting results of our operating subsidiaries and underwriting platforms are included in our Property and Casualty and Specialty segment results as appropriate. Our strategy focuses on operating as an integrated system of three competitive advantages: superior risk selection, superior customer relationships and superior capital management.
The underwriting results of our consolidated operating subsidiaries and underwriting platforms are included in our Property and Casualty and Specialty segment results as appropriate. Our strategy focuses on operating as an integrated system of three competitive advantages: superior risk selection, superior customer relationships and superior capital management.
We have been progressively integrating the consideration of the financial risk of climate change into our governance frameworks, risk management processes, and business strategies over the 15 past several years, and many of our regulators are increasingly focused on these and other climate change disclosures.
We have been progressively integrating the consideration of the financial risk of climate change into our governance frameworks, risk management processes, and business strategies over the past several years, and many of our regulators are increasingly focused on these and other climate change disclosures.
All Bermuda registered insurers are generally required to comply with the BMA’s Insurance Code of Conduct, which establishes duties, requirements and standards regarding sound corporate governance, risk management and internal controls. • Special Purpose Insurer and Collateralized Insurer Reporting Requirements.
All Bermuda registered insurers are required to comply with the BMA’s Insurance Code of Conduct, which establishes duties, requirements and standards regarding sound corporate governance, risk management and internal controls. • Special Purpose Insurer and Collateralized Insurer Reporting Requirements.
The Lloyd’s Council has wide discretionary powers to regulate members’ underwriting at Lloyd’s, including, the power to withdraw a member’s permission to underwrite business or to underwrite a particular class of business and to change the basis on which syndicate expenses are allocated. • Assessments.
The Lloyd’s Council has wide discretionary powers to regulate members’ underwriting at Lloyd’s, including, the power to withdraw a member’s permission to underwrite business or to underwrite a particular class of business and to change the basis on which syndicate expenses are allocated. 23 • Assessments.
Generally, all affiliate 21 transactions involving Renaissance Reinsurance U.S. must be fair and reasonable and, if material or of specified types, require prior notice to and approval or non-disapproval by the MIA. Disclosure and Reporting Requirements .
Generally, all affiliate transactions involving Renaissance Reinsurance U.S. must be fair and reasonable and, if material or of specified types, require prior notice to and approval or non-disapproval by the MIA. Disclosure and Reporting Requirements .
In order to estimate the risk profile of each line of non-natural hazard reinsurance ( i.e. , our casualty and specialty lines of business), we establish probability distributions and assess the correlations with the rest of our portfolio.
In order to estimate the risk profile of each line of non-natural hazard reinsurance ( i.e. , our casualty and specialty lines of business), we establish probability distributions and assess the correlations with the rest of 13 our portfolio.
This includes securities where the repayment is linked to the occurrence and/or size of, for example, one or more hurricanes or earthquakes, or insured industry losses associated with these catastrophic events. 28 Cede; cedant; ceding company When a party reinsures its liability with another, it “cedes” business and is referred to as the “cedant” or “ceding company.” Claim Request by an insured or reinsured for indemnification by an insurance company or a reinsurance company for losses incurred from an insured peril or event.
This includes securities where the repayment is linked to the occurrence and/or size of, for example, one or more hurricanes or earthquakes, or insured industry losses associated with these catastrophic events. 30 Cede; cedant; ceding company When a party reinsures its liability with another, it “cedes” business and is referred to as the “cedant” or “ceding company.” Claim Request by an insured or reinsured for indemnification by an insurance company or a reinsurance company for losses incurred from an insured peril or event.
“Tower Hill Companies” collectively, our investments in a group of Tower Hill affiliated companies including Bluegrass Insurance Management, LLC, Tower Hill Claims Service, LLC, Tower Hill Holdings, Inc., Tower Hill Insurance Group, LLC, Tower Hill Insurance Managers, LLC, Tower Hill Re Holdings, Inc., Tower Hill Signature Insurance Holdings, Inc., Tower Hill Risk Management LLC and Tomoka Re Holdings, Inc.
“Tower Hill Companies” collectively, our investments in a group of Tower Hill affiliated companies including Bluegrass Insurance Management, LLC, Tower Hill Claims Service, LLC, Tower Hill Holdings, Inc., Tower Hill Insurance Group, LLC, Tower Hill Insurance Managers, LLC, Tower Hill Re Holdings, Inc., Tower Hill Risk Management LLC and Tomoka Re Holdings, Inc.
We do not regard the effect of these regulations to be material to us at this time. • Singapore : Branches of Renaissance Reinsurance and DaVinci Reinsurance based in the Republic of Singapore have each received a license to carry on insurance business as a general reinsurer and are regulated by the Accounting and Corporate Regulatory Authority as a foreign company pursuant to Singapore’s Companies Act.
We do not regard the effect of these regulations to be material to us at this time. • Singapore : Branches of Renaissance Reinsurance, Validus Re and DaVinci Reinsurance based in the Republic of Singapore have each received a license to carry on insurance business as a general reinsurer and are regulated by the Accounting and Corporate Regulatory Authority as a foreign company pursuant to Singapore’s Companies Act.
The members of the Board have regular, direct access to the senior executives and other officers responsible for identifying and monitoring our risks and coordinating our ERM, including our Group Chief Risk Officer, Chief Financial Officer, and Group General Counsel, each of whom reports directly to our Chief Executive Officer, as well as other senior personnel such as our Chief Investment Officer, Chief Compliance Officer, Chief Accounting Officer, Global Corporate Controller and Head of Internal Audit.
The members of the Board have regular, direct access to the senior executives and other officers responsible for identifying and monitoring our risks and coordinating our ERM, including our Group Chief Risk Officer, Chief Portfolio Officer, Group Chief Underwriting Officer, Chief Financial Officer, and Group General Counsel, each of whom reports directly to our Chief Executive Officer, as well as other senior personnel such as our Chief Investment Officer, Chief Compliance Officer, Chief Accounting Officer, Global Corporate Controller and Head of Internal Audit.
(2) Includes directors and officers, medical malpractice, and professional indemnity. (3) Includes financial guaranty, mortgage guaranty, political risk, surety and trade credit. (4) Includes accident and health, agriculture, aviation, cyber, energy, marine, satellite and terrorism. Lines of business such as regional multi-line and whole account may have characteristics of various other classes of business, and are allocated accordingly.
(2) Includes directors and officers, medical malpractice, professional indemnity and transactional liability. (3) Includes financial guaranty, mortgage guaranty, political risk, surety and trade credit. (4) Includes accident and health, agriculture, aviation, cyber, energy, marine, satellite and terrorism. Lines of business such as regional multi-line and whole account may have characteristics of various other classes of business, and are allocated accordingly.
Financial Conduct Authority “FCR” financial condition report “FINMA” Swiss Financial Market Supervisory Authority “Fitch” Fitch Ratings Ltd. “Fontana” Fontana Holdings L.P. and its subsidiaries “Form 10-K” this Annual Report on Form 10-K for the year ended December 31, 2021 “GAAP” generally accepted accounting principles in the U.S.
Financial Conduct Authority “FCR” financial condition report “FINMA” Swiss Financial Market Supervisory Authority “Fitch” Fitch Ratings Ltd. “Fontana” Fontana Holdings L.P. and its subsidiaries “Form 10-K” this Annual Report on Form 10-K for the year ended December 31, 2023 “GAAP” generally accepted accounting principles in the U.S.
Expense override An amount paid to a ceding company in addition to the acquisition cost to compensate for overhead expenses. Frequency The number of claims occurring during a given coverage period. 29 Funds at Lloyd’s Funds of an approved form that are lodged and held in trust at Lloyd’s as security for a member’s underwriting activities.
Expense override An amount paid to a ceding company in addition to the acquisition cost to compensate for overhead expenses. Frequency The number of claims occurring during a given coverage period. 31 Funds at Lloyd’s Funds of an approved form that are lodged and held in trust at Lloyd’s as security for a member’s underwriting activities.
Underwriting capacity The maximum amount that an insurance company can underwrite. The limit is generally determined by a company’s retained earnings and investment capital. Reinsurance serves to increase a company’s underwriting capacity by reducing its exposure from particular risks. 32 Underwriting expense ratio The ratio of the sum of the acquisition expenses and operational expenses to net premiums earned.
Underwriting capacity The maximum amount that an insurance company can underwrite. The limit is generally determined by a company’s retained earnings and investment capital. Reinsurance serves to increase a company’s underwriting capacity by reducing its exposure from particular risks. 34 Underwriting expense ratio The ratio of the sum of the acquisition expenses and operational expenses to net premiums earned.
We provide value to our customers and partners in the form of financial security, innovative products, and responsive service. We are known as a leader in paying valid claims promptly. There are three principal drivers of profit that generate diversified earnings streams for our business - underwriting income, fee income, and investment income.
We provide value to our customers and partners in the form of financial security, innovative products, and responsive service. We are known as a leader in paying valid claims promptly. We have three principal drivers of profit that generate diversified earnings streams for our business - underwriting income, fee income, and investment income.
We believe that REMS© is a robust underwriting and risk management system that has been successfully integrated into our business processes and culture.
We believe that REMS© is a robust underwriting and risk management system that has been successfully integrated into our business 12 processes and culture.
As a result of our controlling voting interests, we fully consolidate these entities in our financial statements, even though we do not retain the full value of economic outcomes generated by these entities. The portions of the economic outcomes that are not retained by us are ultimately allocated to the third-party investors who hold the non-controlling interests in these entities.
As a result of our controlling voting interests, we fully consolidate these entities in our financial statements, even though we do not retain the full value of economic outcomes generated by these entities. The portions of the economic outcomes that are not retained by us are ultimately allocated to the third-party investors who hold the noncontrolling interests in these entities.
Because of the nature of the coverages that we provide, the amount and timing of the cash flows associated with our policy liabilities will fluctuate, perhaps significantly, and, therefore, are highly uncertain. Our reserving techniques, assumptions and processes differ among our Property and Casualty and Specialty segments. Refer to “Note 7.
Because of the nature of the coverages that we provide, the amount and timing of the cash flows associated with our policy liabilities will fluctuate, perhaps significantly, and, therefore, are highly uncertain. Our reserving techniques, assumptions and processes differ among our Property and Casualty and Specialty segments. Refer to “Note 8.
Capital and Surplus Requirements . Renaissance Reinsurance U.S. is required to meet certain minimum statutory capital and surplus requirements under Maryland law, including risk-based capital requirements, and to submit an annual report regarding its risk-based capital levels to the MIA. As of December 31, 2022, we believe Renaissance Reinsurance U.S. exceeded all applicable Maryland minimum capital and surplus requirements.
Capital and Surplus Requirements . Renaissance Reinsurance U.S. is required to meet certain minimum statutory capital and surplus requirements under Maryland law, including risk-based capital requirements, and to submit an annual report regarding its risk-based capital levels to the MIA. As of December 31, 2023, we believe Renaissance Reinsurance U.S. exceeded all applicable Maryland minimum capital and surplus requirements.
The principal risk areas that make up our ERM framework are assumed risk (including reserve risk), business environment risk and operational risk: • Assumed Risk.
The principal risk areas that make up our ERM framework are assumed risk (including reserve risk), business environment risk and operational risk: 14 • Assumed Risk.
As of December 31, 2022, we believe RREAG, US Branch exceeded all applicable minimum capital and surplus requirements. The NYDFS may conduct periodic examinations of RREAG, US Branch and requires the filing of annual and other reports relating to RREAG, US Branch’s financial condition and risk-based capital levels.
As of December 31, 2023, we believe RREAG, US Branch exceeded all applicable minimum capital and surplus requirements. The NYDFS may conduct periodic examinations of RREAG, US Branch and requires the filing of annual and other reports relating to RREAG, US Branch’s financial condition and risk-based capital levels.
The BMA has certain powers of investigation and intervention, relating to Bermuda-licensed entities and their holding companies, subsidiaries and other affiliates, including the power to cancel a Bermuda-licensed entity’s registration, which it may exercise in the interest of such an insurer’s policyholders or if there is any risk of insolvency or a breach of the Insurance Act or the license conditions of a Bermuda-licensed entity.
The BMA has certain powers of investigation and intervention, relating to Bermuda-registered entities and their holding companies, subsidiaries and other affiliates, including the power to cancel a Bermuda-registered entity’s registration, which it may exercise in the interest of such an insurer’s policyholders or if 19 there is any risk of insolvency or a breach of the Insurance Act or the license conditions of a Bermuda-registered entity.
The Board also receives regular reports from the Controls and Compliance Committee, which includes members of senior management, compliance professionals and others and oversees policies and procedures relating to accounting, financial reporting, internal controls, legal and regulatory matters, and complex transactions, among other matters. Our ERM framework operates via a three lines of defense model.
The Board also receives regular reports from the Operational Risk and Resilience Committee, which includes members of senior management, compliance professionals and others and oversees policies and procedures relating to accounting, financial reporting, internal controls, legal and regulatory matters, and complex transactions, among other matters. Our ERM framework operates via a three lines of defense model.
Net premiums earned The portion of net premiums written during or prior to a given period that was actually recognized as income during such period. 30 Net premiums written Gross premiums written for a given period less premiums ceded to reinsurers and retrocessionaires during such period.
Net premiums earned The portion of net premiums written during or prior to a given period that was actually recognized as income during such period. 32 Net premiums written Gross premiums written for a given period less premiums ceded to reinsurers and retrocessionaires during such period.
We also believe that effective ERM assists our efforts to minimize the likelihood of suffering financial outcomes in excess of the ranges which we have estimated in respect of specific investments, underwriting decisions, or other operating or business activities, although we do not believe this risk can be eliminated.
We also believe that effective ERM assists our efforts to minimize the likelihood of suffering financial outcomes in excess of the ranges which we have estimated in respect of specific investments, underwriting decisions, or other operating or business activities, including cybersecurity risks, although we do not believe this risk can be eliminated.
Our underwriting results reflect the full value of the business written on behalf of our consolidated operating subsidiaries, joint ventures and managed funds, before we reflect the interests of third-party investors in our consolidated joint ventures and managed funds that are not retained by us. The following table shows gross premiums written allocated between our segments.
Our underwriting results reflect the full value of the business written on behalf of our consolidated operating subsidiaries, joint ventures and managed funds, before we reflect the interests of third-party investors in our consolidated joint ventures and managed funds that are not retained by us. The following table shows gross premiums written allocated to each of our segments.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources—Investments” and “Note 4. Investments” in our “Notes to the Consolidated Financial Statements.” 11 Strategic Investments We also pursue strategic investments where, rather than assuming exclusive management responsibilities ourselves, we partner with other market participants.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources—Investments” and “Note 5. Investments” in our “Notes to the Consolidated Financial Statements.” Strategic Investments We also pursue strategic investments where, rather than assuming exclusive management responsibilities ourselves, we partner with other market participants.
The operations of RSML are subject to oversight by Lloyd’s, substantially effected through the Lloyd’s Council. RSML’s business plan for Syndicate 1458, including maximum underwriting capacity, requires annual approval by Lloyd’s. Lloyd’s may require changes to any business plan presented to it or additional capital to be provided to support the underwriting plan.
U.K. Regulation Lloyd’s Regulation . The operations of RSML are subject to oversight by Lloyd’s, substantially effected through the Council of Lloyd’s. RSML’s business plan for Syndicate 1458, including maximum underwriting capacity, requires annual approval by Lloyd’s. Lloyd’s may require changes to any business plan presented to it or additional capital to be provided to support the underwriting plan.
As alien reinsurers, Renaissance Reinsurance, 22 DaVinci Reinsurance, RREAG, RenaissanceRe Specialty U.S., and Vermeer have each been approved by one or more U.S. states as a “Certified Reinsurer” or “Reciprocal Jurisdiction Reinsurer,” which permits it to post reduced or zero security, respectively, while still allowing its cedents to take financial statement credit for the reinsurance.
As alien reinsurers, Renaissance Reinsurance, Validus Re, DaVinci Reinsurance, RREAG, Validus Switzerland, RenaissanceRe Specialty U.S., and Vermeer have each been approved by one or more U.S. states as a “Certified Reinsurer” or “Reciprocal Jurisdiction Reinsurer,” which permits it to post reduced or zero security, respectively, while still allowing its cedents to take financial statement credit for the reinsurance.
Under the terms of the covered agreements, as of September 1, 2022, state credit for reinsurance laws that result in non-U.S. reinsurers subject to the covered agreements being treated less favorably than U.S. reinsurers may be pre-empted by the applicable covered agreement. U.K. Regulation Lloyd’s Regulation .
Under the terms of the covered agreements, as of September 1, 2022, state credit for reinsurance laws that result in non-U.S. reinsurers subject to the covered agreements being treated less favorably than U.S. reinsurers may be pre-empted by the applicable covered agreement.
Retrocedant A reinsurer who cedes all or a portion of its assumed insurance to another reinsurer. 31 Retrocessional reinsurance; Retrocessionaire A transaction whereby a reinsurer cedes to another reinsurer, the retrocessionaire, all or part of the reinsurance that the first reinsurer has assumed.
Retrocedant A reinsurer who cedes all or a portion of its assumed insurance to another reinsurer. 33 Retrocessional reinsurance; Retrocessionaire A transaction whereby a reinsurer cedes to another reinsurer, the retrocessionaire, all or part of the reinsurance that the first reinsurer has assumed.
We believe all three competitive advantages are required to achieve our objectives, and we aim to seamlessly coordinate the delivery of these competitive advantages for the benefit of our shareholders, ceding insurers, brokers, investors in our joint ventures and managed funds, and other stakeholders. Superior Customer Relationships.
We believe all three competitive advantages are required to achieve our objectives, and we aim to seamlessly coordinate the delivery of these competitive advantages for the benefit of our shareholders, ceding insurers, brokers, investors in our joint ventures and managed funds, and other stakeholders.
For example, if one of these entities were to generate underwriting losses due to a natural catastrophe, the full amount would be reflected in net income (loss) on our consolidated statement of operations, but ultimately we would only retain a portion of that amount in our net income (loss) attributable to RenaissanceRe.
For example, if one of these entities were to generate underwriting losses due to a natural catastrophe, the full amount would be reflected in net income (loss) on our consolidated statement of operations, but ultimately we would only retain the portion of that amount corresponding to our economic interest in the vehicle in the net income (loss) attributable to RenaissanceRe.
The most stringent solvency requirements are applicable to Renaissance Reinsurance and DaVinci Reinsurance, as Class 4 general business insurers, and require: the greater of (i) $100.0 million, (ii) 50% of net premiums written (with a credit for reinsurance ceded not exceeding 25% of gross premiums), (iii) 15% of net aggregate loss and loss expense provisions and other insurance reserves, or (iv) 25% of the ECR.
The most stringent solvency requirements are applicable to our Class 4 general business insurers, and require: the greater of (i) $100.0 million, (ii) 50% of net premiums written (with a credit for reinsurance ceded not exceeding 25% of gross premiums), (iii) 15% of net aggregate loss and loss expense provisions and other insurance reserves, or (iv) 25% of its ECR.
These investments may be directed at classes of risk other than catastrophe reinsurance, and at times may also be directed at non-insurance risks, such as Insurtech opportunities. We find these investments attractive because of their target risk-adjusted returns, and because of their ability to help advance our business objectives and capabilities.
These investments may be directed at classes of risk other than catastrophe reinsurance, and at times may also be directed at non-insurance risks. We find these investments attractive because of their target risk-adjusted returns, and because of their ability to help advance our business objectives and capabilities.
Our underwriting results are reflected in our reportable segments: (1) Property, which is comprised of catastrophe and other property (re)insurance written on behalf of our consolidated operating subsidiaries, joint ventures and managed funds; and (2) Casualty and Specialty, which is comprised of casualty and specialty (re)insurance written on behalf of our consolidated operating subsidiaries, joint ventures and managed funds.
Our underwriting results are reflected in our reportable segments: (1) Property, which is comprised of catastrophe and other property (re)insurance written on behalf of our consolidated operating subsidiaries, joint ventures and managed funds; and (2) Casualty and Specialty, which is comprised of general casualty, professional liability, credit and other specialty (re)insurance written on behalf of our consolidated operating subsidiaries, joint ventures and managed funds.
All dollar amounts referred to in this Form 10-K are in U.S. dollars unless otherwise indicated. Due to rounding, numbers presented in the tables included in this Form 10-K may not add up precisely to the totals provided. OVERVIEW RenaissanceRe is a global provider of reinsurance and insurance that specializes in matching well-structured risks with efficient sources of capital.
All dollar amounts referred to in this Form 10-K are in U.S. dollars unless otherwise indicated. Due to rounding, numbers presented in the tables included in this Form 10-K may not add up precisely to the totals provided. OVERVIEW RenaissanceRe is a global provider of reinsurance and insurance that specializes in matching desirable risk with efficient capital.
Our Bermuda-licensed entities registered under the Insurance Act include: • Class 4 general business insurers : Renaissance Reinsurance and DaVinci Reinsurance • Class 3B general business insurers : RenaissanceRe Specialty U.S., Vermeer and RREAG, Bermuda Branch • Class 3A general business insurers : Top Layer, Fontana Reinsurance Ltd. and Fontana Reinsurance U.S.
Our entities registered under the Insurance Act include: • Class 4 general business insurers : Renaissance Reinsurance, Validus Re, Validus Switzerland, Bermuda Branch, and DaVinci Reinsurance • Class 3B general business insurers : RenaissanceRe Specialty U.S., Vermeer and RREAG, Bermuda Branch • Class 3A general business insurers : Top Layer, Fontana Reinsurance Ltd. and Fontana Reinsurance U.S.
We consolidate the financial results of Upsilon RFO and account for the portion of its premium that we do not own as a ceded retrocession.
We consolidate the financial results of certain segregated accounts of Upsilon RFO and account for the portion of its premium that we do not own as a ceded retrocession.
Non-Controlling Interest We manage DaVinci, Fontana, Medici, and Vermeer, and own all or a majority of the voting interests, but own no, or a minority, economic interest of each.
Noncontrolling Interest We manage DaVinci, Fontana, Medici, and Vermeer, and own all or a majority of the voting interests, but own no, or a minority, economic interest of each.
In addition to the business that we write for our own account, we also write risk with capital provided by third parties. Because we often co-invest alongside our third-party capital providers, we view them as partners in achieving our mission of matching well-structured risks with efficient sources of capital.
In addition to the business that we write for our own account, we also write risk with capital provided by third parties. Because we often co-invest alongside our third-party capital providers, we view them as partners in achieving our mission of matching desirable risk with efficient capital.
Treasury’s Office of Foreign Assets Control “ORSA” Own Risk and Solvency Assessment “Other 2021 Catastrophe Events” the hail storm in Europe in late June 2021, the wildfires in California during the third quarter of 2021, the tornadoes in the Central and Midwest U.S. in December 2021, and the Midwest Derecho in December 2021.
“ORSA” Own Risk and Solvency Assessment “Other 2021 Catastrophe Events” the hail storm in Europe in late June 2021, the wildfires in California during the third quarter of 2021, the tornadoes in the Central and Midwest U.S. in December 2021, and the Midwest Derecho in December 2021.
A dedicated risk team led by the Group Chief Risk Officer is responsible for this second line and reports to the Board of Directors’ Investment and Risk Management Committee and the Chief Executive Officer.
A dedicated risk team led by the Group Chief Risk Officer is responsible for this second line and reports to the Board’s Investment and Risk Management Committee and the Chief Executive Officer.
We market our products primarily through reinsurance brokers and we focus our marketing efforts on targeted brokers and partners. We believe that our existing portfolio of business is a valuable asset and, therefore, we attempt to continually strengthen relationships with our existing brokers and customers.
We market our products primarily through reinsurance brokers and we focus our marketing efforts on targeted brokers and partners. We believe that our existing portfolio of business, including the additional business from the Validus Acquisition, is a valuable asset and, therefore, we attempt to continually strengthen relationships with our existing brokers and customers.
Our mission is to match desirable, well-structured risks with efficient sources of capital to achieve our vision of being the best underwriter. We believe that this will allow us to produce superior returns for our shareholders over the long term, and to further our purpose of protecting communities and enabling prosperity.
Our mission is to match desirable risk with efficient capital to achieve our vision of being the best underwriter. We believe that this will allow us to produce superior returns for our shareholders over the long term, and to enable our purpose of protecting communities and enabling prosperity.
RREAG is also required to maintain and update with FINMA a regulatory business plan, 24 including details on its organization, financials, qualified participants, management, oversight, control persons, and responsible actuary. RREAG must notify FINMA of any changes to the business plan, and FINMA is required to approve certain changes. • Dividends and Distributions.
RREAG and Validus Switzerland are also required to maintain and update with FINMA a regulatory business plan, including details on their organization, financials, qualified participants, management, oversight, control persons, and responsible actuary. RREAG and Validus Switzerland must notify FINMA of any changes to their business plan, and FINMA is required to approve certain changes. • Dividends and Distributions.
Unlike other (re)insurers, SPIs and collateralized insurers are fully funded to meet their (re)insurance obligations; therefore the application and supervision processes. However, these entities remain subject to annual financial statements and solvency reporting and disclosure requirements. • Insurance Manager Reporting Requirements .
Unlike other (re)insurers, SPIs and collateralized insurers are fully funded to meet their (re)insurance obligations; therefore the application and supervision processes are less burdensome than traditional registered general business insurers. However, these entities remain subject to annual financial statements and solvency reporting and disclosure requirements. • Insurance Manager Reporting Requirements .
Fontana also allows us to increase casualty and specialty capacity for our customers. We control a majority of the outstanding voting rights in Fontana, and as a result, consolidate it in our financial results. Fontana assumed a whole account quota share of our global casualty and specialty book of business, including the credit portfolio, ensuring alignment.
We control a majority of the outstanding voting rights in Fontana, and as a result, consolidate it in our financial results. Fontana assumed a whole account quota share of our global casualty and specialty book of business, including the credit portfolio, ensuring alignment.
Our Board of Directors is responsible for overseeing enterprise-wide risk management and is actively involved in the monitoring of risks that could affect us.
Our Board and its committees are responsible for overseeing enterprise-wide risk management and are actively involved in the monitoring of risks that could affect us.
The following table shows gross premiums written in our Property segment allocated by class of business: Year ended December 31, 2022 2021 2020 (in thousands, except percentages) Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Catastrophe $ 2,076,752 55.6 % $ 2,235,736 56.5 % $ 1,886,785 62.9 % Other property 1,657,489 44.4 % 1,722,988 43.5 % 1,112,357 37.1 % Total Property segment gross premiums written $ 3,734,241 100.0 % $ 3,958,724 100.0 % $ 2,999,142 100.0 % We write catastrophe reinsurance and insurance coverage protecting against natural and man-made catastrophes such as earthquakes, hurricanes, typhoons and tsunamis, winter storms, freezes, floods, fires, windstorms, tornadoes, explosions and acts of terrorism.
The following table shows gross premiums written in our Property segment allocated by class of business: Year ended December 31, 2023 2022 2021 (in thousands, except percentages) Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Catastrophe $ 2,146,323 60.2 % $ 2,076,752 55.6 % $ 2,235,736 56.5 % Other property 1,416,091 39.8 % 1,657,489 44.4 % 1,722,988 43.5 % Total Property segment gross premiums written $ 3,562,414 100.0 % $ 3,734,241 100.0 % $ 3,958,724 100.0 % We write catastrophe reinsurance and insurance coverage protecting against natural and man-made catastrophes such as earthquakes, hurricanes, typhoons and tsunamis, winter storms, freezes, floods, fires, windstorms, tornadoes, explosions and acts of terrorism.
Syndicates at Lloyd’s take their financial security rating from the rating of the Lloyd’s market. A satisfactory credit rating issued by an accredited rating agency is necessary for Lloyd’s syndicates to be able to trade in certain classes of business at current levels. • Intervention Powers .
A satisfactory credit rating issued by an accredited rating agency is necessary for Lloyd’s syndicates to be able to trade in certain classes of business at current levels. • Intervention Powers .
Ltd. • Class 3 general business insurer : Shima Reinsurance Ltd. • Collateralized insurer : Upsilon RFO • SPIs : Mona Lisa Re Ltd. and Fibonacci Reinsurance Ltd. • Insurance managers : RUM and RenaissanceRe Underwriting Management Ltd. The European Parliament recognizes Bermuda’s regulatory regime as achieving Solvency II equivalence for its commercial (re)insurers and insurance groups.
Ltd. • Class 3 general business insurer : AlphaCat Re, Mont Fort Re Ltd. and Shima Reinsurance Ltd. • Collateralized insurer : Upsilon RFO • Insurance managers : RUM and RenaissanceRe Underwriting Management Ltd. The European Commission recognizes Bermuda’s regulatory regime as achieving Solvency II equivalence for its commercial (re)insurers and insurance groups.
RREAG may only distribute dividends out of its retained earnings or distributable reserves based on the audited annual accounts of the company.
RREAG and Validus Switzerland may only distribute dividends out of their retained earnings or distributable reserves based on the audited annual accounts of the company.
Currently, our principal joint ventures and managed funds include DaVinci, Top Layer, Fontana, Medici, Upsilon and Vermeer: December 31, 2022 Entity Consolidated (1) Redeemable noncontrolling interests RenaissanceRe’s economic ownership (2) Generates Management Fee Income (3) Generates Performance Fee Income (4) DaVinci X 69.1% 30.9% X X Fontana X 68.4% 31.6% X X Medici X 87.2% 12.8% X — Vermeer X 100% 0% X — Top Layer — (5) — — X — Upsilon X (6) — — X X (1) As a result of our controlling voting interest, we consolidate these entities in our financial statements, and third parties’ economic interest in the entities’ net assets and net income are reflected in our Consolidated Balance Sheets and Consolidated Statements of Operations in “Redeemable noncontrolling interests” and “Net (income) loss attributable to redeemable noncontrolling interests,” respectively.
December 31, 2023 Entity Consolidated (1) RenaissanceRe’s Economic Ownership (2) Generates Management Fee Income (3) Generates Performance Fee Income (4) DaVinci X 27.8% X X Fontana X 31.6% X X Medici X 11.7% X — Vermeer X 0% X — Top Layer — (5) — X — Upsilon X (6) — X X (1) As a result of our controlling voting interest, we consolidate these entities in our financial statements, and third parties’ economic interest in the entities’ net assets and net income are reflected in our Consolidated Balance Sheets and Consolidated Statements of Operations in “Redeemable noncontrolling interests” and “Net (income) loss attributable to redeemable noncontrolling interests,” respectively.
Expansion into additional (re)insurance markets could expose us or our subsidiaries to increasing regulatory oversight. However, we intend to continue to conduct our operations so as to minimize the likelihood that our Bermudian subsidiaries will become subject to direct U.S. regulation. Bermuda Regulation Overview . All Bermuda companies must comply with the provisions of the Bermuda Companies Act 1981.
Expansion into additional (re)insurance markets could expose us or our subsidiaries to increasing regulatory oversight. However, we intend to continue to conduct our operations so as to minimize the likelihood that our Bermuda subsidiaries will become subject to direct U.S. regulation.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Year ended December 31, 2022 2021 2020 (in thousands, except percentages) Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Property $ 3,734,241 40.5 % $ 3,958,724 50.5 % $ 2,999,142 51.7 % Casualty and Specialty 5,479,299 59.5 % 3,875,074 49.5 % 2,807,023 48.3 % Total gross premiums written $ 9,213,540 100.0 % $ 7,833,798 100.0 % $ 5,806,165 100.0 % Across our segments, we write proportional business as well as excess of loss business, and certain insurance business through delegated authority arrangements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Year ended December 31, 2023 2022 2021 (in thousands, except percentages) Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Property $ 3,562,414 40.2 % $ 3,734,241 40.5 % $ 3,958,724 50.5 % Casualty and Specialty 5,299,952 59.8 % 5,479,299 59.5 % 3,875,074 49.5 % Total gross premiums written $ 8,862,366 100.0 % $ 9,213,540 100.0 % $ 7,833,798 100.0 % Across our segments, we write proportional business, excess of loss business, and business through delegated authority arrangements.
For so long as shares of RenaissanceRe are listed on the NYSE or another recognized stock exchange, the Insurance Act requires that the BMA be notified in writing when any person becomes, or ceases to be, a “controller” (as defined by applicable regulations to include significant shareholders, managing directors, and chief executives of the registered insurer or its parent company) of any Bermuda registered insurer or its parent company or an “officer” (as defined by applicable regulations) of any Bermuda registered insurer.
The Insurance Act requires that the BMA be notified in writing when any person becomes, or ceases to be, a “controller” (as defined by applicable regulations to include significant shareholders, managing directors, and chief executives of the registered insurer or its parent company) of any Bermuda registered insurer or an “officer” (as defined by applicable regulations) of any Bermuda registered insurer or its parent company.
The following table shows gross premiums written in our Casualty and Specialty segment aggregated by class of business: Year ended December 31, 2022 2021 2020 (in thousands, except percentages) Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written General casualty (1) $ 1,560,594 28.5 % $ 1,258,536 32.5 % $ 904,594 32.2 % Professional liability (2) 1,728,570 31.5 % 1,283,864 33.1 % 836,120 29.8 % Credit (3) 1,062,183 19.4 % 498,946 12.9 % 514,192 18.3 % Other specialty (4) 1,127,952 20.6 % 833,728 21.5 % 552,117 19.7 % Total Casualty and Specialty segment gross premiums written $ 5,479,299 100.0 % $ 3,875,074 100.0 % $ 2,807,023 100.0 % (1) Includes automobile liability, casualty clash, employer’s liability, umbrella or excess casualty, workers’ compensation and general liability.
The following table shows gross premiums written in our Casualty and Specialty segment aggregated by class of business: Year ended December 31, 2023 2022 2021 (in thousands, except percentages) Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written Gross Premiums Written Percentage of Gross Premiums Written General casualty (1) $ 1,730,102 32.6 % $ 1,560,594 28.5 % $ 1,258,536 32.5 % Professional liability (2) 1,212,393 22.9 % 1,728,570 31.5 % 1,283,864 33.1 % Credit (3) 769,321 14.5 % 1,062,183 19.4 % 498,946 12.9 % Other specialty (4) 1,588,136 30.0 % 1,127,952 20.6 % 833,728 21.5 % Total Casualty and Specialty segment gross premiums written $ 5,299,952 100.0 % $ 5,479,299 100.0 % $ 3,875,074 100.0 % (1) Includes automobile liability, casualty clash, employer’s liability, umbrella or excess casualty, workers’ compensation and general liability.
In the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations, we allocate the portion of these items attributable to third parties in the “Net (income) loss attributable to redeemable noncontrolling interests” line item. Refer to “Note 9.
In the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations, the aggregated portion of these various economic outcomes attributable to third parties is reflected in the “Net (income) loss attributable to redeemable noncontrolling interests” line item. Refer to “Note 9.
The Bermuda Investment Funds Act 2006 sets standards and criteria applicable to the establishment and operation of investment funds in Bermuda with a view to protecting investors. The BMA is responsible for supervising and regulating investment funds. Each of Medici and Upsilon Fund is registered or authorized and regulated by the BMA Investment Funds Act.
The Bermuda Investment Funds Act 2006 sets standards and criteria applicable to the establishment and operation of investment funds in Bermuda with a view to protecting investors. The BMA is responsible for supervising and regulating investment funds.
The activities of RREAG, Australia Branch are licensed and regulated by APRA and the Australian Securities and Investments Commission. Pursuant to these regulations, RREAG, Australia Branch is subject to certain reporting and capital requirements in Australia.
The activities of RREAG, Australia Branch are licensed and regulated by APRA and the Australian Securities and Investments Commission. Pursuant to 25 these regulations, RREAG, Australia Branch is subject to certain reporting and capital requirements in Australia. • Canada : Validus Re, Canada Branch is federally regulated by the Office of the Superintendent of Financial Institutions.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe could also be required to allocate considerable time and resources to comply with any new or additional regulatory requirements in any of the jurisdictions in which we operate, and any such requirements could impact the operations of our insurance and/or non-insurance subsidiaries, result in increased costs for us and impact our financial condition It is possible that individual jurisdiction or cross border regulatory developments could adversely differentiate Bermuda, the jurisdiction in which we are subject to group supervision, or could exclude Bermuda-based companies from benefits such as market access, mutual recognition or reciprocal rights made available to other jurisdictions, which could adversely impact us.
Biggest changeIt is possible that individual jurisdiction or cross border regulatory developments could adversely differentiate Bermuda, the jurisdiction in which we are subject to group supervision, or could exclude Bermuda-based companies from benefits such as market access, mutual recognition or reciprocal rights made available to other jurisdictions, which could adversely impact us.
Our operating subsidiaries owe certain legal duties and obligations (including reporting, governance and allocation obligations) to third-party investors and are subject to laws and regulations relating to the management of third-party capital. Complying with these obligations, laws and regulations requires significant management time and attention.
Certain of our operating subsidiaries owe legal duties and obligations (including reporting, governance and allocation obligations) to third-party investors and are subject to laws and regulations relating to the management of third-party capital. Complying with these obligations, laws and regulations requires significant management time and attention.
Under certain circumstances, if we or our subsidiaries fail to comply with these covenants or meet these financial ratios, the noteholders or the lenders could declare a default and demand immediate repayment of all amounts owed to them or, where applicable, cancel their commitments to lend or issue letters of credit or, where the reimbursement obligations are unsecured, require us to pledge collateral or, where the reimbursement obligations are secured, require us to pledge additional or a different type of collateral.
Under certain circumstances, if we or our subsidiaries fail to comply with these covenants or meet these financial 39 ratios, the noteholders or the lenders could declare a default and demand immediate repayment of all amounts owed to them or, where applicable, cancel their commitments to lend or issue letters of credit or, where the reimbursement obligations are unsecured, require us to pledge collateral or, where the reimbursement obligations are secured, require us to pledge additional or a different type of collateral.
Additionally, any indebtedness we incur at higher interest rates may require higher ongoing debt service payments than our existing debt arrangements, which could leave us with less cash available for our operations. We are also exposed to the risk that the contingent capital facilities we have in place may not be available as expected.
Additionally, any indebtedness we incur at higher interest rates may require higher ongoing debt service payments than our existing debt arrangements, which could leave us with less cash available for our operations. We are also exposed to the risk that the contingent capital facilities we have in place may 42 not be available as expected.
A significant cyber incident, including system failure, security breach, disruption by malware or other damage could interrupt or delay our operations, result in a violation of applicable cybersecurity and privacy and other laws, damage our reputation, cause a loss of customers or expose sensitive customer data, or give rise to monetary fines and other penalties, which could be significant.
A significant cyber incident, including system failure, security breach, disruption by malware or other damage could interrupt or delay our operations, result in a violation of applicable cybersecurity and privacy and other laws, damage our 40 reputation, cause a loss of customers or expose sensitive customer data, or give rise to monetary fines and other penalties, which could be significant.
If inflation continues to increase for a prolonged period or increase further, any of the risks described above could be exacerbated, and the impact on the global economy generally and on our customers could negatively affect our business, financial condition and results of operations. 39 We are exposed to counterparty credit risk, which could increase our liabilities and reduce liquidity.
If inflation continues to increase for a prolonged period or increase further, any of the risks described above could be exacerbated, and the impact on the global economy generally and on our customers could negatively affect our business, financial condition and results of operations. We are exposed to counterparty credit risk, which could increase our liabilities and reduce liquidity.
Were this to occur, such company could be subject to U.S. corporate income and additional branch profits taxes on the portion of its earnings effectively connected to such U.S. business. If we or one or more of our Bermuda subsidiaries were ultimately held to be subject to taxation, our earnings would correspondingly decline.
Were this to occur, such company could be subject to U.S. corporate income and additional branch profits taxes on the portion of its earnings effectively connected to such U.S. trade or business. If we or one or more of our Bermuda subsidiaries were ultimately held to be subject to taxation, our earnings would correspondingly decline.
The insurance and reinsurance regulatory framework continues to be subject to increased scrutiny in many jurisdictions, 41 including the U.S. and Europe. If our Bermuda insurance or reinsurance operations become subject to the insurance laws of any state in the U.S., jurisdictions in the EU, or elsewhere, we could face challenges to the future operations of these companies.
The insurance and reinsurance regulatory framework continues to be subject to increased scrutiny in many jurisdictions, including the U.S. and Europe. If our Bermuda insurance or reinsurance operations become subject to the insurance laws of any state in the U.S., jurisdictions in the EU, or elsewhere, we could face challenges to the future operations of these companies.
While management is not aware of any cybersecurity or information security incident or breach that has had a material effect on our operations, there can be no assurances that a cybersecurity incident that could have a material impact on us will not occur in the future.
While management is not aware of any cybersecurity or information security incident or breach that has had a material effect on our operations, there can be no assurances that a cybersecurity incident that could have a material impact on us has not occurred or will not occur in the future.
We cannot guarantee that the controls and procedures we or third parties have in place to protect or recover our systems and information will be effective, successful or sufficiently rapid to avoid harm to our business.
We cannot guarantee that the controls and procedures we or third parties have in place to protect or recover our systems and information will be effective, successful or sufficiently rapid to avoid harm to our business or reputation.
Management 38 updates its evaluations regularly and reflects impairments in operations as such evaluations are revised. We cannot assure you that we have accurately assessed the level of impairments taken in our financial statements.
Management updates its evaluations regularly and reflects impairments in operations as such evaluations are revised. We cannot assure you that we have accurately assessed the level of impairments taken in our financial statements.
Any of the foregoing could result in a decline in our investment performance and capital resources, and accordingly, adversely affect our financial results. We may be adversely impacted by inflation.
Any of the foregoing could result in a decline in our investment performance and capital resources, and accordingly, adversely affect our financial results. 41 We may be adversely impacted by inflation.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources—Ratings.” We operate in a highly competitive environment. Competition and consolidation in the (re)insurance industry could adversely impact us. We compete with major U.S. and non-U.S. insurers and reinsurers, many of which have greater financial, marketing and management resources than we do.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources—Ratings.” We operate in a highly competitive environment. Competition and consolidation in the (re)insurance industry could adversely impact us. We compete with major U.S. and non-U.S. insurers and reinsurers, which may have greater financial, marketing and management resources than we do.
In addition, it is possible that our delegated authority counterparties or other counterparties authorized to bind policies on our behalf will fail to comply with regulatory requirements, such as those relating to sanctions, or 35 our own standards regarding underwriting and reputational risk tolerance, which could lead to increased regulatory and operational burden, among other risks.
In addition, it is possible that our delegated authority counterparties or other counterparties authorized to bind policies on our behalf will fail to comply with regulatory requirements, such as those relating to sanctions, or our own standards regarding underwriting and reputational risk tolerance, which could lead to increased 37 regulatory and operational burden, among other risks.
In addition, if we are downgraded below a certain rating level, nearly all of our reinsurance contracts contain provisions permitting cedants to cancel coverage and/or requiring us to post collateral for our obligations. For the current ratings of certain of our subsidiaries and joint ventures and additional ratings information, refer to “Part II, Item 7.
In addition, if we are downgraded below a certain rating level, nearly all of our reinsurance contracts contain provisions permitting cedants to cancel coverage and/or requiring us to post collateral for our obligations. For the current financial strength ratings of certain of our subsidiaries and joint ventures and additional ratings information, refer to “Part II, Item 7.
A ratings downgrade or other negative ratings action could adversely affect our ability to compete with other reinsurers and insurers, the marketability of our product offerings, access to and cost of borrowing, and ability to write new business. We could also breach covenants under, or incur higher borrowing costs on, our credit facilities.
A financial strength ratings downgrade or other negative ratings action could adversely affect our ability to compete with other reinsurers and insurers, the marketability of our product offerings, access to and cost of borrowing, and ability to write new business. We could also breach covenants under, or incur higher borrowing costs on, our credit facilities.
Our significant third-party capital management operations may further complicate these foreign currency operational needs and risk. We may require additional capital in the future, which may not be available or may only be available on unfavorable terms. Our exposure to significant catastrophic events may cause significant volatility in our operating and capital needs.
Our significant third-party capital management operations further complicates these foreign currency operational needs and risk. We may require additional capital in the future, which may not be available or may only be available on unfavorable terms. Our exposure to significant catastrophic events may cause significant volatility in our operating and capital needs.
In addition, we believe that climate change and shifting demographic 33 trends in catastrophe exposed regions each contributes to increases in the average economic value of expected losses. Further, we believe that the recent increase in catastrophic events is indicative of permanent climate change rather than transient climate variability .
In addition, we believe that climate change and shifting demographic trends in catastrophe exposed regions each contributes to increases in the average economic value of 35 expected losses. Further, we believe that the recent increase in catastrophic events is indicative of permanent climate change rather than transient climate variability .
The principal markets in which we operate are susceptible to monetary inflation, which could cause loss costs to increase, impact the performance of our investment portfolio, and borrowing costs to increase. We believe the risks of inflation across our key markets have increased following two years of significant increases in inflation in the United States and elsewhere.
The principal markets in which we operate are susceptible to monetary inflation, which could cause loss costs to increase, impact the performance of our investment portfolio, and borrowing costs to increase. We believe the risks of inflation across our key markets have increased following significant increases in inflation in the United States and elsewhere.
The sanctions laws and regulations of non-U.S. jurisdictions in which we operate may differ to some degree from those of the U.S. and these differences may additionally expose us to sanctions violations. In addition, we are subject to the Foreign Corrupt Practices Act and other anti-bribery laws that generally prohibit corrupt payments or improper gifts to non-U.S. governments or officials.
The sanctions laws and regulations of non-U.S. jurisdictions in which we operate may differ from those of the U.S. and these differences may also expose us to sanctions violations. In addition, we are subject to the Foreign Corrupt Practices Act and other anti-bribery laws that generally prohibit corrupt payments or improper gifts to non-U.S. governments or officials.
We market our insurance and reinsurance products worldwide through a limited number of insurance and reinsurance brokers, with three brokerage firms (Aon plc, March & McLennan Companies, Inc. and Arthur J. Gallagher) accounting for 77.4% of our gross premiums written. For additional information relating to premiums written generated by our largest brokers, refer to “Item 1.
We market our insurance and reinsurance products worldwide through a limited number of insurance and reinsurance brokers, with three brokerage firms (Aon plc, March & McLennan Companies, Inc. and Arthur J. Gallagher) accounting for 83.7% of our gross premiums written. For additional information relating to premiums written generated by our largest brokers, refer to “Item 1.
For example, in a rising interest rate environment such as the one prevailing throughout 2022 and into 2023, our borrowing costs have and may continue to increase, new debt may be available only on terms and conditions less favorable than those of our existing debt, and our access to credit may be negatively impacted.
For example, in a high interest rate environment such as the one prevailing throughout 2023 and into 2024, our borrowing costs have and may continue to increase, new debt may be available only on terms and conditions less favorable than those of our existing debt, and our access to credit may be negatively impacted.
See “Part I, Item 1. Business — Information Technology and Cybersecurity” for additional information related to information technology and cybersecurity. The determination of impairments taken is highly subjective and could materially impact our financial condition or results of operations.
See “Part I, Item 1C. Cybersecurity” for additional information related to information technology and cybersecurity. The determination of impairments taken is highly subjective and could materially impact our financial condition or results of operations.
The Federal Reserve increased its benchmark interest rate to the highest level in 15 years in 2022, and may raise it further in the coming year. Increases in interest rates could cause the market value of our investment portfolio to decrease, which could reduce our capital resources.
The Federal Reserve increased its benchmark interest rate to the highest level in 20 years in 2023, and may raise it further in the coming year. Increases in interest rates could cause the market value of our investment portfolio to decrease, which could reduce our capital resources.
Although we generally seek to hedge significant non-U.S. dollar positions, we may experience losses resulting from fluctuations in the values of these foreign currencies, which could cause our consolidated earnings to decrease. In 40 addition, failure to manage our foreign currency exposures could cause our results of operations to be more volatile.
Although we generally seek to hedge significant non-U.S. dollar positions, we have experienced, and may in the future experience, losses resulting from fluctuations in the values of these foreign currencies, which could cause our consolidated earnings to decrease. In addition, failure to manage our foreign currency exposures could cause our results of operations to be more volatile.
Even when reinsurance market conditions in general are strong, retrocessional market conditions may limit or prevent us from obtaining desired amounts of retrocessional reinsurance. For example, recent large catastrophe events have limited and may continue to limit or prevent us from obtaining desired amounts of new or replacement coverage on favorable terms or from entities with satisfactory creditworthiness.
Even when reinsurance market conditions in general are strong, retrocessional market conditions may limit or prevent us from obtaining desired amounts of retrocessional reinsurance. For example, large catastrophe events have limited, and may in the future limit or prevent, us from obtaining desired amounts of new or replacement coverage on favorable terms or from entities with satisfactory creditworthiness.
Furthermore, we expect that our exposure to this uncertainty will grow as our casualty business grows, because in these “long-tail” lines claims can typically be made for many years, making them more susceptible to these trends than our property and specialty businesses, which are generally more “short-tail.” 34 We depend on a few insurance and reinsurance brokers for a preponderance of our business, and any loss of business provided by them could adversely affect us.
Furthermore, we expect that our exposure to this uncertainty is more pronounced in our casualty business, because in these “long-tail” lines claims can typically be made for many years, making them more susceptible to these trends than our property and specialty businesses, which are generally more “short-tail.” 36 We depend on a few insurance and reinsurance brokers for a preponderance of our business, and any loss of business provided by them could adversely affect us.
We have significant premiums receivable and reinsurance recoverable, and our failure to collect even a small portion of these amounts, or a meaningful delay in the collection of recoverables as to which our own underlying obligations are due, could negatively affect our results of operations and financial condition, perhaps materially.
We have significant premiums receivable and reinsurance recoverable, and our failure to collect even a small portion of these amounts, or a meaningful delay in the collection of recoverables as to which our own underlying obligations are due, could negatively affect our results of operations and financial condition, perhaps materially. We may be adversely affected by foreign currency fluctuations.
Regulatory restrictions on the payment of dividends under Bermuda law, Swiss law and various U.S. laws regulate the ability of our subsidiaries to pay dividends. If our subsidiaries are restricted from paying dividends to us, we may be unable to pay dividends to our shareholders or to repay our indebtedness.
Regulatory restrictions on capital distributions under Bermuda law, Swiss law and various U.S. laws regulate the ability of our subsidiaries to pay dividends or otherwise distribute capital. If our subsidiaries are restricted from distributing capital to us, we may be unable to pay dividends to our shareholders or to repay our indebtedness.
See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources—Liquidity and Cash Flows—Credit Facilities, Trusts and Other Collateral Arrangements—Multi-Beneficiary Reinsurance Trusts and 42 Multi-Beneficiary Reduced Collateral Reinsurance Trusts” for a discussion of certain of these collateral arrangements.
See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources—Liquidity and Cash Flows—Credit Facilities, Trusts and Other Collateral Arrangements” for a discussion of certain of these collateral arrangements.
In addition, after a large catastrophic event or circumstance, we may record significant amounts of reinstatement premium, which can cause quarterly, non-recurring fluctuations in both our written and earned premiums in our Property segment . These and other factors may increase the volatility of our financial results.
In addition, after a large catastrophic event or circumstance, we may record significant amounts of reinstatement premium, which can cause quarterly, non-recurring fluctuations in both our written and earned premiums in our Property segment .
These bye-law provisions make it more difficult to acquire control of us by means of a tender offer, open market purchase, proxy contest or otherwise and could discourage a prospective acquirer from making a tender offer or otherwise attempting to obtain control of us.
These bye-law provisions make it more difficult to acquire control of us by means of a tender offer, open market purchase, proxy contest or otherwise and could discourage a prospective acquirer from making a tender offer or otherwise attempting to obtain control of us. In addition, these bye-law provisions could prevent the removal of our current Board and management.
These provisions may have the effect of deterring purchases of large blocks of our common shares or proposals to acquire us, even if our shareholders might deem these purchases or acquisition proposals to be in their best interests. 45 In addition, our bye-laws provide for, among other things: • a classified Board, whose size is generally fixed and whose members may be removed by the shareholders only for cause upon a 66 2/3% vote; • restrictions on the ability of shareholders to nominate persons to serve as directors, submit resolutions to a shareholder vote and requisition special general meetings; • a large number of authorized but unissued shares which may be issued by the Board without further shareholder action; and • a 66 2/3% shareholder vote to amend, repeal or adopt any provision inconsistent with several provisions of the bye-laws.
In addition, our bye-laws provide for, among other things: • a classified Board, whose size is generally fixed and whose members may be removed by the shareholders only for cause upon a 66 2/3% vote; • restrictions on the ability of shareholders to nominate persons to serve as directors, submit resolutions to a shareholder vote and requisition special general meetings; • a large number of authorized but unissued shares which may be issued by the Board without further shareholder action; and • a 66 2/3% shareholder vote to amend, repeal or adopt any provision inconsistent with several provisions of the bye-laws.
It is possible that an employee or intermediary could fail to comply with applicable laws and regulations. In such event, we could be exposed to civil penalties, criminal penalties and other sanctions, including fines or other punitive actions. In addition, such violations could damage our business and our reputation.
It is possible that an employee or intermediary could fail to comply with applicable laws and regulations. In such event, we could 44 be exposed to civil penalties, criminal penalties and other sanctions, including fines or other punitive actions, which could damage our business and reputation, and could adversely affect our financial condition and results of operations.
We have significant reinsurance recoverable associated with the large catastrophe events of the past several years, and the insolvency of any of our reinsurers, or the inability or reluctance of any of our reinsurers to make timely payments to us under the terms of our reinsurance agreements, could have a material adverse effect on us.
We have significant reinsurance recoverables, and the insolvency of any of our reinsurers, or the inability or reluctance of any of our reinsurers to make timely payments to us under the terms of our reinsurance agreements, could have a material adverse effect on us.
We must comply with all applicable economic sanctions and anti-bribery laws and regulations of the U.S. and other jurisdictions. U.S. laws and regulations that may be applicable to us include economic trade sanctions laws and regulations administered by OFAC as well as certain laws administered by the U.S. Department of State.
U.S. laws and regulations that may be applicable to us include economic trade sanctions laws and regulations administered by OFAC as well as certain laws administered by the U.S. Department of State.
Our claims reserves are large, and a small percentage increase to those liabilities could materially adversely affect our financial condition and results of operations. Emerging claim and coverage issues, or other litigation, could adversely affect us.
Conversely, if our reserving estimates are too conservative, it could impede our ability to grow our business. Our claims reserves are large, and a small percentage increase to those liabilities could materially adversely affect our financial condition and results of operations. Emerging claim and coverage issues, or other litigation, could adversely affect us.
The impact of inflation on loss costs could be more pronounced for those lines of business that are long tail in nature, as they require a relatively long period of time to finalize and settle claims.
In particular, widespread economic factors such as supply chain disruptions have contributed to, and may continue to contribute to, significant inflation. The impact of inflation on loss costs could be more pronounced for those lines of business that are long tail in nature, as they require a relatively long period of time to finalize and settle claims.
For example, we have experienced losses related to the conflict between Russia and Ukraine, and the conflict may expand, which could increase our potential exposures or have far-reaching impacts on the global economy.
For example, the ongoing conflicts between Russia and Ukraine, and Israel and Hamas, may expand, which could increase our potential exposures or have far-reaching impacts on the global economy.
If we determine that our claims and claim expense reserves are inadequate, we may be required to increase these reserves at the time of the determination and take charges in our consolidated statement of operations, reducing our net income and available capital. Conversely, if our reserving estimates are too conservative, it could impede our ability to grow our business.
To the extent we determine that our claims and claim expense reserves are inadequate, we may be required to increase or decrease these reserves at the time of the determination and take charges in our consolidated statement of operations, reducing our net income and available capital.
The cybersecurity regulatory environment is evolving, and it is likely that the costs of complying with new or developing regulatory requirements will increase.
The cybersecurity regulatory environment is evolving, in particular with respect to emerging technologies, such as artificial intelligence, and it is likely that the costs of complying with new or developing regulatory requirements will increase.
In addition, these bye-law provisions could prevent the removal of our current Board of Directors and management. To the extent these provisions discourage takeover attempts, they could deprive shareholders of opportunities to realize takeover premiums for their shares or could depress the market price of the shares.
To the extent these provisions discourage takeover attempts, they could deprive shareholders of opportunities to realize takeover premiums for their shares or could depress the market price of the shares.
After experiencing a prolonged soft market cycle several years ago, we believe that the current (re)insurance underwriting market is in a hard market phase for many lines of business, characterized by increasing prices and improving terms and conditions.
After experiencing a prolonged soft market cycle several years ago, we believe that the (re)insurance underwriting market has been in a hard market phase for many lines of business, characterized by increasing prices and improving terms and conditions. The shift has likely been impacted by withdrawals of alternative capital, the number of catastrophic events and continuing prior year adverse development.
Unanticipated higher inflation could also lead to higher interest rates, which would decrease or create volatility in the value of our fixed income securities and potentially other investments. To the extent higher inflation could lead to currency fluctuation, we may also experience increased volatility on foreign exchange gains and losses in our consolidated financial statements.
Unanticipated higher inflation could also lead to higher interest rates, which would decrease or create volatility in the value of our fixed income securities and potentially other investments.
See “ The OECD and the jurisdictions in which we operate may pursue measures that might increase our taxes and reduce our net income and increase our reporting requirements. ” Due to this increased legislative and regulatory scrutiny of the reinsurance industry and Bermuda, our cost of compliance with applicable laws may increase, which could result in a decrease to our profitability.
Due to this increased legislative and regulatory scrutiny of the reinsurance industry and Bermuda, our cost of compliance with applicable laws may increase, which could result in a decrease to our profitability.
Although we cannot predict whether, when or in what form the proposed regulations might be finalized, the proposed regulations, if finalized in their current form, could limit our ability to execute affiliate reinsurance transactions that would otherwise be undertaken for non-tax business reasons in the future and could increase the risk that gross related person insurance income could constitute 20% or more of the gross insurance income of one or more of our non-U.S. insurance subsidiaries in a particular taxable year, which could result in such related person insurance income being taxable to U.S. persons that own our shares.
Although we 45 cannot predict whether, when or in what form the proposed regulations might be finalized, if they are finalized in their current form, we may decide not to undertake affiliate reinsurance transactions that would otherwise be undertaken for non-tax business reasons in the future and there may be an increased risk that gross related person insurance income constitutes 20% or more of the gross insurance income of one or more of our non-U.S. insurance subsidiaries in any year.
It is currently anticipated (though not assured) that we will operate each of our non-U.S. subsidiaries in such a way that gross related person insurance income will constitute less than 20% of the gross insurance income of each of our non-U.S. insurance subsidiaries for any taxable year in the foreseeable future.
Further, we believe that RenaissanceRe should not be characterized as a PFIC and currently anticipate that the gross related person insurance income of each of our non-U.S. insurance subsidiaries will constitute less than 20% of its gross insurance income for any taxable year in the foreseeable future.
We believe the hard/soft market cycle dynamic is likely to persist, and that we may return to soft market conditions in the future. Additionally, it is possible that increased access of primary insurers to capital, new technologies and other factors may reduce the duration or eliminate or significantly lessen the impact of any current or future hard reinsurance underwriting market.
Additionally, it is possible that increased access of primary insurers to capital, new technologies and other factors may reduce the duration or eliminate or significantly lessen the impact of any current or future hard reinsurance underwriting market. The cumulative impact of these risks could negatively impact our profitability and ability to maintain or grow premiums.
Our business depends on the proper functioning and availability of our information technology platform, including communications and data processing systems and our proprietary systems. We are also required to effect electronic transmissions with third parties including brokers, clients, vendors and others with whom we do business, as well as with our Board of Directors.
We are also required to effect electronic transmissions with third parties including brokers, clients, vendors and others with whom we do business, as well as with our Board.
It is possible that new or alternative capital could cause reductions in prices of our products or reduce the duration or amplitude of attractive portions of the historical market cycles.
It is possible that new or alternative capital could cause reductions in prices of our products or reduce the duration or amplitude of attractive portions of the historical market cycles. Competitors may attempt to replicate all or part of our business model and provide further competition in the markets in which we participate.
On January 25, 2022, proposed regulations were published which could, if finalized in their current form, substantially expand the definition of related person insurance income to include insurance income of our non-U.S. subsidiaries related to affiliate reinsurance transactions. These regulations would apply to taxable years beginning after the date the regulations are finalized.
In addition, on January 25, 2022, proposed regulations were published that could, if finalized in their current form, substantially expand the definition of related person insurance income to include all insurance income of our non-U.S. subsidiaries related to affiliate reinsurance transactions if U.S. persons own (or are considered to own under applicable tax rules) more than 50% of our shares.
The covenants in our debt agreements limit our financial and operational flexibility, which could have an adverse effect on our financial condition. We have incurred indebtedness and may incur additional indebtedness in the future. Our indebtedness primarily consists of publicly traded notes, letters of credit and a revolving credit facility.
Any of the foregoing could adversely affect our reputation, business or results of operations. The covenants in our debt agreements limit our financial and operational flexibility, which could have an adverse effect on our financial condition. We have incurred indebtedness and may incur additional indebtedness in the future.
The OECD has published reports and launched a global dialog among member and non-member countries on measures to limit harmful tax competition. These measures are largely directed at counteracting the effects of jurisdictions perceived by the OECD to be tax havens or offering preferential tax regimes.
These measures are largely directed at counteracting the effects of jurisdictions perceived by the OECD to be tax havens or offering preferential tax regimes.
The cumulative impact of these risks could negatively impact our profitability and ability to maintain or grow premiums. We depend on the policies, procedures and expertise of ceding companies and delegated authority counterparties, who may fail to accurately assess the risks they underwrite, which exposes us to operational and financial risks.
We depend on the policies, procedures and expertise of ceding companies and delegated authority counterparties, who may fail to accurately assess the risks they underwrite, which exposes us to operational and financial risks. We do not separately underwrite each primary risk assumed under our reinsurance contracts or pursuant to our delegated authority business.
Risks Related to our Strategy and Operations The loss of key senior members of management and the inability to attract and retain qualified personnel could adversely affect us. Our success depends upon our ability to attract and retain our senior officers and to attract and retain additional qualified personnel in the future.
These and other factors may increase the volatility of our financial results. 38 Risks Related to our Strategy and Operations The loss of key senior members of management and the inability to attract and retain qualified personnel could adversely affect us.
Security breaches, including at third parties that have our information, could expose us to a risk of loss or misuse of our information, litigation and potential liability. In addition, cyber incidents, such as ransomware attacks, that impact the availability, reliability, speed, accuracy or other proper functioning of our systems could have a significant impact on our operations and financial results.
In addition, cyber incidents, such as ransomware attacks, that impact the availability, reliability, speed, accuracy or other proper functioning of our systems could have a significant impact on our operations and financial results. We may not have the resources or technical sophistication to prevent, detect or stop a cyberattack.
Further, as we continue to expand our business operations outside of Bermuda, we are increasingly subject to new and additional regulations, including, for example, laws relating to anti-corruption and anti-bribery. We face risks related to changes in Bermuda law and regulations, and the political environment in Bermuda.
Further, as we continue to expand our business operations outside of Bermuda, we are increasingly subject to new and additional regulations, including, for example, laws relating to anti-corruption and anti-bribery. Our liquidity could be impacted due to regulatory requirements for collateral by non-U.S. insurers.
The negotiation of potential acquisitions or strategic investments as well as the integration of an acquired business could be unsuccessful, result in a substantial diversion of management resources, or lead to other unanticipated risks or challenges. In addition, while our current business strategy focuses predominantly on writing reinsurance, we also write excess and surplus lines insurance through delegated authority arrangements.
The negotiation of potential acquisitions or strategic investments as well as the integration of an acquired business, such as the Validus Acquisition, could be unsuccessful, result in a substantial diversion of management resources, or lead to other unanticipated risks or challenges.
We are incorporated in Bermuda and many of our operating companies are domiciled in Bermuda. Therefore, changes in Bermuda law and regulation may have an adverse impact on our operations, such as the imposition of tax liability, increased regulatory supervision or changes in regulation.
Therefore, changes in Bermuda law and regulation may have an adverse impact on our operations, such as increased regulatory supervision or the imposition of corporate income tax. The recently enacted Corporate Income Tax Act 2023, discussed below, is an example of a material change in Bermuda law.
These changes could adversely affect Bermuda or the international reinsurance market focused there, either of which could adversely impact us commercially. Our liquidity could be impacted due to regulatory requirements for collateral by non-U.S. insurers.
These changes could adversely affect Bermuda or the international reinsurance market focused there, either of which could adversely impact us commercially. Political, regulatory and industry initiatives by state and international authorities could adversely affect our business.
As a result, the premiums they cede to us may not properly compensate us for the risks we assume, which could materially adversely affect our financial condition.
Accordingly, we are heavily dependent on the original underwriting decisions made by our ceding companies and delegated authority counterparties, who may not have adequately evaluated the risks to be reinsured. As a result, the premiums they cede to us may not properly compensate us for the risks we assume, which could materially adversely affect our financial condition.
We will also need to continue to invest significant time and resources in new technologies and new ways to deliver our products and services in order to maintain our competitive position.
We will also need to continue to invest significant time and resources in new technologies and new ways to deliver our products and services in order to maintain our competitive position. Government initiatives, including tax policies, as well as government sponsored or backed insurance companies and catastrophe funds, may also affect demand for reinsurance, sometimes significantly.
Further, we could be adversely impacted by other changes in tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof by taxation authorities in the jurisdictions in which we operate, which could materially adversely affect our results of operations.
These and any other changes in tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof by taxation authorities in the jurisdictions in which we operate may materially adversely affect our results of operations. Risks Related to the Ownership of our Securities Because we are a holding company, we are dependent on capital distributions from our subsidiaries.
Such criminal or civil sanctions, penalties, other sanctions, and damage to our business and reputation could adversely affect our financial condition and results of operations. Our business may be subject to governmental and societal responses to climate change which could affect our profitability.
Our business may be subject to governmental and societal responses to climate change which could affect our profitability.
For example, our significant gross and net reserves associated with the large catastrophe events of the past several years, as well as those associated with the COVID-19 pandemic, remain subject to significant uncertainty.
For example, our significant gross and net reserves associated with the large catastrophe events of the past several years, remain subject to significant uncertainty. We also have significant exposure to losses stemming from COVID-19 related claims, which may emerge over time as the full impact of the pandemic and its effects on the global economy are realized.
Our failure to carry out our business plans may have an adverse effect on our long-term results of operations and financial condition. We are subject to cybersecurity risks and may incur increasing costs to minimize those risks. Cybersecurity threats and incidents have increased in recent years, and we may be subject to heightened cyber-related risks.
Our failure to carry out our business plans may have an adverse effect on our long-term results of operations and financial condition. We may experience difficulties in integrating the Validus Business.
Any of the foregoing could adversely affect our business or results of operations. 36 Large non-recurring contracts and reinstatement premiums may increase the volatility of our financial results.
In addition, insurance companies that merge may be able to spread their risks across a consolidated, larger capital base so that they require less reinsurance. Any of the foregoing could adversely affect our business or results of operations. Large non-recurring contracts and reinstatement premiums may increase the volatility of our financial results.
While we have maintained our rigorous tax-related operating protocols during the ongoing COVID-19 pandemic, it is possible that any ongoing or future travel restrictions may give rise to substantial operating challenges. 43 U.S. tax changes could reduce our access to capital, decrease demand for our products, impact our shareholders or investors in our joint ventures or other entities we manage or otherwise adversely affect us.
Further, we or our shareholders may be the subject of future changes in tax laws, which could reduce our access to capital, decrease demand for our products, impact our shareholders or investors in our joint ventures or other entities we manage or otherwise adversely affect us.
Reinsurance intermediaries may also continue to consolidate, potentially adversely impacting our ability to access business and distribute our products. As the insurance industry consolidates, we expect competition for customers to become more intense, and sourcing and properly servicing each customer to become even more important.
As the insurance industry consolidates, we expect competition for customers to become more intense, and sourcing and properly servicing each customer to become even more important. We could incur greater expenses relating to customer acquisition and retention, further reducing our operating margins.
Pillar Two addresses the remaining Base Erosion and Profit Shifting risk of group shifting profits to entities in low tax jurisdictions by introducing a global minimum tax on large groups (groups with consolidated revenues in excess of €750 million), which would require large groups to calculate the effective tax in each of the jurisdictions in which they operate, and pay an additional top-up tax where the group’s effective tax rate in a jurisdiction is below 15%.
In addition, in December 2021, the OECD/G20 Inclusive Framework on BEPS approved global anti-base erosion model rules (the “GloBE Rules”) that generally would require large multinational groups to calculate the effective tax rate in each of the jurisdictions in which they operate and pay an additional top-up tax where the group’s effective tax rate in a jurisdiction is below 15%.
For more details on 37 our indebtedness, see “Part II, Item 7.
Our indebtedness primarily consists of publicly traded notes, letters of credit and a revolving credit facility. For more details on our indebtedness, see “Part II, Item 7.
If demand for our products falls or the supply of competing capacity rises, our prospects for potential growth may be adversely affected. In particular, we might lose existing customers or suffer a decline in business during shifting market cycles, which we might not regain when industry conditions improve.
In particular, we might lose existing customers or suffer a decline in business during shifting market cycles, which we might not regain when industry conditions improve. We believe the hard/soft market cycle dynamic is likely to persist, and that we may return to soft market conditions in the future.
Required modification of our existing principles, and new disclosure requirements, could have an impact on our results of operations and increase our expenses in order to implement and comply with any new requirements. Our business is subject to certain laws and regulations relating to sanctions and foreign corrupt practices, the violation of which could adversely affect our operations.
Our business is subject to certain laws and regulations relating to sanctions and foreign corrupt practices, the violation of which could adversely affect our operations. We must comply with all applicable economic sanctions and anti-bribery laws and regulations of the U.S. and other jurisdictions.
These consolidated enterprises may try to use their enhanced market power or better capitalization to negotiate price reductions for our products and services or obtain a larger market share through increased line sizes. If competitive pressures decrease the prices for our products, we would generally expect to reduce our future underwriting activities, resulting in lower premium volume and profitability.
Along with increased competition, there has also been significant consolidation in the (re)insurance industry over the last several years, including among our competitors, customers and brokers. These consolidated enterprises may try to use their enhanced market power or better capitalization to negotiate price reductions for our products and services or obtain a larger market share through increased line sizes.
Further, the taxation of us or our subsidiaries and our shareholders may be the subject of future tax legislation, which could have a material adverse effect on us or our shareholders. The OECD and the jurisdictions in which we operate may pursue measures that might increase our taxes and reduce our net income and increase our reporting requirements.
The OECD and the jurisdictions in which we operate may pursue measures that might increase our taxes and reduce our net income and increase our reporting requirements. The OECD has published reports and launched a global dialog among member and non-member countries on measures to limit harmful tax competition.
The “greylist” is a list of jurisdictions that have made sufficient 44 commitments to reform their tax policies but remain subject to close monitoring while they are executing on their commitments. In addition, in 2015, the OECD published its final series of Base Erosion and Profit Shifting reports related to its attempt to coordinate multilateral action on international tax rules.
In the past, Bermuda has been temporarily added to the EU “blacklist” of non-cooperative jurisdictions for tax purposes, as well as the “greylist” of jurisdictions that have made sufficient commitments to reform their tax policies but remain subject to close monitoring while they are executing on their commitments.
All of the foregoing events or potential outcomes, including in combination with other risk factors included herein, could cause a material adverse effect on our results of operations for any period, and, depending on their severity, could also materially and adversely affect our financial condition. We may be adversely affected by foreign currency fluctuations.
The extent to which the COVID-19 pandemic triggers coverage is dependent on specific policy language, terms and exclusions, and if coverage is triggered, that could cause a material adverse effect on our results of operations for any period, and, depending on their severity, could also materially and adversely affect our financial condition.
While we believe that we should not be characterized as a PFIC, we cannot assure you that this will continue to be the case in future years. It is also possible that joint venture entities managed by us may be characterized as PFICs, which could make these entities less attractive to investors and reduce our fee income.
These tax provisions could adversely impact our shareholders and reduce the attractiveness of an investment in our shares and thus our access to capital. Joint venture entities or other entities managed by us may be subject to similar tax risks, which could make these entities less attractive to investors and reduce our fee income.
Removed
For example, in the third quarter of 2022, our results were impacted by Hurricane Ian, which is expected to be one of the costliest natural disasters ever to impact the United States.
Added
We cannot assure you that the higher premium rates will continue, and rates may decrease in the future. If demand for our products falls or the supply of competing capacity rises, our prospects for potential growth may be adversely affected.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES We lease office space in Bermuda, which houses our headquarters and principal executive offices, as well as in other locations throughout the U.S. and in the U.K., Australia, Ireland, Singapore and Switzerland. We believe that our current office space is sufficient for us to conduct our operations, although our needs may change in the future.
Biggest changeITEM 2. PROPERTIES We lease office space in Bermuda, which houses our headquarters and principal executive offices, as well as in other locations throughout the U.S. and in the U.K., Australia, Canada, Ireland, Singapore and Switzerland. We believe that our current office space is sufficient for us to conduct our operations, although our needs may change in the future.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS The information required by this Item relating to legal proceedings is incorporated herein by reference to information included in “Note 19. Commitments, Contingencies and Other Items” in our “Notes to the Consolidated Financial Statements.” ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 46 PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS The information required by this Item relating to legal proceedings is incorporated herein by reference to information included in “Note 20. Commitments, Contingencies and Other Items” in our “Notes to the Consolidated Financial Statements.” ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 48 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe declaration and payment of future dividends is at the sole discretion of our board of directors after taking into account various factors, including our financial condition, settlement indemnifications, operating results, available cash and current and anticipated cash needs. 47 PERFORMANCE GRAPH The following graph compares the cumulative return on our common shares, including reinvestment of our dividends on our common shares, to such return for the S&P 500 Index, the S&P’s Property-Casualty Industry Group Stock Price Index, the published industry index that we previously used, and the S&P Composite 1500 Property & Casualty Insurance Index, the new published industry index that we have selected, for the five-year period commencing December 31, 2017 and ending December 31, 2022, assuming $100 was invested on December 31, 2017.
Biggest changePERFORMANCE GRAPH The following graph compares the cumulative return on our common shares, including reinvestment of our dividends on our common shares, to such return for the S&P 500 Index and the S&P Composite 1500 Property & Casualty Insurance Index for the five-year period commencing December 31, 2018 and ending December 31, 2023, assuming $100 was invested on December 31, 2018.
The table below details the repurchases that were made under the program during the fourth quarter of 2022, and also includes other shares purchased, which represents common shares surrendered by employees in respect of withholding tax obligations on the vesting of restricted stock.
The table below details the repurchases that were made under the program during the fourth quarter of 2023, and also includes other shares purchased, which represents common shares surrendered by employees in respect of withholding tax obligations on the vesting of restricted stock.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN 48 ISSUER REPURCHASES OF EQUITY SECURITIES Our share repurchase program may be effected from time to time, depending on market conditions and other factors, through open market purchases and privately negotiated transactions.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN 49 ISSUER REPURCHASES OF EQUITY SECURITIES Our share repurchase program may be effected from time to time, depending on market conditions and other factors, through open market purchases and privately negotiated transactions.
At December 31, 2022, $500.0 million remained available for repurchase under the share repurchase program. In the future, we may authorize additional purchase activities under the currently authorized share repurchase program, increase the amount authorized under the share repurchase program, or adopt additional trading plans.
At December 31, 2023, $500.0 million remained available for repurchase under the share repurchase program. In the future, we may authorize additional purchase activities under the currently authorized share repurchase program, increase the amount authorized under the share repurchase program, or adopt additional trading plans.
Our decision to repurchase common shares will depend on, among other matters, the market price of the common shares and our capital requirements. ITEM 6. [Reserved] 49
Our decision to repurchase common shares will depend on, among other matters, the market price of the common shares and our capital requirements. ITEM 6. [Reserved] 50
Each measurement point on the graph below represents the cumulative shareholder return as measured by the last sale price at the end of each calendar year during the period from January 1, 2018 through December 31, 2022.
Each measurement point on the graph below represents the cumulative shareholder return as measured by the last sale price at the end of each calendar year during the period from January 1, 2019 through December 31, 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER REPURCHASES OF EQUITY SECURITIES MARKET INFORMATION AND NUMBER OF HOLDERS Our common shares are listed on the NYSE under the symbol “RNR.” On February 3, 2023, there were 106 holders of record of our common shares.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER REPURCHASES OF EQUITY SECURITIES MARKET INFORMATION AND NUMBER OF HOLDERS Our common shares are listed on the NYSE under the symbol “RNR.” On February 14, 2024, there were 105 holders of record of our common shares.
As depicted in the graph below, during this period, the cumulative return was (1) 53.5% on our common shares; (2) 56.9% for the S&P 500 Index; (3) 81.9% for the S&P Property-Casualty Industry Group Stock Price Index; and (4) 73.9% for the S&P Composite 1500 Property & Casualty Insurance Industry Index.
As depicted in the graph below, during this period, the cumulative return was (1) 7.2% on our common shares; (2) 26.3% for the S&P 500 Index; (and (3) 10.9% for the S&P Composite 1500 Property & Casualty Insurance Industry Index.
On each of February 4, 2022, May 16, 2022 and August 2, 2022, our Board of Directors approved a renewal of our authorized share repurchase program to an aggregate amount of up to $500.0 million. Unless terminated earlier by our Board of Directors, the program will expire when we have repurchased the full value of the shares authorized.
Our Board has authorized a share repurchase program in an aggregate amount of up to $500.0 million, which was last renewed on August 2, 2022. Unless terminated earlier by our Board, the program will expire when we have repurchased the full value of the shares authorized.
DIVIDENDS On February 8, 2023, the Board of Directors of the Company announced a quarterly dividend of $0.38 per common share on its common shares. The dividend is payable on March 31, 2023, to shareholders of record on March 15, 2023.
DIVIDENDS On February 6, 2024, RenaissanceRe’s Board approved a quarterly dividend of $0.39 per common share on its common shares. The dividend is payable on March 29, 2024, to shareholders of record on March 15, 2024.
Total Shares Purchased Other Shares Purchased Shares Purchased Under Repurchase Program Dollar Amount Still Available Under Repurchase Program Shares Purchased Average Price per Share Shares Purchased Average Price per Share Shares Purchased Average Price per Share (in millions) Beginning dollar amount available to be repurchased $ 500.0 October 1 - 31, 2022 — $ — — $ — — $ — 500.0 November 1 - 30, 2022 15 $ 154.29 15 $ 154.29 — $ — 500.0 December 1 - 31, 2022 98 $ 181.79 98 $ 181.79 — $ — 500.0 Total 113 $ 178.14 113 $ 178.14 — $ — $ 500.0 During 2022, pursuant to our publicly announced share repurchase program, we repurchased 1.1 million common shares at an aggregate cost of $162.8 million and an average price of $155.00 per common share.
Total Shares Purchased Other Shares Purchased Shares Purchased Under Repurchase Program Dollar Amount Still Available Under Repurchase Program Shares Purchased Average Price per Share Shares Purchased Average Price per Share Shares Purchased Average Price per Share (in thousands) Beginning dollar amount available to be repurchased $ 500,000 October 1 - 31, 2023 — $ — — $ — — $ — $ 500,000 November 1 - 30, 2023 2,265 $ 226.97 2,265 $ 226.97 — $ — $ 500,000 December 1 - 31, 2023 — $ — — $ — — $ — $ 500,000 Total 2,265 $ 226.97 2,265 $ 226.97 — $ — $ 500,000 During 2023, we did not repurchase common shares pursuant to our publicly announced share repurchase program.
Removed
We previously compared our performance to the S&P 500 Property & Casualty Insurance Industry Group Stock Price Index but changed to the S&P Composite 1500 Property & Casualty Insurance Index because we believe it is a more appropriate peer group index and better reflects our business and the companies with which we compete.
Added
The declaration and payment of future dividends is at the sole discretion of our board of directors after taking into account various factors, including our financial condition, settlement indemnifications, operating results, available cash and current and anticipated cash needs.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

220 edited+88 added−65 removed168 unchanged
Biggest changeOur cash flows used in financing activities in 2021 were $302.5 million, and were principally the result of: • the repurchase of 6.6 million of our common shares in open market transactions at an aggregate cost of $1.0 billion and an average price of $156.78 per common share; 84 • the redemption of all 11 million of our outstanding 5.375% Series E Preference Shares on August 11, 2021 for $275.0 million; • dividends paid on our common and preference shares of $67.8 million and $32.9 million, respectively; and partially offset by • net inflows of $488.7 million associated with the issuance of 20 million of Depositary Shares (each representing 1/1000th interest in a share of our 4.20% Series G Preference Shares), net of expenses; • net inflows of $594.3 million primarily related to net third-party redeemable noncontrolling interest share transactions in DaVinci, Medici and Vermeer; and • net inflows of $30.0 million from the drawdown of the Medici Revolving Credit Facility.
Biggest changeThe total net proceeds from the offering were $1,351.6 million; • the issuance of $750.0 million of 5.750% Senior Notes due June 5, 2033, with net proceeds from the offering of $740.6 million; 88 • net inflows of $582.5 million primarily related to net third-party redeemable noncontrolling interest share transactions in Medici and DaVinci; • net inflows of $75.0 million from the drawdown of the Medici Revolving Credit Facility; partially offset by • dividends paid on our common and preference shares of $75.1 million and $35.4 million, respectively; and • repayment of debt of $30.0 million related to the Medici Revolving Credit Facility. 2022 During 2022, our cash and cash equivalents decreased by $664.7 million, to $1.2 billion at December 31, 2022, compared to $1.9 billion at December 31, 2021.
The re-estimated incurred claims and claim expenses as of December 31 of subsequent years, represent our revised estimates as reported as of those dates.
The re-estimated incurred claims and claim expenses as of December 31 of subsequent years, represent our revised estimates as reported as of those dates.
The impact on net income (loss) and shareholders’ equity assumes no increase or decrease in reinsurance recoveries, loss related premium or profit commission, or redeemable noncontrolling interest.
The impact on net income (loss) and shareholders’ equity assumes no increase or decrease in reinsurance recoveries, loss related premium or profit commission, or redeemable noncontrolling interest.
Claims and claim expense reserves represent estimates, including actuarial and statistical projections at a given point in time, of the ultimate settlement and administration costs for unpaid claims and claim expenses arising from the insurance and reinsurance contracts we sell.
Claims and claim expense reserves represent estimates, including actuarial and statistical projections at a given point in time, of the ultimate settlement and administration costs for unpaid claims and claim expenses arising from the insurance and reinsurance contracts we sell.
Reserve for Claims and Claim Expenses” in our “Notes to the Consolidated Financial Statements” for more information on the risks we insure and reinsure, the reserving techniques, assumptions and processes we follow to estimate our claims and claim expense reserves, prior year development of the reserve for claims and claim expenses, analysis of our incurred and paid claims development and claims duration information for each of our Property and Casualty and Specialty segments.
Reserve for Claims and Claim Expenses” in our “Notes to the Consolidated Financial Statements” for more information on the risks we insure and reinsure, the reserving techniques, assumptions and processes we follow to estimate our claims and claim expense reserves, prior year development of the reserve for claims and claim expenses, analysis of our incurred and paid claims development and claims duration information for each of our Property and Casualty and Specialty segments.
However, the geographic 78 distribution of pre-tax income or loss can vary significantly between periods for a variety of reasons, including the business mix and geographic location of the balance sheet on which net premiums are written and earned, the size and nature of net claims and claim expenses incurred, the amount and geographic location of operating expenses, net investment income and net realized and unrealized gains (losses) on investments and the amount of specific adjustments to determine the income tax basis in each of our operating jurisdictions.
However, the geographic distribution of pre-tax income or loss can vary significantly between periods for a variety of reasons, including the business mix and geographic location of the balance sheet on which net premiums are written and earned, the size and nature of net claims and claim expenses incurred, the amount and geographic location of operating expenses, net investment income and net realized and unrealized gains (losses) on investments and the amount of specific adjustments to determine the income tax basis in each of our operating jurisdictions.
However, as a result of a combination of market conditions, turnover of our investment portfolios and changes in investment yields, and the nature of our business where a large portion of the coverages we provide can produce losses of high severity and low frequency, future cash flows from operating activities 80 cannot be accurately predicted and may fluctuate significantly between individual quarters and years.
However, as a result of a combination of market conditions, turnover of our investment portfolios and changes in investment yields, and the nature of our business where a large portion of the coverages we provide can produce losses of high severity and low frequency, future cash flows from operating activities cannot be accurately predicted and may fluctuate significantly between individual quarters and years.
Therefore, the amount of net claims paid in any one year is not necessarily related to the amount of net claims and claims expenses incurred in that year, as reported in the consolidated statement of operations. We expect that our liquidity needs for the next 12 months will be met by our cash receipts from operations.
Therefore, the amount of net claims paid in any one year is not necessarily related to the amount of net claims and claims expenses incurred in that year, as reported in the consolidated statement of operations. 84 We expect that our liquidity needs for the next 12 months will be met by our cash receipts from operations.
In accident years where our current estimates are lower than our initial estimates, we have experienced favorable development while accident years where our current estimates are higher than our original estimates indicate adverse development. The table is presented on a net basis and, therefore, includes the benefit of reinsurance recoverable.
In accident years where our current estimates are lower than our initial 61 estimates, we have experienced favorable development while accident years where our current estimates are higher than our original estimates indicate adverse development. The table is presented on a net basis and, therefore, includes the benefit of reinsurance recoverable.
At each balance sheet date, we assess the need to establish a valuation allowance that reduces the net deferred tax asset when it is more likely than not that all, or some portion, of the net deferred tax assets will not be realized.
At each balance sheet date, we assess the need to establish a valuation allowance that reduces the net 67 deferred tax asset when it is more likely than not that all, or some portion, of the net deferred tax assets will not be realized.
We provide property, casualty and specialty reinsurance and certain insurance solutions to customers, principally through intermediaries. Established in 1993, we have offices in Bermuda, Australia, Ireland, Singapore, Switzerland, the U.K., and the U.S. We are one of the world’s leading providers of property and, casualty and specialty reinsurance.
We provide property, casualty and specialty reinsurance and certain insurance solutions to customers, principally through intermediaries. Established in 1993, we have offices in Bermuda, Australia, Canada, Ireland, Singapore, Switzerland, the U.K., and the U.S. We are one of the world’s leading providers of property, casualty and specialty reinsurance solutions.
Statutory Requirements” in our “Notes to the Consolidated Financial Statements” for additional information on our multi-beneficiary reinsurance trusts and multi-beneficiary reduced collateral reinsurance trusts. Contractual Obligations In assessing our liquidity requirements and cash needs, we also consider contractual obligations to which we are a party.
Statutory Requirements” in our “Notes to the Consolidated Financial Statements” for additional information on our multi-beneficiary reinsurance trusts and multi-beneficiary reduced collateral reinsurance trusts. 86 Contractual Obligations In assessing our liquidity requirements and cash needs, we also consider contractual obligations to which we are a party.
The underwriting results of our operating subsidiaries and underwriting platforms are included in our Property and Casualty and Specialty segment results as appropriate. Our strategy focuses on operating as an integrated system of three competitive advantages: superior risk selection, superior customer relationships and superior capital management.
The underwriting results of our consolidated operating subsidiaries and underwriting platforms are included in our Property and Casualty and Specialty segment results as appropriate. Our strategy focuses on operating as an integrated system of three competitive advantages: superior risk selection, superior customer relationships and superior capital management.
If we believe we lack the claims experience in the early stages of development of a line of business, we may not select the Bornhuetter-Ferguson actuarial method until such time as we 59 believe there is greater credibility in the level of reported losses.
If we believe we lack the claims experience in the early stages of development of a line of business, we may not select the Bornhuetter-Ferguson actuarial method until such time as we believe there is greater credibility in the level of reported losses.
In addition, we adjust the loss ratios and development curves in our other property lines of business in a similar fashion to the 57 sensitivity analysis performed for our Casualty and Specialty segment, discussed in greater detail below.
In addition, we adjust the loss ratios and development curves in our other property lines of business in a similar fashion to the sensitivity analysis performed for our Casualty and Specialty segment, discussed in greater detail below.
As development experience for claims and claim expenses on prior accident years becomes credible, the Bornhuetter-Ferguson actuarial method is generally selected which places greater weight on this reported experience as it develops.
As development experience for claims and claim expenses on prior accident years becomes credible, the Bornhuetter-Ferguson actuarial method is 62 generally selected which places greater weight on this reported experience as it develops.
In general, our reserve for claims and claim expenses for more recent losses are subject to greater uncertainty and, therefore, greater variability and are likely to experience material changes from one period to the next.
In general, our reserve for claims and claim expenses for more recent losses are subject to greater uncertainty 60 and, therefore, greater variability and are likely to experience material changes from one period to the next.
This represented 0.5% and 0.0% of our total assets and liabilities, respectively (2021 - 0.5% and 0.0%, respectively). Level 3 fair value measurements are based on valuation techniques that use at least one significant input that is unobservable. These measurements are made under circumstances in which there is little, if any, market activity for the asset or liability.
This represented 0.3% and 0.0% of our total assets and liabilities, respectively (2022 - 0.5% and 0.0%, respectively). Level 3 fair value measurements are based on valuation techniques that use at least one significant input that is unobservable. These measurements are made under circumstances in which there is little, if any, market activity for the asset or liability.
We use valuation models or other pricing techniques that require a variety of inputs including contractual terms, market prices and rates, yield curves, credit curves, measures of volatility including credit spreads and projected cash flows, prepayment rates and correlations of such inputs, some of which may be unobservable, to value these Level 3 assets and liabilities. Refer to “Note 5.
We use valuation models or other pricing techniques that require a variety of inputs including contractual terms, market prices and rates, yield curves, credit curves, measures of volatility including credit spreads and projected cash flows, prepayment rates and correlations of such inputs, some of which may be unobservable, to value these Level 3 assets and liabilities. Refer to “Note 6.
Refer to “Note 9. Noncontrolling Interests” in our “Notes to Consolidated Financial Statements” for additional information regarding our redeemable noncontrolling interests. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Financial Condition As a Bermuda-domiciled holding company, RenaissanceRe has limited operations of its own. Its assets consist primarily of investments in subsidiaries and cash and securities in amounts which fluctuate over time.
Refer to “Note 10. Noncontrolling Interests” in our “Notes to Consolidated Financial Statements” for additional information regarding our redeemable noncontrolling interests. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Financial Condition As a Bermuda-domiciled holding company, RenaissanceRe has limited operations of its own. Its assets consist primarily of investments in subsidiaries and cash and securities in amounts which fluctuate over time.
Sensitivity Analysis The table below shows the impact on our Casualty and Specialty segment reserve for claims and claim expenses, net income (loss) and shareholders’ equity as of and for the year ended December 31, 2022, of a reasonable range of possible outcomes associated with a variety of reasonable actuarial assumptions for our estimates of gross ultimate claims and claim expense ratios and loss reporting patterns.
Sensitivity Analysis The table below shows the impact on our Casualty and Specialty segment reserve for claims and claim expenses, net income (loss) and shareholders’ equity as of and for the year ended December 31, 2023, of a reasonable range of possible outcomes associated with a variety of reasonable actuarial assumptions for our estimates of gross ultimate claims and claim expense ratios and loss reporting patterns.
See “Note 18. Derivative Instruments” in our “Notes to Consolidated Financial Statements” for additional information. We structure our investment portfolio to emphasize the preservation of capital and the availability of liquidity to meet our claims obligations, to be well diversified across market sectors, and to generate relatively attractive returns on a risk-adjusted basis over time.
See “Note 19. Derivative Instruments” in our “Notes to Consolidated Financial Statements” for additional information. We structure our investment portfolio to emphasize the preservation of capital and the availability of liquidity to meet our claims obligations, to be well diversified across market sectors, and to generate relatively attractive returns on a risk-adjusted basis over time.
We also have an allocation to publicly traded equities reflected on our consolidated balance sheet as equity investments and an allocation to other investments (including catastrophe bonds, direct private equity investments, fund investments and term loans). 87 The following table summarizes the composition of our investment portfolio, including the amortized cost, fair value, credit ratings and effective yields.
We also have an allocation to publicly traded equities reflected on our consolidated balance sheet as equity investments and an allocation to other investments (including catastrophe bonds, fund investments, term loans and direct private equity investments). 92 The following table summarizes the composition of our investment portfolio, including the amortized cost, fair value, credit ratings and effective yields.
Moody’s believes that insurance companies rated “A1” and “A3” offer good financial security. 92 Fitch The outlook for all of our Fitch ratings is stable. Fitch believes that insurance companies rated “A+” have “Strong” capacity to meet policyholders and contract obligations on a timely basis with a low expectation of ceased or interrupted payments.
Moody’s believes that insurance companies rated “A1” and “A3” offer good financial security. 97 Fitch The outlook for all of our Fitch ratings is stable. Fitch believes that insurance companies rated “A+” have “Strong” capacity to meet policyholders and contract obligations on a timely basis with a low expectation of ceased or interrupted payments.
We provide value to our customers and partners in the form of financial security, innovative products, and responsive service. We are known as a leader in paying valid claims promptly. There are three principal drivers of profit that generate diversified earnings streams for our business - underwriting income, fee income, and investment income.
We provide value to our customers and partners in the form of financial security, innovative products, and responsive service. We are known as a leader in paying valid claims promptly. We have three principal drivers of profit that generate diversified earnings streams for our business - underwriting income, fee income, and investment income.
Our most recent estimates as reported at December 31, 2022 differ from our initial accident year estimates and demonstrate that our most recent estimate of incurred claims and claim expenses are reasonably likely to vary from our initial estimate, perhaps significantly. Changes in this estimate will be recorded in the period in which they occur.
Our most recent estimates as reported at December 31, 2023 differ from our initial accident year estimates and demonstrate that our most recent estimate of incurred claims and claim expenses are reasonably likely to vary from our initial estimate, perhaps significantly. Changes in this estimate will be recorded in the period in which they occur.
Sensitivity Analysis The table below shows the impact on our reserve for claims and claim expenses, net income (loss) and shareholders’ equity as of and for the year ended December 31, 2022 of a reasonable range of possible outcomes associated with our estimates of gross ultimate losses for claims and claim expenses incurred within our Property segment.
Sensitivity Analysis The table below shows the impact on our reserve for claims and claim expenses, net income (loss) and shareholders’ equity as of and for the year ended December 31, 2023 of a reasonable range of possible outcomes associated with our estimates of gross ultimate losses for claims and claim expenses incurred within our Property segment.
We also caution that the above sensitivity analysis is not used by management in developing our reserve estimates and is also not used by management in managing the business. 60 Premiums and Related Expenses Premiums are recognized as income, net of any applicable reinsurance or retrocessional coverage purchased, over the terms of the related contracts and policies.
We also caution that the above sensitivity analysis is not used by management in developing our reserve estimates and is also not used by management in managing the business. 63 Premiums and Related Expenses Premiums are recognized as income, net of any applicable reinsurance or retrocessional coverage purchased, over the terms of the related contracts and policies.
Our estimate of the fair value of catastrophe bonds is based on quoted market prices or, when such prices are not available, by reference to broker or underwriter bid indications. Refer to “Note 5. Fair Value Measurements” in our “Notes to the Consolidated Financial Statements” for additional information regarding the fair value measurement of our investments.
Our estimate of the fair value of catastrophe bonds is based on quoted market prices or, when such prices are not available, by reference to broker or underwriter bid indications. Refer to “Note 6. Fair Value Measurements” in our “Notes to the Consolidated Financial Statements” for additional information regarding the fair value measurement of our investments.
In addition, we have included historical incurred claims and claim expenses development information related to Platinum and TMR in the table below.
In addition, we have included historical incurred claims and claim expenses development information related to Platinum, TMR and Validus in the table below.
In addition, we have included historical incurred claims and claim expenses development information related to Platinum and TMR in the table below.
In addition, we have included historical incurred claims and claim expenses development information related to Platinum, TMR and Validus in the table below.
(2) The investment commitments do not have a defined contractual commitment date and we have therefore included them in the less than one year category. (3) The amount and timing of the cash flows associated with our policy liabilities are highly uncertain. Refer to “Note 7.
(2) The investment commitments do not have a defined contractual commitment date and we have therefore included them in the less than one year category. (3) The amount and timing of the cash flows associated with our policy liabilities are highly uncertain. Refer to “Note 8.
Statutory Requirements” in our “Notes to the Consolidated Financial Statements.” Liquidity and Cash Flows Holding Company Liquidity RenaissanceRe’s principal uses of liquidity are: (1) common share related transactions including dividend payments to our common shareholders and common share repurchases, (2) preference share related transactions including dividend payments to our preference shareholders and preference share redemptions, (3) interest and principal payments on debt, (4) capital investments in our subsidiaries, (5) acquisition of, or investments in, new or existing companies or books of business of other companies and (6) certain corporate and operating expenses.
Statutory Requirements” in our “Notes to the Consolidated Financial Statements.” Liquidity and Cash Flows Holding Company Liquidity RenaissanceRe’s principal uses of liquidity are: (1) common share related transactions including dividend payments to our common shareholders and common share repurchases, (2) preference share related transactions including dividend payments to our preference shareholders and preference share redemptions, (3) interest and principal payments on debt, (4) capital investments in our subsidiaries, (5) acquisition of, or investments in, new or existing companies or books of business of other companies, such as the Validus Acquisition, and (6) certain corporate and operating expenses.
However, there is no assurance that this favorable development on prior accident years net claims and claim expenses will occur in future periods. Our reserving techniques, assumptions and processes differ among our Property and Casualty and Specialty segments. Refer to “Note 7.
However, there is no assurance that this favorable development on prior accident years net claims and claim expenses will occur in future periods. Our reserving techniques, assumptions and processes differ among our Property and Casualty and Specialty segments. Refer to “Note 8.
In accident years where our current estimates are lower than our initial estimates, we have experienced favorable development, in comparison, for accident years where our current estimates are higher than our original estimates we have experienced adverse development. The table is presented on a net basis and, therefore, includes the benefit of reinsurance recoverable.
In accident years where our current estimates are lower than our initial estimates, we have experienced favorable development, in comparison, for accident years where our current estimates are higher than our original estimates we have experienced adverse development. The table is presented on a net basis and, therefore, includes the benefit of reinsurance recoveries.
This decrease was principally driven by actual reported and paid net claims and claim expenses associated with the 2020 accident year being lower than expected, which has resulted in a reduction in our expected ultimate claims and claim expense ratio for this accident year.
This decrease was principally driven by actual reported and paid net claims and claim expenses associated with the 2021 accident year being lower than expected, which has resulted in a reduction in our expected ultimate claims and claim expense ratio for this accident year.
Reinsurance recoverable on dual trigger reinsurance contracts require us to estimate our ultimate losses applicable to these contracts as well as estimate the ultimate amount of insured industry 61 losses that will be reported by the applicable statistical reporting agency, as per the contract terms.
Reinsurance recoverable on dual trigger reinsurance contracts require us to estimate our ultimate losses applicable to these contracts as well as estimate the ultimate amount of insured industry 64 losses that will be reported by the applicable statistical reporting agency, as per the contract terms.
However, in some circumstances, RenaissanceRe may determine it is necessary or advisable to contribute capital to our subsidiaries, or may be contractually required to contribute capital to our joint ventures or managed funds. For example, in 2022, RenaissanceRe contributed capital to RenaissanceRe Specialty U.S. to support growth in premiums.
However, in some circumstances, RenaissanceRe may determine it is necessary or advisable to contribute capital to our subsidiaries, or may be contractually required to contribute capital to our joint ventures or managed funds. For example, in 2023, RenaissanceRe contributed capital to RenaissanceRe Specialty U.S. to support growth in premiums.
The regulations governing our and our principal operating subsidiaries’ ability to pay dividends and to maintain certain measures of solvency and liquidity, and requirements to file FCRs are discussed in detail in “Part I, Item 1. Business, Regulation” and “Note 17.
The regulations governing our and our principal operating subsidiaries’ ability to pay dividends and to maintain certain measures of solvency and liquidity, and requirements to file FCRs are discussed in detail in “Part I, Item 1. Business, Regulation” and “Note 18.
Notwithstanding the foregoing, our investments are subject to market-wide risks and fluctuations, as well as to risks inherent in particular securities. For additional information regarding our investments and the fair value measurement of our investments refer to “Note 4. Investments” and “Note 5.
Notwithstanding the foregoing, our investments are subject to market-wide risks and fluctuations, as well as to risks inherent in particular securities. For additional information regarding our investments and the fair value measurement of our investments refer to “Note 5. Investments” and “Note 6.
We think that we are uniquely positioned to write a variety of risks, leveraging the enhancements we have made over the last several years to our risk and capital management technology and underwriting expertise to cover additional lines of business.
We are uniquely positioned to write a variety of risks, leveraging the enhancements we have made over the last several years to our risk and capital management technology and underwriting expertise to cover additional lines of business.
Our actual net claims and claim expenses paid will differ, perhaps materially, from the estimates reflected in our financial statements, which may adversely impact our financial condition, liquidity and capital resources. Refer to “Note 7.
Our actual net claims and claim expenses paid will differ, perhaps materially, from the estimates reflected in our financial statements, which may adversely impact our financial condition, liquidity and capital resources. Refer to “Note 8.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion and analysis of our results of operations for 2022 compared to 2021, as well as our liquidity and capital resources at December 31, 2022.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion and analysis of our results of operations for 2023 compared to 2022, as well as our liquidity and capital resources at December 31, 2023.
Our most recent estimates as reported at December 31, 2022 differ from our initial accident year estimates and demonstrates that our initial estimate of incurred claims and claim expenses are reasonably 58 likely to vary from our most recent estimate, perhaps significantly. Changes in this estimate will be recorded in the period in which they occur.
Our most recent estimates as reported at December 31, 2023 differ from our initial accident year estimates and demonstrates that our initial estimate of incurred claims and claim expenses are reasonably likely to vary from our most recent estimate, perhaps significantly. Changes in this estimate will be recorded in the period in which they occur.
For incurred accident year claims and claim expenses denominated in currencies other than USD, we have used the current year-end balance sheet foreign exchange rate for all periods provided, thereby eliminating the effects of changes in foreign currency translation rates from the incurred accident year claims development information included in the table below. 56 The following table details our Property segment incurred claims and claim expenses, net of reinsurance, as of December 31, 2022.
For incurred accident year claims and claim expenses denominated in currencies other than USD, we have used the current year-end balance sheet foreign exchange rate for all periods provided, thereby eliminating the effects of changes in foreign currency translation rates from the incurred accident year claims development information included in the table below. 59 The following table details our Property segment incurred claims and claim expenses, net of reinsurance, as of December 31, 2023.
Meaningful uncertainty remains regarding the estimates and the nature and extent of the losses from these catastrophe events, driven by the magnitude and recent nature of each event, the geographic areas 67 impacted by the events, relatively limited claims data received to date, the contingent nature of business interruption and other exposures, potential uncertainties relating to reinsurance recoveries and other factors inherent in loss estimation, among other things. 2022 Net Negative Impact The financial data below provides additional information detailing the net negative impact of the 2022 Weather-Related Large Losses on our consolidated financial statements in 2022.
Meaningful uncertainty remains regarding the estimates and the nature and extent of the losses from these catastrophe events, driven by the magnitude and recent nature of each event, the geographic areas impacted by the events, relatively limited claims data received to date, the contingent nature of business interruption and other exposures, potential uncertainties relating to reinsurance recoveries and other factors inherent in loss estimation, among other things. 2023 Net Negative Impact The financial data below provides additional information detailing the net negative impact of the 2023 Large Loss Events on our consolidated financial statements in 2023.
The portions of the economic outcomes that are not retained by us are ultimately allocated to the third-party investors who hold the non-controlling interests in these entities. The economic outcomes may include underwriting results, investments results, and foreign exchange impacts, among other items.
The portions of the economic outcomes that are not retained by us are ultimately allocated to the third-party investors who hold the noncontrolling interests in these entities. The economic outcomes may include underwriting results, investments results, and foreign exchange impacts, among other items.
Debt and Credit Facilities” in our “Notes to the Consolidated Financial Statements” for additional information related to this letter of credit facility. Multi-Beneficiary Reinsurance Trusts, Multi-Beneficiary Reduced Collateral Reinsurance Trusts Renaissance Reinsurance, DaVinci Reinsurance and RREAG, use multi-beneficiary reinsurance trusts and/or multi-beneficiary reduced collateral reinsurance trusts to collateralize reinsurance liabilities.
Debt and Credit Facilities” in our “Notes to the Consolidated Financial Statements” for additional information related to this letter of credit facility. Multi-Beneficiary Reinsurance Trusts, Multi-Beneficiary Reduced Collateral Reinsurance Trusts Renaissance Reinsurance, DaVinci Reinsurance, RREAG, Validus Re and Validus Switzerland, use multi-beneficiary reinsurance trusts and/or multi-beneficiary reduced collateral reinsurance trusts to collateralize reinsurance liabilities.
We then evaluate the overall adequacy of the provision for current expected credit losses based on other qualitative and judgmental factors. At December 31, 2022, the Company’s premiums receivable balance was $5.1 billion (2021 - $3.8 billion). Of the Company’s premiums receivable balance as of December 31, 2022, the majority are receivables from highly rated counterparties.
We then evaluate the overall adequacy of the provision for current expected credit losses based on other qualitative and judgmental factors. At December 31, 2023, the Company’s premiums receivable balance was $7.3 billion (2022 - $5.1 billion). Of the Company’s premiums receivable balance as of December 31, 2023, the majority are receivables from highly rated counterparties.
A combined ratio over 100% indicates unprofitable underwriting prior to the consideration of investment income. We also discuss our net claims and claim expense ratio on a current accident year basis and a prior accident years basis.
A combined ratio below 100% indicates profitable underwriting prior to the consideration of investment income. A combined ratio over 100% 54 indicates unprofitable underwriting prior to the consideration of investment income. We also discuss our net claims and claim expense ratio on a current accident year basis and a prior accident years basis.
For example, net claims and claim expenses associated with the 2019 accident year have experienced favorable development. This is largely driven by reductions in estimated net ultimate claims and claim expenses associated with the 2019 Large Loss Events.
For example, net claims and claim expenses associated with the 2019 accident year have experienced favorable development. This is largely driven by reductions in estimated net ultimate claims and claim expenses associated with the 2019 Large Loss Events. In comparison, net claims and claim expenses associated with the 2020 accident year have experienced adverse development.
The following table details our Casualty and Specialty segment incurred claims and claim expenses, net of reinsurance, as of December 31, 2022.
The following table details our Casualty and Specialty segment incurred claims and claim expenses, net of reinsurance, as of December 31, 2023.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period in which the change in tax rates is enacted.
The effect on deferred tax assets and liabilities of a change in tax laws or tax rates is recognized in income in the period in which the change is enacted.
At December 31, 2022, our non-investment grade and not-rated fixed maturity investments totaled $1.2 billion or 8.7% of our fixed maturity investments (2021 - $1.3 billion or 9.7%, respectively). In addition, within our other investments category we have funds that invest in non-investment grade and not-rated fixed income securities and non-investment grade cat-linked securities.
At December 31, 2023, our non-investment grade and not-rated fixed maturity investments totaled $1.3 billion or 6.1% of our fixed maturity investments (2022 - $1.2 billion or 8.7%, respectively). In addition, within our other investments category we have funds that invest in non-investment grade and not-rated fixed income securities and non-investment grade cat-linked securities.
Quantitative and Qualitative Disclosures About Market Risk” for additional information related to our exposure to foreign currency risk and “Note 18.
Quantitative and Qualitative Disclosures About Market Risk” for additional information related to our exposure to foreign currency risk and “Note 19.
We have committed capital to direct private equity investments, fund investments, term loans, and investments in other ventures of $2.9 billion, of which $1.7 billion has been contributed at December 31, 2022 (2021 - $2.7 billion and $1.3 billion, respectively). Our remaining commitments to these investments at December 31, 2022 totaled $1.2 billion (2021 - $1.4 billion).
We have committed capital to direct private equity investments, fund investments, term loans and investments in other ventures of $3.6 billion, of which $2.0 billion has been contributed at December 31, 2023 (2022 - $2.9 billion and $1.7 billion, respectively). Our remaining commitments to these investments at December 31, 2023 totaled $1.6 billion (2022 - $1.2 billion).
For additional information related to the terms of our debt and significant credit facilities, see “Note 8. Debt and Credit Facilities” in our “Notes to the Consolidated Financial Statements.” See “Note 11. Shareholders’ Equity” in our “Notes to the Consolidated Financial Statements” for additional information related to our common and preference shares.
For additional information related to the terms of our debt and significant credit facilities, see “Note 9. Debt and Credit Facilities” in our “Notes to the Consolidated Financial Statements.” See “Note 12. Shareholders’ Equity” in our “Notes to the Consolidated Financial Statements” for additional information related to our common and preference shares.
(2) The S&P ratings for our principal operating subsidiaries and joint ventures represent the insurer’s financial strength rating and the issuer’s long-term issuer credit rating. The Lloyd’s Overall Market Rating represents RenaissanceRe Syndicate 1458’s financial strength rating. RenaissanceRe has been assigned a “Very Strong” ERM score by S&P. (3) The Moody’s ratings represent the insurer’s financial strength rating.
(2) The S&P ratings for our principal operating subsidiaries and joint ventures represent the insurer’s financial strength rating. The Lloyd’s Overall Market Rating represents RenaissanceRe Syndicate 1458’s financial strength rating. RenaissanceRe has been assigned a “Very Strong” ERM score by S&P. (3) The Moody’s ratings represent the insurer’s financial strength rating.
We have not recorded any other-than-temporary impairment charges related to goodwill and other intangible assets associated with our investments in other ventures, under equity method in any of the years ended December 31, 2022 or 2021. See “Note 3. Goodwill and Other Intangible Assets” in our “Notes to the Consolidated Financial Statements” for additional information.
We have not recorded any other-than-temporary impairment charges related to goodwill and other intangible assets associated with our investments in other ventures, under equity method in either of the two years ended December 31, 2023 or 2022. See “Note 4. Goodwill and Other Intangible Assets” in our “Notes to the Consolidated Financial Statements” for additional information.
In order to determine if a market is active or inactive for a security, we consider a number of factors, including, but not limited to, the volume of trading activity for the security in question, the price of the security compared to its par value (for fixed maturity investments), and other factors that may be indicative of market activity. 62 At December 31, 2022, we classified $170.3 million and $5.3 million of our assets and liabilities, respectively, at fair value on a recurring basis using Level 3 inputs (2021 - $169.3 million and $10.8 million, respectively).
In order to determine if a market is active or inactive for a security, we consider a number of factors, including, but not limited to, the volume of trading activity for the security in question, the price of the security compared to its par value (for fixed maturity investments), and other factors that may be indicative of market activity. 65 At December 31, 2023, we classified $159.8 million and $2.7 million of our assets and liabilities, respectively, at fair value on a recurring basis using Level 3 inputs (2022 - $170.3 million and $5.3 million, respectively).
At December 31, 2022, the Company held a provision for current expected credit losses on its premiums receivable of $4.6 million (2021 - $2.8 million). Reinsurance Recoverable We enter into retrocessional reinsurance agreements in order to help reduce our exposure to large losses and to help manage our risk portfolio.
At December 31, 2023, the Company held a provision for current expected credit losses on its premiums receivable of $3.5 million (2022 - $4.6 million). Reinsurance Recoverable We enter into retrocessional reinsurance agreements in order to help reduce our exposure to large losses and to help manage our risk portfolio.
See “Note on Forward-Looking Statements.” For a discussion and analysis of our results of operations for 2021 compared to 2020, please refer to the disclosures set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 54-108 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 4, 2022.
See “Note on Forward-Looking Statements.” For a discussion and analysis of our results of operations for 2022 compared to 2021, please refer to the disclosures set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 50-97 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 8, 2023.
SELECTED CONSOLIDATED FINANCIAL DATA The following tables set forth our selected consolidated financial data and other financial information at the end of and for each of the years in the five-year period ended December 31, 2022. The results of TMR are included in our consolidated financial data from March 22, 2019.
SELECTED CONSOLIDATED FINANCIAL DATA The following tables set forth our selected consolidated financial data and other financial information at the end of and for each of the years in the five-year period ended December 31, 2023. The results of Validus and TMR are included in our consolidated financial data from November 1, 2023 and March 22, 2019, respectively.
Our mission is to match desirable, well-structured risks with efficient sources of capital to achieve our vision of being the best underwriter. We believe that this will allow us to produce superior returns for our shareholders over the long term, and to further our purpose of protecting communities and enabling prosperity.
Our mission is to match desirable risk with efficient capital to achieve our vision of being the best underwriter. We believe that this will allow us to produce superior returns for our shareholders over the long term, and to enable our purpose of protecting communities and enabling prosperity.
Such temporary differences are primarily due to net operating loss carryforwards and GAAP versus tax basis accounting differences relating to unearned premiums, reserves for claims and claim expenses, deferred finance charges, deferred underwriting results, accrued expenses, investments, deferred acquisition expenses, intangible assets, amortization and depreciation.
Such temporary differences are primarily due to net operating loss and capital loss carryforwards and GAAP versus tax basis accounting differences relating to unearned premiums, reserves for claims and claim expenses, deferred finance charges, deferred underwriting results, accrued expenses, investments, value of in-force business, VOBA, deferred acquisition expenses, intangible assets, amortization and depreciation.
In certain instances, we may be required to make capital contributions to our subsidiaries or joint ventures or managed funds, for example, Renaissance Reinsurance is obligated to make a mandatory capital contribution of up to $50.0 million in the event that a loss reduces Top Layer’s capital below a specified level.
In certain instances, we may be required to make capital contributions to our subsidiaries or joint ventures or managed funds, for example, we have net worth maintenance agreements with certain operating subsidiaries, and Renaissance Reinsurance is obligated to make a mandatory capital contribution of up to $50.0 million in the event that a loss reduces Top Layer’s capital below a specified level.
We also anticipate that losses from the COVID-19 pandemic will be highly complex and uncertain, given the unprecedented situation, and will take longer to develop given the nature of the losses, thus potentially adding volatility to our incurred net claims and claim expenses.
Losses from the COVID-19 pandemic are uncertain and highly complex, given the unprecedented situation, and will take longer to develop given the nature of the losses, thus potentially adding volatility to our incurred net claims and claim expenses.
At December 31, 2022, our reinsurance recoverable balance was $4.7 billion (2021 - $4.3 billion). Of this amount, 47.2% is fully collateralized by our reinsurers, 52.0% is recoverable from reinsurers rated A- or higher by major rating agencies and 0.8% is recoverable from reinsurers rated lower than A- by major rating agencies (2021 - 46.9%, 52.1% and 1.0%, respectively).
At December 31, 2023, our reinsurance recoverable balance was $5.3 billion (2022 - $4.7 billion). Of this amount, 60.6% is fully collateralized by our reinsurers, 38.5% is recoverable from reinsurers rated A- or higher by major rating agencies and 0.9% is recoverable from reinsurers rated lower than A- by major rating agencies (2022 - 47.2%, 52.0% and 0.8%, respectively).
Reserve for Claims and Claim Expenses” in our “Notes to the Consolidated Financial Statements” for additional information related to the development of prior accident years net claims and claim expenses. Refer to “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Summary of Critical Accounting Estimates—Claims and Claim Expense Reserves” and “Note 8.
Refer to “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Summary of Critical Accounting Estimates—Claims and Claim Expense Reserves” and “Note 76 8. Reserve for Claims and Claim Expenses” in our “Notes to the Consolidated Financial Statements” for additional discussion of our reserving techniques and prior year development of net claims and claim expenses.
We are also subject to taxes in certain jurisdictions in which we operate. Since the majority of our income is currently earned in Bermuda, which does not have a corporate income tax, the tax impact to our operations has historically been minimal.
We are also subject to taxes in certain jurisdictions in which we operate. Historically, the majority of our income has been earned in Bermuda, which did not have a corporate income tax, so the tax impact to our operations has been minimal.
We principally measure our financial success through long-term growth in tangible book value per common share plus the change in accumulated dividends. We believe this metric is the most appropriate measure of our financial performance, and in respect of which we believe we have delivered superior performance over time.
We principally measure our financial success through long-term growth in tangible book value per common share plus the change in accumulated dividends. We believe this metric is the most appropriate measure of our financial performance, and in respect of which we believe we have delivered superior performance over time. Our current business strategy focuses predominantly on writing reinsurance.
The reinsurers with the three largest balances accounted for 20.8%, 7.0% and 5.4%, respectively, of our reinsurance recoverable balance at December 31, 2022 (2021 - 19.9%, 8.4% and 4.3%, respectively). The provision for current expected credit losses recorded against reinsurance recoverable was $12.2 million at December 31, 2022 (2021 - $8.3 million).
The reinsurers with the three largest balances accounted for 17.6%, 14.3% and 8.7%, respectively, of our reinsurance recoverable balance at December 31, 2023 (2022 - 20.8%, 7.0% and 5.4%, respectively). The provision for current expected credit losses recorded against reinsurance recoverable was $13.3 million at December 31, 2023 (2022 - $12.2 million).
Principally impacting the Property segment underwriting result and combined ratio in 2022 were the 2022 Weather-Related Large Losses, which resulted in a net negative impact on the Property segment underwriting result of $1.2 billion and added 46.8 percentage points to its combined ratio.
In comparison, 2022 was impacted by the 2022 Weather-Related Large Losses, which resulted in a net negative impact on the Property segment underwriting result of $1.2 billion and added 46.8 percentage points to its combined ratio.
In the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations, we allocate the portion of these items attributable to third parties in the “Net (income) loss attributable to redeemable noncontrolling interests” line item. Refer to “Note 9.
In the Company’s consolidated balance sheets and consolidated statements of operations, the portion of these items attributable to third parties is reflected in “Net (income) loss attributable to redeemable noncontrolling interests” line item. Refer to “Note 10.
As an example, our re-estimated incurred claims and claim expenses decreased for the 2020 accident year from the initial estimates.
For example, our re-estimated incurred claims and claim expenses decreased for the 2021 accident year from the initial estimates.
Performance fees are based on the performance of the individual vehicles or products, and may be zero or negative in a particular period if, for example, large losses occur, which can potentially result in no performance fees or the reversal of previously accrued performance fees.
Performance fees are based on the performance of the individual vehicles or products, and may be zero or negative in a particular period if, for example, large losses occur, which can potentially result in no performance fees or the reversal of previously accrued performance fees. Joint ventures include DaVinci, Top Layer, Vermeer, and Fontana.
The following filed income tax returns are open for examination with the applicable tax authorities: tax years 2017 through 2021 with the U.S.; 2018 through 2021 with Ireland; 2020 through 2021 with the U.K.; 2018 through 2021 with Singapore; 2020 and 2021 with Switzerland; and 2018 through 2021 with Australia.
The following filed income tax returns are open for examination with the applicable tax authorities: tax years 2018 through 2022 with the U.S.; 2019 through 2022 with Ireland; 2021 through 2022 with the U.K.; 2019 through 2022 with Singapore; 2019 through 2022 with Switzerland; 2019 through 2022 with Australia; 2019 through 2022 with Canada; and 2018 through 2022 with Luxembourg.
The following table details our prior year development by segment of its liability for unpaid claims and claim expenses: Year ended December 31, 2022 2021 (in thousands) (Favorable) adverse development (Favorable) adverse development Property $ (205,741) $ (233,373) Casualty and Specialty (41,841) (16,097) Total favorable development of prior accident years net claims and claim expenses $ (247,582) $ (249,470) Our reserving methodology for each line of business uses a loss reserving process that calculates a point estimate for our ultimate settlement and administration costs for claims and claim expenses.
The following table details our prior year development by segment of our liability for unpaid claims and claim expenses: Year ended December 31, 2023 2022 (in thousands) (Favorable) adverse development (Favorable) adverse development Property $ (408,905) $ (205,741) Casualty and Specialty (41,702) (41,841) Total favorable development of prior accident years net claims and claim expenses $ (450,607) $ (247,582) Our reserving methodology for each line of business uses a loss reserving process that calculates a point estimate for our ultimate settlement and administration costs for claims and claim expenses.
At December 31, 2022, the funds that invest in non-investment grade and not-rated fixed income securities and non-investment grade cat-linked securities totaled $2.0 billion (2021 – $1.8 billion). At December 31, 2022, we had $4.7 billion of short term investments (2021 – $5.3 billion).
At December 31, 2023, the funds that invest in non-investment grade and not-rated fixed income securities and non-investment grade cat-linked securities totaled $2.9 billion (2022 – $2.0 billion). At December 31, 2023, we had $4.6 billion of short term investments (2022 – $4.7 billion).
The realized value we ultimately attain for our investments in other ventures, under equity method will likely differ from the carrying value, perhaps materially. Ratings Financial strength ratings are important to the competitive position of reinsurance and insurance companies. We have received high long-term issuer credit and financial strength ratings and scores from A.M.
The realized value we ultimately attain for our investments in other ventures, under equity method will likely differ from the carrying value, perhaps materially. Ratings Financial strength ratings are important to the competitive position of reinsurance and insurance companies. We have received high financial strength ratings from A.M. Best, S&P, Moody’s and Fitch.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

20 edited+5 added−0 removed22 unchanged
Biggest changeIn addition, we attempt to maintain adequate liquidity in our fixed maturity investments portfolio to fund operations, pay reinsurance and insurance liabilities and claims and provide funding for unexpected events. 97 The following tables summarize the aggregate hypothetical increase (decrease) in fair value of our fixed maturity investment and short term investments, private credit funds and term loans from an immediate parallel shift in the treasury yield curve, assuming credit spreads remain constant, reflecting the use of an immediate time horizon since this presents the worst-case scenario: Interest Rate Shift in Basis Points At December 31, 2022 -100 -50 Base 50 100 (in thousands, except percentages) Fair value of fixed maturity and short term investments $ 19,020,674 Fair value of private credit funds 771,383 Fair value of term loans 100,000 Total fair value $ 20,383,013 $ 20,131,215 $ 19,892,057 $ 19,655,793 $ 19,409,094 Net increase (decrease) in fair value $ 490,956 $ 239,158 $ — $ (236,264) $ (482,963) Percentage change in fair value 2.5 % 1.2 % — % (1.2) % (2.4) % Interest Rate Shift in Basis Points At December 31, 2021 -100 -50 Base 50 100 (in thousands, except percentages) Fair value of fixed maturity and short term investments $ 18,805,516 Fair value of private credit funds 473,112 Fair value of term loans 74,850 Total fair value $ 19,848,073 $ 19,600,750 $ 19,353,478 $ 19,106,257 $ 18,859,086 Net increase (decrease) in fair value $ 494,595 $ 247,272 $ — $ (247,221) $ (494,392) Percentage change in fair value 2.6 % 1.3 % — % (1.3) % (2.6) % As noted above, we use derivative instruments, primarily interest rate futures and interest rate swaps, within our portfolio of fixed maturity investments to manage our exposure to interest rate risk, which can include increasing or decreasing our exposure to this risk.
Biggest changeThe following tables summarize the aggregate hypothetical increase (decrease) in fair value of our fixed maturity investment and short term investments, private credit funds and term loans from an immediate parallel shift in the treasury yield curve, assuming credit spreads remain constant, reflecting the use of an immediate time horizon since this presents the worst-case scenario: Interest Rate Shift in Basis Points At December 31, 2023 -100 -50 Base 50 100 (in thousands, except percentages) Fair value of fixed maturity and short term investments, private credit funds and term loans $ 27,259,888 $ 26,865,707 $ 26,560,861 $ 26,246,627 $ 25,904,022 Net increase (decrease) in fair value $ 699,027 $ 304,845 $ — $ (314,235) $ (656,839) Percentage change in fair value 2.6 % 1.1 % — % (1.2) % (2.5) % Interest Rate Shift in Basis Points At December 31, 2022 -100 -50 Base 50 100 (in thousands, except percentages) Fair value of fixed maturity and short term investments, private credit funds and term loans $ 20,383,013 $ 20,131,215 $ 19,892,057 $ 19,655,793 $ 19,409,094 Net increase (decrease) in fair value $ 490,956 $ 239,158 $ — $ (236,264) $ (482,963) Percentage change in fair value 2.5 % 1.2 % — % (1.2) % (2.4) % As noted above, we use derivative instruments, primarily interest rate futures and interest rate swaps, within our portfolio of fixed maturity investments to manage our exposure to interest rate risk, which can include increasing or decreasing our exposure to this risk.
Interest Rate Risk Interest rate risk is the price sensitivity of a security to changes in interest rates. Our investment portfolio includes fixed maturity investments and short term investments, as well as private credit funds and term loans which primarily invest in debt instruments. The fair values of these investments will fluctuate with changes in interest rates.
Interest Rate Risk Interest rate risk is the price sensitivity of a security to changes in interest rates. Our investment portfolio includes fixed maturity investments and short term investments, as well as private credit funds and term 102 loans which primarily invest in debt instruments. The fair values of these investments will fluctuate with changes in interest rates.
The management of credit risk in the investment portfolio is integrated in our credit risk governance framework and the management of credit exposures and concentrations within the investment portfolio are carried out in accordance with our risk policies, limits and risk concentrations as overseen by the Investment and Risk Management Committee of our Board of Directors.
The management of credit risk in the investment portfolio is integrated in our credit risk governance framework and the management of credit exposures and concentrations within the investment portfolio are carried out in accordance with our risk policies, limits and risk concentrations as overseen by the Investment and Risk Management Committee of our Board.
Our investment guidelines permit, subject to approval, investments in derivative instruments such as futures, options, foreign currency forward contracts and swap agreements, which may be used to assume risks or for hedging purposes. Refer to “Note 18. Derivative Instruments” in our “Notes to the Consolidated Financial Statements” for additional information related to derivatives we have entered into.
Our investment guidelines permit, subject to approval, investments in derivative instruments such as futures, options, foreign currency forward contracts and swap agreements, which may be used to assume risks or for hedging purposes. Refer to “Note 19. Derivative Instruments” in our “Notes to the Consolidated Financial Statements” for additional information related to derivatives we have entered into.
For an immediate downward shift in credit spreads, we do not allow credit spreads to go negative in calculating the impact. The foregoing reflects the use of an immediate time horizon, since this presents the worst-case scenario. 102 Premiums Receivable and Reinsurance Recoverable Premiums receivable from ceding companies and reinsurance recoverable from our reinsurers are subject to credit risk.
For an immediate downward shift in credit spreads, we do not allow credit spreads to go negative in calculating the impact. The foregoing reflects the use of an immediate time horizon, since this presents the worst-case scenario. 107 Premiums Receivable and Reinsurance Recoverable Premiums receivable from ceding companies and reinsurance recoverable from our reinsurers are subject to credit risk.
Credit spreads are assumed to remain constant in these hypothetical examples. Foreign Currency Risk Our functional currency for consolidated reporting purposes is the U.S. dollar. We routinely write a portion of our business in currencies other than U.S. dollars and invest a portion of our cash and investment portfolio 98 in those currencies.
Credit spreads are assumed to remain constant in these hypothetical examples. 103 Foreign Currency Risk Our functional currency for consolidated reporting purposes is the U.S. dollar. We routinely write a portion of our business in currencies other than U.S. dollars and invest a portion of our cash and investment portfolio in those currencies.
We are primarily impacted by the foreign currency risk exposures noted below, and may, from time to time, enter into foreign currency forward and option contracts to minimize the effect of fluctuating foreign currencies on the value of non-U.S. dollar denominated assets and liabilities. Refer to “Note 18.
We are primarily impacted by the foreign currency risk exposures noted below, and may, from time to time, enter into foreign currency forward and option contracts to minimize the effect of fluctuating foreign currencies on the value of non-U.S. dollar denominated assets and liabilities. Refer to “Note 19.
Government related entities, and money market securities, none of our fixed-maturity and short-term investments exceeded 10% of shareholders’ equity at December 31, 2022. At December 31, 2022, our fixed maturity investments and short term investment portfolio had a dollar-weighted average credit quality rating of AA (2021 - AA).
Government related entities, and money market securities, none of our fixed-maturity and short-term investments exceeded 10% of shareholders’ equity at December 31, 2023. At December 31, 2023, our fixed maturity investments and short term investment portfolio had a dollar-weighted average credit quality rating of AA (2022 - AA).
We are primarily exposed to direct credit risk within our portfolios of fixed maturity and short term 100 investments, and through customers and reinsurers in the form of premiums receivable and reinsurance recoverable, respectively, as discussed below.
We are primarily exposed to direct credit risk within our portfolios of fixed maturity and short term 105 investments, and through customers and reinsurers in the form of premiums receivable and reinsurance recoverable, respectively, as discussed below.
Conversely, at December 31, 2022, the aggregate hypothetical impact of an immediate downward parallel shift in the treasury yield curve of 100 basis points would be an increase in the market value of our net position in interest rate futures of approximately $41.9 million. The foregoing reflects the use of an immediate time horizon, since this presents the worst-case scenario.
Conversely, at December 31, 2023, the aggregate hypothetical impact of an immediate downward parallel shift in the treasury yield curve of 100 basis points would be an increase in the market value of our net position in interest rate futures of approximately $37.9 million. The foregoing reflects the use of an immediate time horizon, since this presents the worst-case scenario.
The following table summarizes the ratings of our fixed maturity investments and short term investments and term loans (using ratings assigned by S&P and/or other rating agencies when S&P ratings were not available) as a percentage of the total of those investments as of the dates indicated: At December 31, 2022 2021 AAA 31.1 % 37.7 % AA 46.5 % 43.3 % A 8.1 % 6.4 % BBB 7.8 % 5.7 % Non-investment grade 6.0 % 6.3 % Not rated 0.5 % 0.6 % Total 100.0 % 100.0 % Private credit funds are not included in the table above.
The following table summarizes the ratings of our fixed maturity investments and short term investments and term loans (using ratings assigned by S&P and/or other rating agencies when S&P ratings were not available) as a percentage of the total of those investments as of the dates indicated: At December 31, 2023 2022 AAA 25.2 % 31.1 % AA 49.3 % 46.5 % A 10.4 % 8.1 % BBB 10.2 % 7.8 % Non-investment grade 4.6 % 6.0 % Not rated 0.3 % 0.5 % Total 100.0 % 100.0 % Private credit funds are not included in the table above.
At December 31, 2022, the aggregate hypothetical impact of an immediate upward parallel shift in the treasury yield curve of 100 basis points would be a decrease in the market value of our net position in interest rate futures of approximately $40.8 million.
At December 31, 2023, the aggregate hypothetical impact of an immediate upward parallel shift in the treasury yield curve of 100 basis points would be a decrease in the market value of our net position in interest rate futures of approximately$38.1 million.
The aggregate hypothetical market value impact from an immediate tightening in credit spreads of 100 basis points would cause a decrease in the market value of our net position in these derivatives of approximately $35.0 million at December 31, 2022.
The aggregate hypothetical market value impact from an immediate tightening in credit spreads of 100 basis points would cause a decrease in the market value of our net position in these derivatives of approximately $46.7 million at December 31, 2023.
Conversely, the aggregate hypothetical market value impact from an immediate widening in credit spreads of 100 basis points would cause an increase in the market value of our net position in these derivatives of approximately $35.0 million at December 31, 2022.
Conversely, the aggregate hypothetical market value impact from an immediate widening in credit spreads of 100 basis points would cause an increase in the market value of our net position in these derivatives of approximately $46.7 million at December 31, 2023.
At December 31, 2022, we had outstanding credit derivatives of $953.4 million in notional positions to hedge credit risk and $13.1 million in notional positions to assume credit risk, denominated in U.S. dollars (2021 - $Nil and $218.5 million, respectively). Refer to “Note 18.
At December 31, 2023, we had outstanding credit derivatives of $1.1 billion in notional positions to hedge credit risk and $22.1 million in notional positions to assume credit risk, denominated in U.S. dollars (2022 - $953.4 million and $13.1 million, respectively). Refer to “Note 19.
At December 31, 2022, we had $2.4 billion of notional long positions and $0.5 billion of notional short positions of primarily U.S. Treasury futures contracts (2021 - $2.2 billion and $0.5 billion, respectively). Refer to “Note 18.
At December 31, 2023, we had $5.9 billion of notional long positions and $2.7 billion of notional short positions of primarily U.S. Treasury futures contracts (2022 - $2.4 billion and $507.2 million, respectively). Refer to “Note 19.
As credit spreads widen, the fair value of our fixed maturity, short term investments, private credit funds and term loans decreases, and vice versa. 101 The following tables summarize the aggregate hypothetical increase (decrease) in fair value in our fixed maturity investments and short term investments, private credit funds and term loans, from an immediate parallel shift in credit spreads, assuming the treasury yield curve remains constant, reflecting the use of an immediate time horizon since this presents the worst-case scenario: Credit Spread Shift in Basis Points At December 31, 2022 -100 -50 Base 50 100 (in thousands, except percentages) Fair value of fixed income and short term investments $ 19,020,674 Fair value of private credit 771,383 Fair value of term loans 100,000 Total fair value $ 20,173,383 $ 20,041,143 $ 19,892,057 $ 19,720,191 $ 19,548,324 Net increase (decrease) in fair value $ 281,326 $ 149,086 $ — $ (171,866) $ (343,733) Percentage change in fair value 1.4 % 0.7 % — % (0.9) % (1.7) % Credit Spread Shift in Basis Points At December 31, 2021 -100 -50 Base 50 100 (in thousands, except percentages) Fair value of fixed income and short term investments $ 18,805,516 Fair value of private credit 473,112 Fair value of term loans 74,850 Total fair value $ 19,546,182 $ 19,467,319 $ 19,353,478 $ 19,206,525 $ 19,059,573 Net increase (decrease) in fair value $ 192,704 $ 113,841 $ — $ (146,953) $ (293,905) Percentage change in fair value 1.0 % 0.6 % — % (0.8) % (1.5) % We also employ credit derivatives in our investment portfolio to either assume credit risk or hedge our credit exposure.
As credit spreads widen, the fair value of our fixed maturity, short term investments, private credit funds and term loans decreases, and vice versa. 106 The following tables summarize the aggregate hypothetical increase (decrease) in fair value in our fixed maturity investments and short term investments, private credit funds and term loans, from an immediate parallel shift in credit spreads, assuming the treasury yield curve remains constant, reflecting the use of an immediate time horizon since this presents the worst-case scenario: Credit Spread Shift in Basis Points At December 31, 2023 -100 -50 Base 50 100 (in thousands, except percentages) Fair value of fixed maturity and short term investments, private credit funds and term loans $ 26,854,484 $ 26,716,705 $ 26,560,861 $ 26,345,584 $ 26,130,307 Net increase (decrease) in fair value $ 293,623 $ 155,843 $ — $ (215,277) $ (430,554) Percentage change in fair value 1.1 % 0.6 % — % (0.8) % (1.6) % Credit Spread Shift in Basis Points At December 31, 2022 -100 -50 Base 50 100 (in thousands, except percentages) Fair value of fixed maturity and short term investments, private credit funds and term loans $ 20,173,383 $ 20,041,143 $ 19,892,057 $ 19,720,191 $ 19,548,324 Net increase (decrease) in fair value $ 281,326 $ 149,086 $ — $ (171,866) $ (343,733) Percentage change in fair value 1.4 % 0.7 % — % (0.9) % (1.7) % We also employ credit derivatives in our investment portfolio to either assume credit risk or hedge our credit exposure.
The following table summarizes a hypothetical 10% increase or decline in the market value of our equity investments, direct private equity investments, private equity funds and hedge funds, holding all other factors constant, at the dates indicated: At December 31, 2022 2021 (in thousands, except for percentages) Equity investments $ 625,058 $ 546,016 Direct private equity investments 66,780 88,373 Private equity funds 315,323 241,297 Hedge funds — 11,394 Total carrying value of investments exposed to equity price risk $ 1,007,161 $ 887,080 Impact of a hypothetical 10% increase in the carrying value of investments exposed to equity price risk $ 100,716 $ 88,708 Impact of a hypothetical 10% decrease in the carrying value of investments exposed to equity price risk $ (100,716) $ (88,708)
The following table summarizes a hypothetical 10% increase or decline in the market value of our equity investments, direct private equity investments, private equity funds and hedge funds, holding all other factors constant, at the dates indicated: At December 31, 2023 2022 (in thousands, except for percentages) Equity investments $ 106,766 $ 625,058 Direct private equity investments 59,905 66,780 Private equity funds 433,788 315,323 Total carrying value of investments exposed to equity price risk $ 600,459 $ 1,007,161 Impact of a hypothetical 10% increase in the carrying value of investments exposed to equity price risk $ 60,046 $ 100,716 Impact of a hypothetical 10% decrease in the carrying value of investments exposed to equity price risk $ (60,046) $ (100,716) Commodity Price Risk Commodity price risk is the potential loss arising from changes in the market value of commodities.
Refer to “Note On Forward-Looking Statements” for additional discussion regarding forward-looking statements included herein. We are principally exposed to four types of market risk: interest rate risk; foreign currency risk; credit risk; and equity price risk. Our policies to address these risks in 2022 were not materially different than those used in 2021.
Refer to “Note On Forward-Looking Statements” for additional discussion regarding forward-looking statements included herein. We are principally exposed to five types of market risk: interest rate risk; foreign currency risk; credit risk; equity price risk and commodity price risk.
In the future, we may choose to increase our exposure to non-U.S. dollar investments. 99 The following tables summarize the principal currencies creating foreign exchange risk for us and our net foreign currency exposures and the impact of a hypothetical 10% change in our net foreign currency exposure, keeping all other variables constant, as of the dates indicated: At December 31, 2022 AUD CAD EUR GBP JPY NZD Other Total (in thousands, except for percentages) Net assets (liabilities) denominated in foreign currencies $ 76,323 $ 34,834 $ (434,498) $ (138,642) $ (11,361) $ 4,335 $ (74,592) $ (543,601) Net foreign currency derivatives notional amounts (62,818) (19,645) 424,007 107,499 36,192 (1,617) 65,124 548,742 Total net foreign currency exposure $ 13,505 $ 15,189 $ (10,491) $ (31,143) $ 24,831 $ 2,718 $ (9,468) $ 5,141 Net foreign currency exposure as a percentage of total shareholders’ equity attributable to RenaissanceRe 0.3 % 0.3 % (0.2) % (0.6) % 0.5 % 0.1 % (0.2) % 0.1 % Impact of a hypothetical 10% change in total net foreign currency exposure $ (1,351) $ (1,519) $ 1,049 $ 3,114 $ (2,483) $ (272) $ 947 $ (514) At December 31, 2021 AUD CAD EUR GBP JPY NZD Other Total (in thousands, except for percentages) Net (liabilities) assets denominated in foreign currencies $ 92,683 $ 59,000 $ (372,987) $ (322,628) $ 4,053 $ (20,167) $ (74,000) $ (634,046) Net foreign currency derivatives notional amounts (108,168) (58,725) 369,335 327,339 (313) 19,760 56,052 605,280 Total net foreign currency exposure $ (15,485) $ 275 $ (3,652) $ 4,711 $ 3,740 $ (407) $ (17,948) $ (28,766) Net foreign currency exposure as a percentage of total shareholders’ equity attributable to RenaissanceRe (0.2) % — % (0.1) % 0.1 % 0.1 % — % (0.3) % (0.4) % Impact of a hypothetical 10% change in total net foreign currency exposure $ 1,549 $ (28) $ 365 $ (471) $ (374) $ 41 $ 1,795 $ 2,877 Credit Risk Credit risk relates to the uncertainty of a counterparty’s ability to make timely payments in accordance with contractual terms of the instrument or contract and market risk associated with changes in credit spreads.
In the future, we may choose to increase our exposure to non-U.S. dollar investments. 104 The following tables summarize the principal currencies creating foreign exchange risk for us and our net foreign currency exposures and the impact of a hypothetical 10% change in our net foreign currency exposure, keeping all other variables constant, as of the dates indicated: At December 31, 2023 AUD CAD EUR GBP JPY NZD Other Total (in thousands, except for percentages) Net assets (liabilities) denominated in foreign currencies $ 83,427 $ 133,228 $ (146,480) $ (161,522) $ 37,381 $ (50,771) $ (68,593) $ (173,330) Net foreign currency derivatives notional amounts (46,640) (95,820) 214,172 74,226 14,617 6,648 20,027 187,230 Total net foreign currency exposure $ 36,787 $ 37,408 $ 67,692 $ (87,296) $ 51,998 $ (44,123) $ (48,566) $ 13,900 Net foreign currency exposure as a percentage of total shareholders’ equity attributable to RenaissanceRe 0.4 % 0.4 % 0.7 % (0.9) % 0.5 % (0.5) % (0.5) % 0.1 % Impact of a hypothetical 10% change in total net foreign currency exposure $ (3,679) $ (3,741) $ (6,769) $ 8,730 $ (5,200) $ 4,412 $ 4,857 $ (1,390) At December 31, 2022 AUD CAD EUR GBP JPY NZD Other Total (in thousands, except for percentages) Net (liabilities) assets denominated in foreign currencies $ 76,323 $ 34,834 $ (434,498) $ (138,642) $ (11,361) $ 4,335 $ (74,592) $ (543,601) Net foreign currency derivatives notional amounts (62,818) (19,645) 424,007 107,499 36,192 (1,617) 65,124 548,742 Total net foreign currency exposure $ 13,505 $ 15,189 $ (10,491) $ (31,143) $ 24,831 $ 2,718 $ (9,468) $ 5,141 Net foreign currency exposure as a percentage of total shareholders’ equity attributable to RenaissanceRe 0.3 % 0.3 % (0.2) % (0.6) % 0.5 % 0.1 % (0.2) % 0.1 % Impact of a hypothetical 10% change in total net foreign currency exposure $ (1,351) $ (1,519) $ 1,049 $ 3,114 $ (2,483) $ (272) $ 947 $ (514) Credit Risk Credit risk relates to the uncertainty of a counterparty’s ability to make timely payments in accordance with contractual terms of the instrument or contract and market risk associated with changes in credit spreads.
Added
As a result of the Validus Acquisition expanding the geographic scope of our operations and the size of our investment portfolio, our exposure to some of these market risks has increased. Our policies to address these risks in 2023 were not materially different than those used in 2022.
Added
In addition, we attempt to maintain adequate liquidity in our fixed maturity investments portfolio to fund operations, pay reinsurance and insurance liabilities and claims and provide funding for unexpected events.
Added
We are directly exposed to this risk through our investments in commodity derivative instruments, which are exchange traded, but may include over-the-counter derivative instruments when deemed appropriate.
Added
As of December 31, 2023 the total notional amount of commodity contracts was $255.7 million (2022 - $Nil), and the aggregate fair value of these contracts was a net liability position of $1.1 million (2022 - $Nil).
Added
If the underlying exposure of each commodity derivative held at December 31, 2023 depreciated by 10%, it would have resulted in a reduction in net income of approximately $25.8 million. If the underlying exposure of each commodity derivative held at December 31, 2023 appreciated by 10%, it would have resulted in an increase in net income of approximately $26.1 million.

Other RNR 10-K year-over-year comparisons