RenaissanceRe Holdings Ltd.
Q4 2020 Earnings Call Transcript

Published: 27 Jan 2021

[Operator:]

Thank you for standing by. And welcome to RenaissanceRe's Q4 and Year-End Earnings Call. I'd now like to hand the conference over to Keith McCue, Senior Vice President, Investor Relations. Mr. McCue, please go ahead.

[Keith McCue:]

Good morning. Thank you for joining our fourth quarter and year-end financial results conference call. Yesterday after the market close, we issued our quarterly release. If you didn't receive a copy, please call me at 441-239-4830 and we'll make sure to provide you with one. There will be an audio replay of the call available from about 2

[Kevin O'Donnell:]

Thanks, Keith. Good morning, everyone and thank you for joining today's call. I wanted to begin today by giving you a quick summary of what we accomplished at January 1 and how 2021 is shaping up. First, I would like to thank everyone who supported last year's capital raise. I made several promises then, which I can now definitively say were capped. This January 1, was one of the most important renewals in our history and I'm very pleased with the performance and the outcome we achieved. At January 1, we saw opportunities for profitable growth in both of our segments and across our platforms, resulting in the full deployment into our underwriting portfolio of the $1.1 billion raised last June. We also raised and deployed additional capital in our joint venture business. As a result, in 2021, we expect to grow our net premiums written by approximately $1 billion and believe that we have materially increased the profitability of our underwriting book. Importantly, we expect to achieve these outcomes while keeping our tail risk consistent with last year's on a percentage of equity basis and due to the efficiency and diversity of our portfolio continuing to have ample dry powder to deploy into new opportunities. Looking back at 2020, at the beginning of the year, I told you that with the TMR integration behind us, we were a more resilient company and a broader deeper partner to our customers. In our business you learn to expect the unexpected, but I don't think any of us envisioned the year would unfold in quite the way it did or just how critical our resilience would prove to be. As the year progressed, we encountered a variety of challenges. I am proud of how our employees responded rapidly and effectively to each of these, enabling us to grow our business substantially and profitably. At the end of each year, I'd like to review our performance by responding to two questions. The first is how did we do financially and the second is have we executed our strategy effectively. Starting with the first question, how did we do financially. In the year impacted by the global COVID-19 pandemic and multiple weather-related catastrophic losses, we grew book value per share by 15% and tangible book value per share plus change in accumulated dividends by 18%. For the year, our return on equity was 11.7% and our operating return on equity was 0.2%. Bob, will walk you through our financial results in greater detail, but I believe we have done the hard work to recognize our losses early, build a fortress balance sheet and enter 2021 financially and operationally stronger as a company than we have ever been.

[Bob Qutub:]

Thanks, Kevin and good morning, everyone. As Kevin discussed, both our fourth quarter and year-end results were impacted by large weather events and COVID- 19. Despite this above normal activity, we reported positive net income for the quarter and positive net and operating income for the year. Today, I will divide my remarks between our fourth quarter and year-end 2020 results. I'll first cover our consolidated performance and then provide more detail on our three drivers of profit; underwriting income, fee income, investment income.

[Kevin O'Donnell:]

Thanks, Bob. As usual, I will divide my comments between our Property and Casualty segments. Before I get into our segment specific information, I would like to provide my perspective on the ongoing impact of COVID-19 on our industry. As Bob explained, we undertook a very rigorous process in estimating our potential COVID-19 losses this quarter. In the first quarter of 2020, I first defined our three category approach to evaluating our COVID-19 exposure. As you recall, we initially recorded $104 million reserve, primarily for Category One. We also adjusted loss picks for Category Two exposures to reflect the likelihood of increased claim activity due to the pandemic and the resulting economic slowdowns. We have now received enough information to update our COVID-19 estimate and this resulted in $173 million net negative impact for the quarter, primarily related to property exposure in Category Three. Even as COVID-19 continues to spread, there has been some speculation that it will not prove as impactful to the insurance industry as originally foreseen. I do not believe this to be the case. In many instances, our industry is yet to recognize the losses that will inevitably arise from the pandemic, particularly with respect to business interruption. Likely this lack of recognition occurred because it made renewal smoother at January 1. I believe that we still have a long way to go before the true scale of COVID-19 industry losses are fully apparent. In the US, the risk of a widespread court leakage where courts imply coverage when it is not expressly provided currently appears low, but is something we continue to monitor. While individual court rulings have been relatively favorable to the insurance industry, cases will take years to work through the system and some recent decisions have been adverse. In the UK, Europe and Australia, we have seen a trend of more affirmative contractual cover and in situations of uncertainty, court's ruling in favor of the policyholder. Now moving to our Property segments and starting with property. Following an active third quarter, natural catastrophe persisted into the fourth. As Bob mentioned, the most impactful event for us in the quarter were hurricanes Zeta, Delta and Eta. 2020 was an extraordinary year in many ways. We experienced a record 30 named storms, 12 of these made landfall in the US, six as hurricanes, including one major. The previous record was in 1916 with nine land-falling storms. We also saw record wildfires. In terms of acreage burned, five of the six largest fires in California's history occurred in 2020. It is safe to say that 2020 was anything but a normal year. As I discussed on the call last quarter, we expect that the warming climate will make extreme events more frequent and more severe. However, this does not mean that we expect every year going forward to be like 2020. Of course, the world will continue to experience variability in weather events. What has increased however is the likelihood of extreme events relative to the long-term record. The insurance industry has always used the past to predict the future but now the future no longer resembles the past. Our ability to understand this shift in future risk provides us a competitive advantage, allowing us to position ourselves favorably for a change in climate. About 50% of our property business renews at January 1 and as I discussed, we had a very successful renewal. By almost any measure, our property portfolio has gotten better and is indicative of materially improving market. A significant amount of this growth was in our other property business. As I discussed on the call this time last year, we have been growing our other property portfolio and targeting risks that are more cat exposed, particularly in the US E&S market. We have been building our reputation in this market for many years and have attained first call status on several accounts. In part, this is because we have the platforms, capabilities and relationships to move quickly and at scale into much -- a much improved market for E&S. With rates up 20% to 25%, we found many attractive opportunities to grow both, existing and new customers at January 1 renewal and believe that the market will continue to harden through 2021. Our growth in traditional property cat was relatively muted. Demand was flat with rate increases across the book averaging about 10%, with loss impacted US business enjoying larger increases and non-loss impacted European business up single-digits. We saw better opportunities in other areas and are pleased with the increase we achieved in our property portfolio overall, as we believe constructed very attractive portfolios for us and our partners. Shifting now to the retro market. Heading into the renewal, our goals were to push for further rate increases, improved contractual terms and grow if possible. While rates in the retro market were up 5% to 15%, as I discussed earlier, additional supply began suppressing rate increases as the renewal progressed. We demonstrated discipline by choosing to write a slightly smaller retro book. That said, the retro market has experienced four consecutive years of rate enhancement, resulting in cumulative average rate increases approaching 15% . So, while a little smaller, our retro book is attractive. Moving now to our Casualty Specialty business. The casualty and specialty renewal proceeded particularly well, exceeding our already high expectations. A significant portion of our casualty and specialty business renews at January 1. We saw opportunities in various classes across this segment with several experiencing dislocation that should provide further opportunities in 2021. As a result, we will grow our gross written premiums in casualty and specialty for the year by approximately $500 million with lines like general liability and D&O being particularly attractive. At this renewal, we continue to leverage years of relationship building with key customers into preferred access to desirable business. Our conviction and consistent an independent view of risk was an advantage in this changing market and we were able to provide customers and brokers with early and material solutions, which resulted in our successful growth. We were also a market leader and largely successful in implementing communicable disease exclusions when necessary and demonstrated our resolve by non-renewing several deals that did not incorporate a necessary exclusion. In our casualty book, about half of the growth came from existing programs with the other half coming from new programs with existing customers. We continue to be the first call on several private deals, which typically garner better than market terms. In addition to premium growth, we realized significant improvement in expected underwriting margins, which are principally driven by strong underlying insurance rate increases. The specialty and credit book renewals were also successful and we found that our stability underwriting expertise and strong relationships were an advantage in securing additional business this year. Reinsurance terms and conditions adjusted where appropriate to account for increasing view of risk in areas such as mortgage and surety and strong underlying insurance rates added to growth and increased underwriting margin in classes such as marine and energy. This quarter we once again demonstrated the strength of our ventures group. As Bob mentioned, including our own participation, we raised over $700 million across our joint venture vehicles. While each of our vehicles enjoyed strong renewals, we particularly demonstrated both, discipline and superior capital management in our Upsilon joint venture. We were able to materially improve its portfolio, but consistent with our track record chose to return unused capital to investors rather than deploy it at on attractive rates of return. As we predicted when we raised equity capital last June, Upsilon wrote a slightly smaller portfolio but with higher expected profit. We are leaders in ILS management and believe we acted accordingly upholding the highest underwriting standards while putting the interests of our partners first. Finally, another milestone for the year was our public announcement of an environmental, social and governance strategy. Our strategy focuses on promoting climate resilience, closing the protection gap and inducing positive societal change. We chose these three priorities because we believe they lie at the intersection of our risk acumen and ability to make a meaningful impact on society. As part of this strategy, we will be tracking and offsetting our operational carbon footprint. More information about our broader ESG strategy is available on our newly launched webpage found on renre.com under ESG/ sustainability. So, in conclusion, for most perspectives, 2020 was a difficult year. Across our industry COVID-19 strained normal business practices and stressed employees. Climate change fueled record breaking hurricanes and wildfires. Decreasing interest rates impacted future returns on investment portfolios. There were others receive only problems, the best underwriter recognized outsized opportunities. We raised material amounts of expensive capital in anticipation of these opportunities and executed strongly in one of the best January 1 renewals in many years, growing expected profit across our business lines and geographies. As we head into 2021, I believe we will continue to find outsized opportunities to create shareholder value. Thanks. And with that, I'll open it up for questions.

[Operator:]

Elyse Greenspan with Wells Fargo, your line is open.

[Elyse Greenspan:]

Thanks, good morning. I was hoping to spend a little bit more time on the book you guys put together at 1/1. Kevin, I think you alluded to $500 million of gross premium growth within casualty and specialty that you expect this year. I don't believe you gave top line growth targets for cat or property although, you did give the premiums written target. I'm just trying to get a sense of the $1 billion of capital, we could obviously make assumptions on, capital to do to support that $500 million of growth, but in casualty specialty, can you give us a sense of how much of that went to the different businesses? It sounds like from that $500 million a good portion given the opportunity you saw within allocated to casualty specialty.

[Kevin O'Donnell:]

Yes. So, yes, this was -- I think a very successful renewal for us on both -- in both segments. When we look at the growth that we've achieved, within casualty we grew on an expected basis because much of this will come in over the course of the year because it's on a proportional basis of just under $700 million. And then within the Property segment, the vast majority of our growth, so we estimate that will grow that book at about $500 million and about $450-ish million and again, a lot of that is proportional, so will come in over the course of the year, is coming from our other property portfolio. And just to remember, the other property portfolio is consuming more capital by design and in particular with regard to the $1.1 billion raised because we were targeting US more significantly exposed cat business where rate enhancement has been best.

[Elyse Greenspan:]

Okay, that's helpful. And then a couple times throughout your remarks you mentioned higher expected profits. Obviously, if you look at more recent years new pockets rates have been offset by pretty high level of cat losses, right and obviously also COVID losses. So, when you say higher expected profit, can you give us like a barometer to compare that to, so we can get a sense of the profitability you are expecting in 2021?

[Kevin O'Donnell:]

Yes. As you know, we don't give guidance, but what -- and as Bob's comments I think were designed to highlight. Themes we talked about when we raised the capital was that we expected to see more margin in our underwriting portfolio. We expected the increase in pricing to be broadly across lines and we anticipated that it would last more than a single renewal cycle. We saw the increased margin, we did observe that it was broadly across both Property and Casualty segments and our conviction that the market will continue to change through 2021 persists. So, when I reflect on 2020, my comments suggest that that was a higher than average cat year. So, looking at the drivers of our profitability and hoping for a more average cat year than what we experienced in 2020, one should anticipate significantly enhanced margins, but again, it's not something that we provide guidance on.

[Elyse Greenspan:]

Okay, that's helpful. Thanks, Kevin.

[Kevin O'Donnell:]

Sure. One final comment I'll make too is that just to highlight that we also held our risk relatively flat from a percent of equity perspective. So, one way to enhance returns is to go risk on. We were relatively risk-neutral, but on a much larger portfolio in 2021 compared to 2020. Thanks.

[Operator:]

Michael Phillips with Morgan Stanley, your line is open.

[Michael Phillips:]

Thank you. Good morning. Kevin, appreciate your comments that you made on COVID in industry potential there. I guess I was hoping to dive a little bit deeper there. You said there were many companies that have yet to recognize losses mainly for business interruption, yet US courts I think you said leakage there appears pretty low, which I hope you're right there and I agree. I guess, does that mean your concern is mainly for outside US for business interruption or just can you comment more on where the major concerns you see if it is just BR, what else -- what else you're concerned about?

[Kevin O'Donnell:]

So, as I mentioned COVID, we all know COVID is ongoing. It's a very, very complex problem. And I think there is going to be significant uncertainty. So, what we're trying to provide is the best transparency on that uncertainty that we can. We think the way to frame it is through the Category One, Two and Three. Much of the reserve that we added this in the fourth quarter related to Category Three and within Category Three, we talked about originally when we defined the book that we have, we believe we're less exposed relative to others in Category Three for business interruption, specifically pointing to about half of our property cat book protects personal lines where we believe exposure is lower. Internationally, we have seen more affirmative cover sold for business interruption related to communicable disease and much of the reserve that we put up in the quarter, although, it's in IBNR would be in contemplation of things that we learned related to some of the international book that was renewing. The US still remains uncertain. I think we'll have a lot of ups and downs with court decisions as we go through this, but we still remain relatively optimistic about the courts being rationale about their interpretation there.

[Michael Phillips:]

Okay, thanks. I guess sticking with that for a second, what extent do you think if this does become pretty significant as time develops here? To what extent would COVID then continue the duration of the hard commercial lines market and the hardening/trimming reinsurance market. How does COVID affect the duration of that?

[Kevin O'Donnell:]

We believe it's playing a significant role. The -- as I mentioned, I think demand might have been suppressed at 1/1 just because of the strong financial performance of companies and their willingness to retain more risk. As the economic hardships related to the shutdowns persist, we're hopeful that companies will choose to retain less volatility and reinsurance demand will grow. So, we remain optimistic. We've kept dry powder to continue to provide solutions to our customers, hoping that 2021 continues to see increased concern with some of our customers and hopefully, we can provide solutions .

[Michael Phillips:]

Okay. Thank you, Kevin. Appreciate it.

[Kevin O'Donnell:]

Sure, thanks.

[Operator:]

Meyer Shields with KBW, your line is open.

[Meyer Shields:]

Thanks. I wanted to take a step back and get your updated thoughts if I can on how the Florida marketplace ultimately plays itself out. And I'm thinking here the combination of maybe more capital being available than originally expected, but it really seems like that marketplace is struggling on a primary reinsurance volume basis.

[Kevin O'Donnell:]

So first, I agree that the market is struggling and I think it's struggling on an insurance basis. Reinsurance is playing a role due to the rate change, but there is probably pretty fundamental issues that need to be addressed in that market. I think we will engage with our Florida customers as we always do through the first half of the year. We have very strong relationships in Florida. So, I anticipate that we will have very strong opportunities in the Florida market. I'm not too concerned about the new capital coming in at this point, just due to -- for us, due to the strength of the relationships that we have there and the increased need that they have for more reinsurance. So, early to tell, and a lot can change between now and a June renewal in Florida. We've seen -- we're always cautious on this call to think about what could happen then. But right now, we're having -- we're having discussions with some Florida accounts and I agree with you that the market is struggling that usually creates opportunities for reinsurers.

[Meyer Shields:]

Okay, fantastic. That's all I had. Thank you so much.

[Kevin O'Donnell:]

Thank you.

[Operator:]

Yaron Kinar with Goldman Sachs, your line is open.

[Yaron Kinar:]

Good morning. My first question goes to the market opportunity. I think when you raised the capital last year, you were talking about the potential of a multi-year opportunity. Do you think that's still the case and if so, I guess, why would we see the $4 billion of capital raise deployed so early in this opportunities?

[Kevin O'Donnell:]

One, we -- as I mentioned, we still have dry powder to deploy further through the course of 2021. So, by no means having been successful in deploying the capital that we raised, are we in a position where we don't have capital to put to further opportunities. Secondly, the way we've written the portfolio in casualty and specialty, I'll start with is mostly proportional. So, we will have the run rate of the rate increase coming through the portfolio over the 18 -- next 18 months or so and then much of the other property portfolio is proportional in nature. So, we should be participating on the increased primary rates that are being seen broadly in the market, which we believe have legs and should persist. So, I look forward into the market. We've got plenty of dry powder to take on the next opportunity and we are pretty tightly coupled with the primary companies enjoying a lot of the rate enhancement that they're getting on their books of business.

[Yaron Kinar:]

Got it. And then, my second question just goes back to the kind of, that Category Three of known unknowns in COVID. So, if I understood correctly, really what's happening is kind of, you are looking closer under the hood and seeing if there is more affirmative coverage in some of the underlying risk. Is that -- is that the correct interpretation, and if so, I guess, why is this coming out now? Is this just a function of consider the renewal process into 1/1? Why would you have not known about it a quarter ago or three quarters ago when kind of, COVID first emerged as a pandemic issue?

[Kevin O'Donnell:]

So, one, we're not surprised that this exposure existed. What became more apparent through the discussions we had at 1/1 is became -- is that we believe it became more estimatable. So, when we looked at the portfolio and have the discussions at the renewal, we were able to better understand how much exposure these companies thought they had. With that, we have very few specific claim notifications, most of this is based on our own work, as Bob mentioned, for clients from the bottom up and other clients from the top down but it is in IBNR. And we'll have to allocate it as the specific reserves from companies becomes more clear. But we think it's a fulsome and comprehensive approach to think about what the exposure could be.

[Yaron Kinar:]

Understood. Thank you.

[Kevin O'Donnell:]

Thanks.

[Operator:]

Brian Meredith with UBS, your line is open.

[Brian Meredith:]

Yes, thanks. A couple ones here for Kevin. First one, I am just curious on the profitability and improved profitability, I was thinking maybe another way question that is, is what is the return on kind of allocated capital or equity look like on this year's portfolio versus last year's portfolio? Is it 100 basis points better roughly, 200 basis points?

[Bob Qutub:]

Let me take that one. I'll start. I mean I can't really provide any good guidance on the ROE or the returns, but let me tell you, kind of how I think about it and the way we look at this. Obviously, the principal driver is going to be the returns from our underwriting book business and as we pointed out, we're very pleased with the capital we deployed in January and expectations that we look forward to is that develops on the profitability that we've been talking about. And you will see the economics over time as it realized and we also benefit from the risk sharing that we have with our partner capital as well that we've been fairly successful at. The other driver of our returns will come from our investment portfolio. The investment leverage is about nearly 2 times and we're pretty well positioned in this environment. And the other thing we talk about and I put in my comments is the underlying all of this is our platform. We've consistently demonstrated strong operating leverage out there over time. So, kind of, in short, we've got a strong track record of deploying the capital, great client relationships and that's going to help us leverage the integrated systems for what's ahead.

[Brian Meredith:]

Great, thanks. And then my second question relates to third-party capital. Kevin, just curious, what is the kind of demand right now from investors for third-party capital? I was a little surprised to see that you actually took more DaVinci exposure on to your balance sheet through a secondary transaction given that I thought pricing was actually pretty good.

[Kevin O'Donnell:]

Yes. Actually, we -- the number we put out is actually the net number we deployed. We actually raised more than that. As I said, we returned a little bit of capital, which is -- which is a common practice for us for Upsilon. We had more than enough interest from third-party capital to support the DaVinci raise. We actually targeted an increase. Over the last several years, we reduced our participation in DaVinci, partially because we had such high-quality investors looking for some participated in the vehicle that we allow them to purchase some of our share. We had the opportunity to increase a little bit at 1/1. It was a strategic target for us to increase our participation there; so nothing to do with subdued demand for our vehicles. It was really more about us wanting to have a little bit more flexibility with our share going forward.

[Brian Meredith:]

Got you. And then just lastly, just curious, the net premium written increase that you're kind of expecting for the year, the $1 billion, how much of that is related to your third-party capital vehicles? Because it still looked a little different.

[Bob Qutub:]

It will follow -- it will show up too. You'll see it through the non-redeemable, but we don't really carve out. I'd say on the property cat side probably, not a lot. When you think about it from DaVinci, probably some from Vermeer, it will come through the property side of the business and where Kevin said property was up by about just under $0.5 billion, with most of it through the other property of E&S, so you won't see a lot of that coming through the third-party.

[Brian Meredith:]

Okay, makes sense. Thank you so much.

[Kevin O'Donnell:]

Okay. Thank you.

[Operator:]

Josh Shanker with Bank of America, your line is open.

[Josh Shanker:]

Yes, thank you for taking my question. Can you talk about all the process during the renewals of talking to your customers about COVID? In assessing what the right rate to charge your customers, you kind have to know what their expectation with their COVID losses are. But if everything is still in the unknowns, how can you extend coverage to be comfortable with your clients if they don't have a good sense of their own exposures?

[Kevin O'Donnell:]

Yes, it's a delicate balance to think about how to have those conversations and it depends on kind of what they know as well. The real issue is the renewals that we had, we excluded COVID and addressed communicable disease specifically. So, in some ways the exposure is the exposure and it will be sorted out over time. But going forward, the grant of coverage if any was ever provided is specifically and more precisely excluded in the contracts that we renewed. Does that answer your question, I'm not sure...

[Josh Shanker:]

I guess I think on the charge -- the charge you took, you somewhat knew about the exposures that they were going to report and that helped give you information I would think, or maybe they did -- maybe they don't know and everything is still in guesswork, I don't know. Could you have a...

[Kevin O'Donnell:]

It is a little of both. Again, as I said, there is not a lot of formal claim notifications that we had, but what we were trying to do is parameterize what is the extent of the exposure that they believe that they have to the policies that they sold. And with that we went through a couple of different analysis, independent of each other to try to assess a way for us to estimate the exposure that we -- that potentially could come to us through what we learned over the renewal. So, we had more of an actuarial approach, we had an underwriting approach and then we worked with our external advisors to reality check it. So, I think we had a strong and robust process to come up with the estimate, but the estimate is not as clean as what you would traditionally have from an observable physical damage loss related to a hurricane or even in earthquake, I would say.

[Josh Shanker:]

Thank you. And one quickie, or maybe it is not quickie. How do you balance the responsibility to get best performance for your shareholders versus best performance for your venture partners? As you raise more capital into the New Year, does that come -- does everyone make money together or do some of the capital raise come at the expense of different constituents?

[Kevin O'Donnell:]

That's a great question and I think it's one of the hardest things to manage for a company like us where we have owned balance sheet and partner capital. So, each vehicle is slightly different where something like premier and top layer. There isn't a significant appetite overlap with our owned balance sheets. We think of DaVinci more as a quota share and we do think of DaVinci having a degree of incumbency on the deals that they had. So, as we were talking to DaVinci shareholders through the capital raise that we did publicly, we were saying that is our expectation we will have opportunities to grow DaVinci in parallel with RenRe. I see long-term our shareholders benefiting from the ability for us to manage both sets of capital effectively and fairly. So, I don't think of it as a trade-off as giving risk to one or the other. I see it as the pursuit of providing the best solutions to our clients with the most efficient capital and that should recognize the best return for each of our stakeholders, most importantly, our shareholders.

[Josh Shanker:]

Thank you very much for the clarity.

[Kevin O'Donnell:]

Sure.

[Operator:]

Ryan Tunis with Autonomous Research, your line is open.

[Ryan Tunis:]

Thanks. A couple, the first is, understand the growth in casualty specialty. The one thing I guess I'd point out is that historically has been a line you booked really conservatively like around 100% underlying combined and I know you don't want to give guidance but I mean like directionally, should we think that we're at least in a point now where you think that that is earning an accident year underwriting margin as we approach 2021 what you're deploying?

[Kevin O'Donnell:]

Yes. Let me make a couple comments there. What we've talked about before is thinking about casualty and specialty over a longer term period, so say 10 years and making sure that over that period of time we get -- we achieve the return that we need for that business. Clearly, with what's going on in that market, we're moving that block of rolling 10-year average to a much better return. Historic -- well, traditional actuarial methodologies the recognition of that will lag. And what I can say is we -- which would be a normal actuarial view is to recognize bad news faster than good news. There is usually a gap between what your pricing actuaries are seeing in an improving market to what your reserving actuaries will recognize. That gap is extended a bit right now and we're hopeful that over time, our pricing actuaries will be more accurate than our reserving actuaries. But it will take a little bit of time for those to reconcile.

[Ryan Tunis:]

Got it. And I just -- Kevin, just taking a step back, I mean, it feels like a little bit of a, I don't know if it's a strategic pivot or not, but what's six, seven years ago, it's just property cat, now, these other businesses seem to be the most important. I'm just curious, how you are thinking about your organic capabilities? Is there anywhere -- are you still thinking you purely want to be a reinsurer? Are there acquisitions or anything like that do you think could bolster the platform now based on sort of the direction you are headed?

[Kevin O'Donnell:]

So, your comment, strategically, we have made an effort to change the profile of the company. As Bob talked about, we've increased operating leverage, we've increased capital leverage and we've diversified the sources of income that we have. I have in my mind not de-emphasized anything that we do, but simply added emphasis to doing more things well and doing more things at the same level that our cat reputation holds. So, when I look at the portfolio that we have and I look at the quality of the underwriters and the books that we built, I couldn't be happier with the portfolio. And for sure, it's been a strategic change to who we are and what we're doing. It's been driven by what our customers want. Going back five, six, seven years ago, our customers were saying they really enjoyed trading with us from a property cat perspective, but they want to do more with quality companies. So, we worked hard to build the capabilities and the platforms to be able to best meet their risk needs. I hope more of its to come in the future. You mentioned acquisitions, from that perspective, again, we feel great about who we are and what we're doing and nothing has changed. We've historically said and still believe that we see something that furthers our strategy and is economically viable, we'll take a look at it, but again, we feel great about who we are and what we're doing.

[Ryan Tunis:]

Thank you.

[Operator:]

Phil Stefano with Deutsche Bank, your line is open.

[Phil Stefano:]

Yes, thanks. And congrats on the quarter. Most have been asked and answered, just I think you had mentioned that there was an improvement in terms of conditions, which I feel like is a little different than I've heard others start to talk about. Just given the proportional nature of the businesses being added this year, can you talk about the terms and conditions that approved? In my mind the terms and conditions are generally stickier than price increases. Maybe you can help us just kind of formulate the additional returns that are coming through from this improvement.

[Kevin O'Donnell:]

Yes. I'd say the two -- the two most common discussions that we had with renewal, particularly in the property cat is adding a cyber-exclusion and communicable disease exclusions. In some instances, it was understanding the portfolio that they have is a personal lines portfolio in others, but I would say that that's where the improvement, most specifically came from.

[Phil Stefano:]

Okay. Thanks.

[Operator:]

Elyse Greenspan with Wells Fargo, your line is open.

[Elyse Greenspan:]

Thanks. Sorry, I have a few quick follow-ups. The first, Kevin, when you responded to my question earlier and you said $700 million of growth in casualty and $450 million in other property premium. Is that a gross or net figure?

[Kevin O'Donnell:]

That's net.

[Elyse Greenspan:]

That's net, okay. And then my second question is, so, when you said retained, I think a few percentage points more right at 1/1. I'm assuming that that's a comment pertaining to all three businesses, casualty, property -- property cat and other property?

[Kevin O'Donnell:]

I'm sorry, Elyse, I didn't hear. Bob, did you hear the question?

[Bob Qutub:]

I think Elyse, you're asking referring to Kevin's comment about ceding a little bit less, so opening up the exposure. Generally speaking, that's more on the property side that we have.

[Elyse Greenspan:]

But including cat and other property.

[Bob Qutub:]

Yes, property cat.

[Elyse Greenspan:]

Okay. And then, my last question. So, the Q4 decline in casualty write specialty because some TMR non-renewals. Are we mostly done with the non-renewals of that book? I'm assuming that's all embedded within the 2021 outlook for casualty?

[Bob Qutub:]

That's pretty much it, Elyse. I mean there was a few multi-years but they are insignificant. So, that's the bulk of it, and again that goes back to relative Q4 '19 versus Q4 '20, so that's pretty much behind us.

[Elyse Greenspan:]

Okay. Thanks for taking the follow-up.

[Kevin O'Donnell:]

Yes, our pleasure. Thanks.

[Operator:]

There are no further questions at this time. I will now turn the call back over to Kevin for closing comments.

[Kevin O'Donnell:]

Thanks everybody for your participation on the call. As I stated, I think this was one of the most important renewals for Renaissance. I am delighted with the outcome that we achieved and I look forward to opportunities in 2021. Thank you for joining today's call, and we'll speak to you soon.

[Operator:]

This concludes today's call. We thank you for your participation. You may now disconnect.