Good morning. My name is Matthew and I will be your conference operator today. At this time, I would like to welcome everyone to the RenaissanceRe First Quarter 2017 Financial Results. [Operator Instructions] Thank you. Peter Hill from Kekst, you may begin your conference.

Thanks, Matthew and good morning. Thank you for joining our first quarter 2017 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 212-521-4800 and we will make sure to provide you with one. There will be an audio replay of the call available from about 1:00 p.m. Eastern Time today through midnight on June 2. The replay can be accessed by dialing 855-859-2056 or +1404-537-3406. The passcode you will need for both numbers is 5634274. Today’s call is also available through the Investor Information section of www.renre.com and will be archived on RenaissanceRe’s website through midnight on July 12. Before we begin, I am obliged to caution that today’s discussion may contain forward-looking statements and actual results may differ materially from those discussed. Additional information regarding the factors shaping these outcomes can be found in RenaissanceRe’s SEC filings to which we direct you. With us to discuss today’s results are Kevin O’Donnell, President and Chief Executive Officer and Bob Qutub, Executive Vice President and Chief Financial Officer. I would now like to turn the call over to Kevin. Kevin? Kevin O’Donnell: Thanks Peter. Good morning and thanks for joining today’s call. I will open with an overview of our performance for the quarter and we will give some color on what happened and how we think about it. Bob will then go over the financial results and I’ll come back on to speak a little bit more about each of our segments. Last night, we released our first quarter earnings. For the quarter, we reported growth in book value of 0.8% and growth in tangible book value per share plus accumulated dividends of 1.2%. We also reported an annualized ROE of 8.3% and an annualized…

Thanks, Kevin and good morning everyone. Today, I would like to first give you a few overall themes for the quarter, then provide some detail on our consolidated segment financial results and conclude with investments and capital activities. As Kevin pointed out in his opening remarks, the impact of the decrease in the Ogden rate was the standout driver of our results for the quarter driving all of the prior year development in our casualty and specialty segment. We also experienced an uptick in current accident year losses in our casualty and specialty segment. Having said that, we reported a strong performance from our investment portfolio and our ventures unit continues to provide meaningful contributions to our bottom line and overall strategy. I continue to be confident in our strategy and proud of the work our team did during the January 1 and April 1 renewals. The first quarter cedes a significant portion of our book renew, most notably in our property segment, where almost half of our annual premiums incept during the quarter. We saw pockets of attractive business and were able to grow the top line in our property segment while continuing to maintain our underwriting discipline and execute our gross-to-net strategy, impacting our consolidated and casualty and specialty segment underwriting results during the quarter with the announcement that the discount rate used to calculate lump-sum awards in UK bodily injury cases known as the Ogden rate, changed from 2.5% to negative 0.75%, a decrease of 325 basis points. This is an industry-wide issue and not unique to us. We were primarily exposed to the Ogden rate change through a limited number of UK med mal contracts with an impact on our first quarter consolidated combined ratio of about 9 points. This was all contained within prior accident…

Operator, will you please give the instructions?

[Operator Instructions] Your first question comes from the line of Elyse Greenspan at Wells Fargo. Your line is open.

Hi, good morning. So if we look at the ROE you guys reported in the quarter, a little bit over 4%. And so if I just make some adjustments for the Ogden charge and then some of the higher specialty losses, I think you called out a combined $23 million in the quarter. I would adjust to about an ROE just over 9%. I know you also said there were some cat losses that aren’t included in that number. I am just trying to see what do you view kind of as the run-rate ROE? I mean, I know we – the overall low cat quarter and I think there some expectations might have been that your return would have been higher? Kevin O’Donnell: Thanks, Elyse. It certainly is a lot going on this quarter. So, I appreciate you taking the time to kind of bring things back to a normalized level. I think at the highest level, looking at 2017, we see some of the trends continuing, but there is really not much different in 2017 than what we saw in 2016. So with that, it’s a good framing for how to think about what the macro environment is in which we are operating. Breaking that down, there is really three things to talk about with regard to our performance in our ROE. So results are driven by investments, underwriting and capital management. Within investments, I think there is some green shoots where we are seeing some opportunity for an improved investment environment in 2017 compared to 2016. In underwriting, from a reinsurance perspective, within casualty and specialty, we are seeing reasonably stable reinsurance terms. The issue that we are monitoring – the issues that we are monitoring are really twofold: one is, what is going on with the…

Okay, that’s great. And then in terms of the reserve releases, we saw it slowed down in the Q1. I think in the commentary, you guys did point to some prior year adverse development in the other property book. But historically, if I go back the past couple years, Q1 has actually been when you have seen the lowest level of favorable reserve development. Can you – is there – can you just remind us, is there seasonality to the review of your reserves? And why has the Q1 historically, I guess, been lower and how we can think about favorable reserve development for the balance of ‘17? Kevin O’Donnell: Yes, I think that’s a good observation to look at. We don’t think of our reserves on a quarterly basis. We look at our reserves as being our best estimate in – over the longer term. With that, we do report on a quarterly basis and those quarterly reports often reflect when we receive information from our customers. Typically, the fourth quarter is a lot of information conveyed both because our customers are closing their books of business in many cases, and secondly we are renewing a lot of business. So to the extent there is any seasonality, it could be in response to just the normal financial calendar that our cedents have and the fact that we do often receive more detail than additional information as we are renewing it.

Okay. And then in terms of the Ogden loss that you guys disclosed. So, you guys had pointed to this coming from your med mal exposure, so two questions there. It seems like from some of the disclosure on the Lloyd’s book that this stemmed from, I think both Lloyd’s and the Platinum business, is that correct. And then also, most of the players in the space that have disclosed Ogden losses have pointed to that coming from UK motor business, I am just – can you just provide just a little bit more commentary on where rent exposures come, because I really can’t – I can’t recall other companies highlighting exposure related to med mal with this loss? Kevin O’Donnell: Absolutely, I think you are absolutely right that most of the other announcements regarding Ogden are around auto. As you know or as we have disclosed, we are not a very large auto writer. The Ogden rate actually affects the – any bodily injury claim in the UK. So looking through our book of business, we saw that it was largely concentrated within a single account that was written in both our syndicate and in the legacy book and which we purchased from Platinum. It is something that there are exposures that can come through in other lines of business for bodily injuries, but for us, it was really focused on the med mal. It’s something that – from a going-forward basis, it’s not something we anticipate for it to continue to develop for us because, as I have said it’s a single account and we are in negotiations with full information on Ogden as to how to think about it going forward.

Okay, great. Thank you.

Your next question comes from the line of Kai Pan with Morgan Stanley. Your line is open.

Thank you and good morning. So I just want to be clear on the sort of question on Ogden rates, so this impact is only impacting past reserve, not your ongoing business going forward? Kevin O’Donnell: Right, it’s only the priors, Kai.

Okay, that’s clear. And then on the mortgage re gross and it seems like it moderate a little bit, we have heard a lot of competitors actually ramping up the mortgage rates sort of premiums, I just wonder where do you see the market dynamics here, are you losing to competition or you feel the return is less attractive than it was before? Kevin O’Donnell: So as Bob disclosed, we had a large transaction in the mortgage market last year, which was a one-off transaction, obviously we earned over many years. But with that, we are still seeing mortgage opportunities in 2017. I don’t think there is any mortgage business that we are not seeing, so it’s a result of us seeing some unique opportunities in 2016. Those unique opportunities were mostly in the PMI books of business and it was with regard to older vintages that we thought were particularly attractive. What we expect to see this year is more current vintages. We believe that there will be a full spectrum of what’s attractive and what is less attractive. Overall, ‘17 will be less attractive than ‘16 for mortgage business, but we believe that the mortgage business will still be attractive. We anticipate that we will grow, but we probably will grow at a lesser rate than we grew from ‘16 to ‘15.

Okay. And then – so the return of the mortgage re, you think is doing probably better than the other lines of business you are having right now? Kevin O’Donnell: I think there is two answers to that. One is on a standalone basis and one is on a marginal basis for our portfolio. So on a standalone basis we still see good margins in much of the mortgage business. And I think from a marginal basis, so the effect on our portfolio it’s still pretty efficient to us to add it particularly on a reinsurance basis.

Okay. Lastly, just follow-up your commentary on your monitoring inflation trend, some of the – your peers are talking more about these fees from size right in inflation and commercial auto as well as in the professional lines, could you talk a little bit more about where do you see potential inflation trends in your lines of business? Kevin O’Donnell: Okay. Auto certainly has been a big topic around the industry, but again we are not a big auto writer, so I don’t see that as particularly concerning to us. I think within professional liability, there has been a lot of discussion about an increased frequency really of class action suits. I would say a lot of that is around kind of merger objection claims. Our observation of that is we are still seeing reasonably high dismissal rates. And a lot of the claims inflation that we are seeing there is really the loss adjustment expense associated with defending those and a lot of that is contained within the primary. We are more of an excess player within the D&O market, so it’s something that we absolutely are watching carefully. At this point in time, it’s not driving our results, but to the extent these sorts of claims begin to get traction, it could begin to move up into more awards that affect the excess layers and then we would be more impacted.

Thanks so much for the answers. Kevin O’Donnell: Sure.

Your next question comes from the line of Amit Kumar with Macquarie. Your line is open.

Thanks. And good morning and thanks for the question. Firstly, just going back to the casualty and specialty discussion, when you talked about timing versus trend, we have seen some noise sort of lingering in this segment quarter-to-quarter, I am curious why shouldn’t we think about this as maybe some sort of a problem that the business that is being sourced or maybe just talk about any changes you have made and how this business is being sourced now versus the past, so that it sort of reassures us that you are on top of this issue? Kevin O’Donnell: Okay. To go back to first quarter last year, we talked about some event losses that came in. That occurred again this quarter within our specialty lines. So the way I think about those is when something in one of our specialty lines happens it tends to be a large event. We have a bias to think of it as an event, we post the reserve and then over time, the curve should catch up to the reserve that we post in the quarter. I think within the specialty lines, one of the things to look at is we are not changing our ultimate expected losses. So I think of this as perhaps the curve is – we need to think about the timing of the curve or we just have to accept that our losses will come in a little bit more lumpy than what a traditional curve would do. Within casualty, I think we have a little bit more of a traditional thought process around reserving. And what we are seeing in the current accident year is really where I focus, because all the prior year development is Ogden. So on the current accident year, it’s just we have seen a few more – a bit of an up-tick in reported claims coming in. It’s not within any one line of business. It’s not thematically tied together. So we are looking at it. We decided to add it to our discussion points for the quarter. But again, it’s something that if we are correct, our ultimates will remain consistent and this will pan out over time as our curves mature.

Got it. The other question I have is, you spent some time talking about the reinsurance strategy and you have talked about the retro strategy in detail over the past several quarters. I am curious, how has that evolved, let’s say, over the past eight quarters or so and has that shifted in terms of how it protects the tail versus the middle piece, maybe just add some color on that front so that we have some confidence in terms of the relativity of the numbers? Thanks. Kevin O’Donnell: Okay. And just to clarify, you are asking about our seeded strategy, is that right?

Yes, exactly. Kevin O’Donnell: Okay. Let me – I will start with property, which I think we have – that’s probably a little bit more understood and we have been doing it for a longer, then I will move over to casualty. So within property, we have – what I talk about is the fact that we keep about 50% of our gross premiums. So included in that is our use of third-party capital through all the vehicles that I listed in my comments. Additionally, we have a series of quota share like protections. So those will participate in a proportional basis, on the losses throughout our property book, including other property. The rest of it is more of an excessive loss, which will protect different components of the book at different return periods, traditionally more remote return periods, certainly more remote return periods than we have experienced over the last several years. Moving to casualty and specialty, we have a similar philosophy in thinking about how to protect the book, where we are looking at substantial quota share protections for several of our lines of business. When we think about purchasing those quota shares, the fundamental – the most basic analysis we are doing is what percent of the expected profits are we keeping per full session of loss. That is the driver for us to think about constructing the portfolio on a net basis. Additionally, we are increasingly finding opportunities to buy either per occurrence or per risk protections within our casualty book, which will serve as – to protect us from either a single shock loss or from adverse aggregate performance across the portfolios. In observing those, what I am talking about is the economic framework or the capital model in which we are making our decisions. The observed GAAP impact is less than the observed economic impact meaning that we have seen and within property cat, losses smaller than would recognize the full benefit of the ceded portfolio that we have purchased. And within specialty, we see the effect of the quota share, which will emerge over time, but more specifically, the specific excess covers have not been utilized to the degree that they are appearing in our GAAP statements, so very consistent across both segments. We believe it’s the right thing to do to position us for long-term success and as – and to the extent we are correct on the expected modeling of our portfolios, these will be accretive, over time.

And then just finally, just sort of linked to that when you say long-term, can you define long-term? Kevin O’Donnell: Well, then property – within property cat, it’s when – long-term can be tomorrow, it’s just whenever an event happens. What I mean by that is just something that’s a little bit further out in the tail than what we have experienced. For casualty, it’s just as the books mature I think you will continue to see the increased sessions in the more recent books soaking up some of the losses as they come through. Did you ask another question? Sorry, I missed you.

Your next question comes from the line of Jay Cohen with Bank of America. Your line is open.

Yes, thank you. A couple of questions. In the other property segment, the acquisition expense ratio was higher obviously a shift towards quota share business would do that. Is that a number that we should think about going forward over the next couple of quarters or for some reason, was that inflated in this particular quarter? Kevin O’Donnell: No, Jay, I think you are right, it’s related to our growth in proportional and delegated authority. You saw that we had a lot of growth and you can see that the growth in the acquisition really parallel what we saw in the net earned premiums. So as that business continues to grow, you will see that growth, what you would normally see with a proportional business.

And does that business have a lower loss ratio than your other business? Kevin O’Donnell: I think I would divide it into two pieces. Other property is not necessarily cat focused business, but there is a cat component in it. The volatility in the attritional stuff is lower than the cat piece, so it has a higher loss ratio. So, we look to write the property. The cat component of that at similar loss ratio as our property cat, the attritional will have a higher loss ratio, which is normal in any proportional book. It’s more of an insurance property set of economics than reinsurance.

That’s helpful. And then secondly, in the specialty business, these kind of losses that you talked about in the quarter, can you talk about what lines they were in, what kind of losses we are talking about? Kevin O’Donnell: Sure. Some losses – so I am going to give you a specific example. One of them is we decided to book, there is some press recently about the Mozambique bond. We decided to go out ahead of the Mozambique transaction and to book that. So that’s a kind of a clear example where we see that as an event and added ultimately the curve will catch up, rest of the market may treat it differently. We had a surety event, which was similar. Couple of things like that, but it’s not one line of business, it’s a few things of large size that we are treating more as an event and bringing it through our reserves that way ultimately the curve I think will catch up.

Got it. That’s helpful. Thank you. Kevin O’Donnell: Sure.

And your next question comes from the line of Josh Shanker with Deutsche Bank. Your line is open.

Yes, good morning everyone. Kevin O’Donnell: Hey, Josh.

Good morning, Josh.

Robert, I want to know how to think about excess capital as you rate proportional business versus excessive loss business. And where you sort of look in terms of the extent to which you are maximizing what you think is sort of the right amount of capital at this point in the market versus giving that back to shareholders? Kevin O’Donnell: Okay. I think I hear two questions here. The first is how do we think about allocating capital in lines of business, including other property and then secondly excess capital. So firstly, within – we have – all of our risk is managed in REMS and within that, we have two sets of analysis, which we talked to you about before: one is the standalone, the other is the marginal. The marginal is the way in which we allocate capital to risk on an economic basis and which informs how much GAAP capital is required. So thinking about other property, specifically, the cat component will add required capital to our portfolio. The attritional loss, which tends to be more individual lost up is less capital consumptive and won’t add nearly as much capital. So, thinking about the premium change within other property, it’s a very – it’s a much lower additional capital requirement than it would be within property cat, because property cat still draws the tail of our distributions. With regard to how that – think about that between deploying capital and share repurchases or returning capital. So, our first objective is always to look for accretive ways to deploy capital into our business. And if we can’t, then we will look for ways to return it. Once we have the information as to what the return is on required capital, with any line of business, it makes the return decision as to whether – makes the decision as to whether return capital pretty easy, you just compare one to the other. So for us, internally, it’s reasonably transparent, lots of sophisticated kind of analysis behind it, but it’s what we do everyday regardless of whether it’s other property, surety or another property cat line.

What about making investments in non-correlated businesses? I think at some points in your history, you guys have been a total return company and there has been – obviously, you do some investments out there. Instead of returning the capital, instead of deploying the capital, how actually are you looking to maybe buy something? Kevin O’Donnell: Sure. So, a lot of the – I think what you are talking about is some of the venture capital investments that we make.

Could be, I mean, ChannelRe, Japan yen, I mean, all sorts you did over the years, some worked out, some haven’t? Kevin O’Donnell: Yes. So, the way we look at that is we will do a normal private equity analysis. There is two – let me divide the venture portfolio into – from an investment perspective, into two things. One is underwrited supported investment, so we own – a component of owning Tower Hill is the information that we learn about what’s going on in Florida primary market as well as our access to their risk as a preferred reinsurer. So that’s one set of investments that we make. The other set of investments is things that we think will enhance our franchise and further our strategy, but maybe one step further removed. Trupanion is probably a little bit closer to that, where Trupanion, we think is an excellent company. We see it as an area where potentially we can learn how to think about small premium processing and in a growing market, so we will make an investment potentially there looking to expand the franchise a little bit more than something like Tower Hill. All of them are made independently to make sure that we are seeing an IRR that we believe to be accretive to the firm over time.

And as you weigh that against, I guess – is returning capital viewed as an accretive? I mean the balance between those two things, to return the capital I guess is accretive through a buyback at a certain price versus a dividend, which is probably not accretive. I guess how does that fit into when you presenting to the board, whilst should we really be buying back stocks? Should we really be giving a dividend? What about – should we – how aggressively, I guess, should we be looking for third-party type investments? Kevin O’Donnell: Sure. So, one of the high bars we placed for ourselves is we should not be doing invest to – for investors what they can do for themselves. Things I like about several of our ventures investments is that they provide long-term income opportunities where share buybacks – we are looking to be accretive over a much shorter period of time. I think with regard to special dividends, dividends, share buybacks, we look at it each of those each quarter, make a determination as to what we think is most beneficial to shareholders. Historically, as you know, share buybacks has been the winning strategy for us to return capital. But again, if we can find an opportunity that we think will provide long-term benefits to shareholders through investment, we will absolutely make it.

Okay. Well, thank you for the answers and good luck in this tough year. Kevin O’Donnell: Okay, I appreciate it Josh. Thanks.

Your next question comes from the line of Brian Meredith with UBS. Your line is open.

Thanks. I have just two quick ones, and I think it kind of follows on Josh’s question, the Tower Hill loss in the quarter, that kind of an unusual situation, what was that all about?

Tower Hill did take – we did take an equity method on that Brian and it was down in the quarter. But if you look at our investment in Tower Hill over time, it’s had quite attractive returns.

Okay. And then I am just curious, can you just remind us on the reinsurance contracts, you booked those kind of as fair value, how should we think about that line item as far as earnings and it’s down pretty significantly year-over-year…?

I am not following your question.

I am sorry, you other – under other income, you have got that one line that’s the fair value of I have assumed to see the reinsurance, I guess it’s your cat bonds? Kevin O’Donnell: Give us a second. I want to pull that line up just to make sure…

Is the reinsurance cost accounted for at fair value or as deposits? Kevin O’Donnell: Okay. Brian, let’s keep going here. Let’s take a look at – do you have other questions, while we take a look, try and dig than one up.

That’s all I had. You guys have been really thorough this call. Thank you. Kevin O’Donnell: Sure. We will circle back with you Brian, okay. Any other questions?

Great.

Operator, can we get the last question, please.

And your last question comes from the line of Ian Gutterman with Balyasny. Your line is open.

Thank you. First of all, FYI [ph], Brian was referring to Page 15, I was going to ask the same thing, but I will get to that in a minute. My sort of big picture question, one observation I had looking at the results was your underwriting income for the quarter pretty much all came from DaVinci, I think there was about $1 million, if I backed out the DaVinci, that came from the Ren balance sheet, just how should – just kind of caught me off-guard, I mean how should I think about that, is there anything to read into that, that DaVinci generated the most profit this quarter? Kevin O’Donnell: Actually, it’s an interesting way to think about it. I hadn’t focused on kind of dividing it between RenRe and DaVinci. DaVinci is really a quota share of our property cat book at the simplest level, so I think of it as mimicking. What you see at DaVinci is an unadulterated performance of what you’re seeing at RenRe, Limited. I think if I were to break it out, it’s been some of the other components that we were talking about, the – the up-tick in the specialty casualty losses and then the Ogden rate change, which didn’t affect DaVinci. So all the other components that we are seeing within casualty and specialty are not within – resonant within DaVinci and what you are seeing is just the pure property cat performance coming out of DaVinci.

Got it, okay. It makes sense, okay. And then I just wanted to follow-up Amit’s earlier question about the casualty book, maybe just ask a little bit differently. The thing I noticed is the last three quarters, on an accident year basis, has been running at about a 110 and I know there has been sort of issues that have come up each quarter that I wouldn’t want to call that a run rate, but then again, three quarters in a row, you started to scratch your head and say, well maybe is – my run rate higher than I used to think it was, right, so I mean can you help us try to think of how often we should have quarters that look like 110, I mean is it once every 3 years you just happen to have three in a row or is the normal now property, over 100 and is it a combination of it’s not as good as we used to have and bad luck, like how should we think about normal? Kevin O’Donnell: So I think there are two components that are driving the loss ratio within that, one is prior year development and the other is the current accident year. So I think as the book grows, I have – actuaries tend to be the glass half full, so they will be more interested in recognizing increased frequency or severity than something that is looking for like favorable frequency or severity. So as the book grows, you are going to have a bias to have a little bit more of a negative skew into your loss ratio. I think the prior year development, we did the best we can to estimate it. We look at it each quarter and there is going to be some natural volatility there. From a run rate perspective, I don’t have a return period to think about what a 105 is or a 95. But I would expect that – we believe the book to be profitable. It may be a little bit of lumpy ride to get there. But as the book matures, we should see more stability in the results.

Do you think you will be profitable on an accident year basis, profitable this year? Kevin O’Donnell: Looking at the expected value of the portfolio, the answer is yes.

Okay, good. And then the other sort of subcomponent of that, I have been trying to figure out is, can you give us a ballpark sense of how much of the year in premium at this point is from mortgage and again, in rough view, where that’s books, I would have thought that would have been well below 100 and that would have been helping the mix?

We don’t. I mean in terms of looking at the combined ratio for mortgage, we don’t really show that. But what we do show is the amount of gross written premium in our financial line sector. That’s about 50% of the total, the gross written premium in the first quarter and that’s down significantly from the prior year on the comparative basis, which had the larger deals. So when you factor that out, there was some growth, but it runs about 60% of what the total financial lines was for the first quarter of this year.

But their earn is much slower, right, so if I looked at that $179,000 of earned, I would guess mortgage is, I don’t know, 20%, 30%, I mean it’s not certainly as much as the growth would imply?

The earn-out would be over a period of 7 years to 10 years. And that earn-out period is going to be reflective in the risk and the degree of risk over the life of that contract. So it’s not a linear earn-out, it’s more reflective of the risk over the 7 years to 10 years, probably a little bit more in the front end, then a longer tail at the back end.

Okay, got it. And then just one last one for me is, on the investment income does the fixed income that has been sort of a run rate in the high-30s for a while and it bumped up to 43 this quarter was – I think you mentioned high investment assets, but was there anything unusual this quarter or is this a new run rate up in the 40s? Kevin O’Donnell: We had some higher invested assets that came in. We had a slight up-tick in the rates this quarter, overall 2.1% to 2.3% and we did a little bit of rebalancing with a little bit more exposure on the credit side, but nothing significant. Just modest changes to it and we were able to benefit from those changes in our structure as well as in the market.

Great. Thanks so much.

Thank you. Kevin O’Donnell: Brian, let me go back to your question. It really relates to a few deals that we carry at fair value, given the way GAAP makes us account for them. And so we have to account for them on a fair value basis, so you get some volatility. But it’s a very small number and you will see some up and down on it, but there is no trend there?

Thanks. Kevin O’Donnell: Any other questions for today?

And there are no further questions at this time. I will turn the call back over to Mr. O’Donnell for a brief closing. Kevin O’Donnell: I appreciate everybody dialing today. Thank you for the opportunity to speak to you and to explain the quarter. I know there is a lot of moving parts, so hopefully, we provided you with some good insights. We feel great about where we are, recognize it’s a difficult market, but I think we are in the ideal spot to continue to execute and perform well in this market. So thanks again. And I look forward to speaking to you next quarter.

This concludes today’s conference call. You may now disconnect.