Good morning. My name is Angela and I will be your conference operator. At this time, I would like to welcome everyone to the RenaissanceRe Second Quarter 2018 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. And I would now like to turn the call over to Mr. Peter Hill. Please go ahead.

Good morning and thank you for joining our financial results conference call for the second quarter of 2018. Yesterday, after the market closed, we issued our quarterly release. If you didn't get a copy, please call me at (212)-521-4800 and we'll 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 October 3rd. The replay can be accessed by dialing (855)-859-2056 or +1-(404)-537-3406. The passcode you will need for both numbers is 18690172. 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 October 3rd. 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?

Thanks Peter. Good morning and thank you for joining today's call. I'll open with an overview of our performance for the quarter, and highlight how I think our strategy performed. Bob will discuss financial results and finally I will give you little more detail about what happened in each of our segments before taking your questions. Last night we released our second quarter earnings, I'm proud to say that we had a very strong quarter reporting growth in book value of 4.3% and growth in tangible book value per share plus accumulated dividends of 4.9%. We also reported an annualized return on average common equity of 18.6% and an annualized operating return on average common equity of 20.3%. These returns reflect a strong performance we've delivered across all aspects of our business, as well as our continued focus on controlling expenses. This has allowed us to head into the 2018 win season just as strong financially as we were at this time last year. And with almost $350 million of operating income in the first two quarters of 2018, we have more than earned back last year's loss. We also benefited from higher investment income as well as significant prior year favorable development on the 2017 catastrophe events. As Bob will discuss in greater detail, we grew premium in both property and casualty; I believe it is a significant complement to achieve the growth we have so far this year. This is all the more impressive because we have built the best portfolio that we have had in many years in terms of it's capital efficiency, it's profitability, and it's level of risk. Even though this portfolio is larger and more profitable due to the innovative capital structures we are able to bring to risk using our integrated system engrossed…

Thanks Kevin, and good morning everyone. We had a strong quarter and today I'll focus my comments on the key financial drivers of our performance. I will also give you some additional insights into our investment portfolio and capital management. In summary, there were several drivers of our performance this quarter including favorable prior development from the 2017 catastrophe events, higher net earned premiums standing from targeted top line growth over the past year and continued operating efficiency. Starting with the consolidated results for the second quarter, we reported net income of $192 million or $4.78 per diluted common share. Our operating income was $210 million or $5.23 per diluted common share which excludes $18 million of net realized and unrealized losses on the investments. Underwriting income for the quarter was $227 million and reported a combined ratio of 47.2%. Our gross premiums written grew 18% in the quarter to $977 million. These results drove an annualized ROE for the quarter of 18.6% and an annualized operating ROE of 20.3%, all-in-all, a very strong financial performance for the quarter. Now before moving on to our segments I wanted to highlight again for you this quarter the changes we made to our expense allocations as well as the continued improvements in our operational efficiency. We made some minor adjustments at the beginning of the year to our allocation methodology which we discussed with you on the previous call where we shifted certain public company expenses from operational expenses in the segments to corporate expenses to be more in line with how our peers treat such expenses. This allocations realignment aside, we continue to improve our operational efficiency as we increase net premiums earned by 12% in the current quarter compared to the same period last year while keeping the sum of…

Thanks, Bob. Let me start with property and then I'll move over to casualty. Overall, we grew gross premiums written in our property segment by 10.7% over the comparable quarter last year. Property cat gross premiums written grew 6.4% with the substantial portion of this growth coming from a mix of better rate and a new business. Our strategy entering mid-year renewals was to grow opportunistically with core volumes and leverage our gross to net strategy. As a result, we're able to grow the Florida portfolio incrementally despite rates that were flat to up a few points. We also grew Upsilon which is now over $1 billion in capital and issued a new series of debt bonds to gap bonds to Fibonacci. Rate change varied by program and by layer, pricing in our overall property cat portfolio at midyear which were to reflect both the U.S. and non-U.S. renewals was up single digits, in some instances we saw rate decreases. There is still an abundance of capacity in the market and over subscription was a common theme. We were able to grow where appropriate and also exercise underwriting discipline and came off business when our return hurdles were not met. Let me touch briefly on the deep dive of the 2017 catastrophe events Bob already discussed with you. We disclosed that we will perform this around mid-year and believed that we had sufficiently credible data this quarter to make better informed decisions about the necessary quantum of our reserves. When we initially set these reserves we had to make a number of assumptions around the many variables that can potentially influence an event, and our estimates were dependent on the validity of these assumptions. Since making these estimates however, more information has become available and many of the variables are…

[Operator Instructions] Your first question comes from the line of Kai Pan with Morgan Stanley.

Thank you and good morning. Thank you so much for all the detail about the reserve leases, I just want to follow-up on that to see -- is that -- [indiscernible] said at anniversary day which means we would now see sort of big reserve movements is related to these hurricanes were 2017 cat events until the second quarter of next year?

Kai, you came across a little broken out there. Can you actually just repeat the question?

Sure. And you said you typically do these -- like deep dives, reserve study at anniversary of low cede events, and that's the time you decided to either add it to these reserves. So which study -- imply [ph] would now see significant movements on the reserve related to 2017 catastrophes like another year from now, basically second quarter of 2019?

I think what we announced earlier was that we would do a mid-year review of these events and part of the reason we used the term mid-year is because we were aggressively collecting as much data as we possibly could, so we weren't sure whether we would be able to do in the second quarter or the third quarter. The combination of our work and then the reports we received for the June and July renewals put us in a position to feel comfortable to do it in the second quarter not at the anniversary which would be the third quarter. So I wouldn't read too much into it other than we're responding to the information that we have and we felt comfortable that in the second quarter we were in a strong position to be able to make the judgments that we made. I wouldn't read that forward that we would do the same second quarter next year.

But in fact looking back your 2004-2005 hurricane losses; we have -- we didn't see sort of meaningful reserve releases from those events until you probably 2007-2008. I just wonder is that correct or not? And what has changed here -- that to why you released so slow [ph]?

I don't have the information to hand as to what happened with the 2004 and 2005 events. What I would say here is interference [ph] is different, when we try to point out as the California wildfires pay more quickly but I think the important thing to focus on is that we identified I think the important variables that would control the loss or control our assessment of the loss and we collected more information of that. So thinking of Irma where there is an increasing industry dialogue around the growth in several onus as the loss, if you look back over the things we talked to you about since the loss, I think we have correctly identified that we expected to see elevated loss adjustment expense, we expected to see more real authentic claims, we talked about the impact of not only Irma but all of the events on the aggregate covers and we all recognized [indiscernible] environment. So the fact that we sort of highlighted what we thought the important variables allowed us to focus in narrowly as to what was the important information for us to provide an update on our -- with the quantum of our reserves against each of these and that's what we did, we were able to achieve at the second quarter. I think it would have been the same process, we applied after of the events which is that this event became transparent in the second quarter and not the third.

My next question is on the underlying combined ratio in the property cat segments; it looks like it's kind of adequate comparing either 49% versus like low 40s for the prior years. I just wondered is there are any sort of one-off items which is not including the cats?

The cat is favorable development on the prior year 2017 catastrophe represents. I did point out some anomalies in the acquisition expense ratio related to the events that actually drove it up but absent that they were fairly normal. Really nothing that was other than the cat events was the big driver.

You said so it's just one-off for this quarter.

Then the large item for the 2017.

If you're stepping back, Kevin you could look at first quarter operating ROE about 13.5%, the second quarter is about all the reserve release is coming from 2017 event; still 13%. So I wonder is that 13% ROE sustainable in year-over-year going forward?

Our strategy is the same in the way we're looking at the business, we're thinking about targeting the line of the business that best serve our customers and I'm thinking about the most efficient capital to match with it. So without giving guidance as to what the return expectations are I think our strategy is working well in this market, and we hope that it continues to work well as we move into the third and fourth quarters.

And your next question is from the line of Amit Kumar with Buckingham Research.

The first question, you know, going back to Kai's question on ROE; if I flip the question, do you think that the better way to look at RenaissanceRe is looking at the value creation overtime? Do you think is that better or should we continue to focus on near-term ROE moves?

Our primary metric that we look at is value creation. Our both tangible book value per share plus accumulating dividends, and that's the one we really look at and what we focus on ROE and operating ROE is a relative measure off of that. Kevin, if you want to add anything else to that?

No, that's exactly right. I think if we do our job and grow tangible book value plus gave away [ph] the dividends, I think that's our best task comparing long-term shareholder value.

But the second question and maybe I might hope for a bit more color on the reserve releases. If I understand correctly, the majority of the release came from Harvey but Irma Maria were sort of unchanged -- maybe just go a bit deeper and also talk about the LAE issue which is probably running materially higher versus the past storms?

Let me start with the loss adjustment expense which is -- within the Florida market, the way the market is structured we've always anticipated a higher loss adjustment expenses for Florida related losses and I think we've talked about that consistently on each of the calls since the Q3 event reserves reverse split up. So I don't think that's something that we are particularly surprised at, let's begin we've got 25 years of deep experience within Florida. With regard to the events, what I said in my comments is that on a net basis each of the events are down, so what I try to do is to give a little color from a market perspective as to what's driving the events but from our perspective when we look across the board each of the hurricanes are down on a net basis and when I said as the wildfires are about the same as what they were when we put them up in the fourth quarter.

I guess what I was trying to ask is, is Harvey like 80%, 75% -- like is there some sort of proportion which would help us sort of do some sort of a comparative analysis with other companies?

I think we look at it as a portfolio and we manage it as a portfolio, adding to the complicating factor is that how the retro which supports all of the events with a single program response. So I don't think it would provide the insight that you're hoping for us to guide more deeply because the net changes to us are unique to us. And a lot of it depends on the assumptions you've made with the original loss estimates that use for reserving.

On the investment income side you alluded to the higher invested assets with the new business etcetera; the investment income this quarter is the materially higher than the last -- I guess couple of quarters run rate. Should we use this sort of as the guide or going forward in terms of our modeling purposes?

I think there is three things driving the growth and that is -- one is, obviously we're seeing interest rates increase over the last year, that's driving probably the majority of the increase. You can see that in the fixed maturity where that's up several million dollars. Now there is some balance growth as well but principally interest rates are the biggest catalyst. Short-term which is up significantly, terms of lot on the Upsilon side that's helped part of the growth when you think about it in volumes and then you can look at the -- the interest rates have been the biggest factor and as we move forward, we expect to see benefits from that as the rates go up. New money yield is 3%, quite a little bit higher than that with the rates going up, so that's how it's all the time.

And your next question is from the line of Yarn Kanar [ph] with Goldman Sachs.

Just given where pricing is today and all the benign starts of the wind season this year, if the wind season proves to be benign this year at the end of '18 -- of the structuring of our portfolio and to have one renewals, are you going to be shifting into quarter share from ex-loss [ph], or are you going to be using more of trail, I mean maybe any thoughts on that would be appreciated.

I think when think about any renewal or anytime we're going to engage with our customers is we try to think the best way which we can serve them. What's the right capital to bring to them and what's the right level of risk for us to accept for them. So I think when I look at what's going to happen at 11, I don't think there is a lot of information in the system right now and we are going through [indiscernible] hurricane season. So I say that I don't have any meaningful comments about what we expect for January 1 at this point but I can say that our strategy to go in thinking about serving our clients and bringing the right capital to their needs will be unchanged.

In terms of your partners with the perspective of a year after the storms have the conversations changed -- are the issues that they are focused on changing at all or is it pretty much consistent from relative to where it was a year ago?

I'll divide my comments between our customers and then those for whom we share risk. Our customer conversations are -- I think increasingly about how we can provide more protections more broadly to them, and I think that's been benefiting us not just in the property cat portfolio but other properties across the casualty and specialty as well. From our capital providers, I think they are appreciative of the transparency that we bring to them and understanding the risk from which they accept to us. So those conversations have been very robust, so we feel like we're in a great spot which way the market is and with our access both to desirable risk and efficient capital.

And your next question is from the line of Elyse Greenspan with Wells Fargo.

My first question; you gave some color on your growth connect strategy within your property book this year. I guess we have a repeat of last year events, not specifically the same events but meaning more of a frequency events that a severity event. Do you think that the level of loss that went to the reinsurance market would be materially different than the share of the loss that they saw from the three hurricanes that we saw last year? I guess I'm trying to see like were there more aggregate coverage purchased or the way reinsurance was purchased this year are different than how it had been purchased last year.

I think from a market perspective demand has been pretty stable and the dose on the aggregate was about the same level of risk being transferred roughly. And the types of product that are being sold is not materially shifted from last year to this year, so I think from those two perspectives we should see a reasonably consistent risk transfer from insurers to reinsurance. I'd also say that retentions have been reasonably stable. So an aggregation of small-ish type events, even it's a heavy aggregate year I'd say is comparable to what we saw last year. The one thing I will mention for us is -- as I've commented in my prepared remarks is, if there are more wildfires we saw an opportunity in a dislocated liability market for public utilities in California, so we could have more exposure to something like that but I don't think that's an industry trend.

And then in terms of as we think about the take down for the 2007 losses that you guys had this quarter, could you provide some color in terms of the IBNR that you guys have up for the events and that will compare to past events; I guess just as we think about the IBNR I guess still there following the peak down that you saw this quarter?

I think it's different by events. As I mentioned, the California wildfires pay you more quickly than something like an earthquake and then the hurricanes are a little bit of a mixed bag with Maria being the slowest of the hurricanes. I think that's an indication that as things are slower one should expect there to be reserves associated with the claim. But I don't think at this point we're going to provide a breakdown of pay to case IBNR but we recognize that each of these have a unique development pattern and I think we were thoughtful in thinking about those and have set the original reserves and also have set the current reserves.

And then in terms of the expense ratio this quarter -- I know you guys pointed out a few factors for hurricanes that impacted that number; if I kind of adjust for the reinstatements and the profit commission impact, I get an expense ratio and this is for the entire company -- about 29.6%, and then it is comes out a little bit lower than where you have been trending. Bob, I know you mentioned I think expenses might go up but earned premium offsets that; so is that about the right expense ratio to assume going forward or was there something kind of one-off when we back out the impact of the 2017 loss adjustments?

I think we tried to highlight in my prepared comments the factors that were driving the costs that were outside where you would see normal growth, the [indiscernible] correspond to premium growth like acquisition expense cost. We will invest in the business, we will do it modestly as we see, the need to expand the platform for growth. But again at the same time maintaining that discipline, trying to point you that the ratio should remain at/or around if not below whether currently have right now and did point to levers that we've built into the system across all of our expense base as well.

You guys mentioned that the surplus required for your block [ph] this year was about the same as last year, did you carry a bit more capital because you had the preferred that you issued this quarter. So I guess as we were thinking about getting to a point of capital return depending upon opportunities, would your process be to wait I guess until later on in the year after wind season?

In my comment around are deploying the same level of surplus with the growth they would achieve was to give a little bit of color on the efficiency we're building into our risk portfolios. As far as our buyback positioning, it's not exchanged, we continue to look to deploy into the business first and I'd prefer mandated capital return remains share buybacks which have been accretive overtime.

And your next question is from Ryan Ponus [ph] with Autonomous Research.

Following up on Elyse's question I think you guys did a really good job giving us the kind of the bottom's up view on when you get comfortable with the big reserve release, but just looking for something more from a top down perspective, if you'll give us I guess pay to incur that would be helpful. But if not that is there anything you can give us that we can see in publicly available data that you think kind of adequately says that -- like this is one reason why you should be comfortable with where we're having our reserves at this point.

I think there a couple of things; as Kevin pointed out the complexity of the business model makes it difficult just the way we manage the risk. Yes, through the individual storms you layer that with the retro-session or across the portfolio and then you have the aggregates. In the supplemental we do lay out on one of the pages -- I think it's 13, we do have shown the changes in the reserves that breaks it down a little bit more detail. You can see how it spikes up, that's probably where you will get the lost information on the detail. But again, we look at on an aggregate basis and the negative basis just given the level of complexity.

And then I just thought actual versus expected, thinking about Irma, so it sounds like you guys got it right and being pretty conservative around the L.A. yield out of the litigation stuff. So just to say that relatively to your estimates -- I think the PCS estimates are like $20 billion [ph] as of June. I mean where you guys have it versus where the PCS is coming in, do you guys -- is your assumption there is still more creep in your leasing off of that or do you think that kind of what you're seeing now paints a pretty good picture?

I think when we first set up a reserve we do look both top down and bottom up; top down being market share venture event as -- again, which we can begin to zero -in on the appropriate level of loss when there is -- when uncertainty is significantly higher. As the loss matures, we increasingly rely on more observed information on specific programs so we're more from a bottoms up approach that we do less reconciliation as to where the industry loss is. Specific to Irma, I think the things that are being discussed is adverse development are things that we identified and thought would continue -- we thought would deteriorate, it would be difficult for us to comment whether the market believes there will be more or less deterioration in it. We think we have a robust process to assess it and we feel comfortable with the level reserves were carrying [ph].

And then I just had a couple thinking about -- I guess retro in Upsilon, if that is right so there is a pretty big capital raise in Upsilon, and -- I mean correct me if I'm wrong here, that's a lot of business that you've written because you raised capital on Upsilon that you would have otherwise written, is that right on a gross basis?

Really what Upsilon is -- it's portfolio which on it rated balance sheet is heavily captive to capital consumptive. So we like the business that is Upsilon. We simply put it into that vehicle because it fits better on the non-rated collateralized structure that it does on the rated balance sheets that we write the rest of our book on. And as Bob had mentioned, we do own a portion of the capital that's deployed within Upsilon, so it's a gross portfolio we like, we just recognized that we can bring more efficient capital like moving it off the rated balance sheets and delivering that product to our customers.

I guess I was trying to maybe get at is -- if you think about -- I mean, I guess it's tricky, so all you're doing is moving it from your balance sheet over to Upsilon but just trying to think about if you're having a no loss year, your decision to raise all this capital in Upsilon -- how can you quantify what the earnings pickup would look like to shareholders for having done all that. I mean is there any way to really think about it like that?

The way I think about it is, that business is best suited to that source of capital. So thinking of it what the return could be if we retain that risk is a but flawed because it doesn't belong on our rate of balance sheet because that's not the best way for us to serve our customer. So I look at it as the opportunity over the long-term to earn appropriate margins for our capital -- for our partner capital and for the fees which we charge to administrative vehicle is through that and it serves our client best, so I think over 10 years regardless of whether there is losses or not it's the best structure that we can -- and it's the best way in which we can participate and support our customers with that capital.

Your next question is from the line of Josh Shankar [ph] with Deutsche Bank.

You guys have been growing fantastically in non-cat lines and I'm trying to understand the picture of the pie getting bigger or you getting better, and it might be a combination of both. You discussed the California wildfire liability transaction what I think is an example of the pie getting bigger. But my question is, when you're winning business from business held by competitors what types of competitors or what type of capital structures are losing business in the market to RenRe's offering?

What we've talked about before is that a lot of our casualty and specialty clients are heavily overlapped with our property cat lines. So I think we've done a very good job getting out the most desirable accounts that are difficult for others to access because we've had long relationships and other lines with them. So I wouldn't point to there being -- we're targeting a specific competitor; what we're doing is targeting what we think are the best accounts and then working hard by bringing our expertise not only in property cat but increasingly in other lines of business to the sessions that they are making outside of property cat. So it's more about it's access for us more than competitive [ph].

Is that a conversation that begins with a broker or begins with a client?

It's increasingly -- we are broker market but increasingly as we write more diverse lines for large counterparties, many of those lines are written through different brokers; so we find it increasingly important for us to directly engage with the ultimate buyer so that we can talk broadly across the portfolio of coverages that we're providing. I think we do a good job balancing the important role that the broker plays and bringing our expertise directly to the client, so we can have the most robust conversations.

So ultimately this sounds a bit like a cross-sale to me. I'm wondering if you have an idea of a possible market for yourself and how well penetrated you are in those goals that you have and whether we can look at 2019 and say, well, this is just the beginning, we should have another great year of getting on those accounts that we've been targeting. I mean do you have sort of a multi-year plan about where you want to be?

We have lots of different plans, included in that is we have development plans for each of our core clients, those include the types of deals in which they are ceding the lines in which we have on their most desirable programs and added target for growth. So it's something that -- it's pretty tactical and how we attack each of these opportunities but it's something that is highly coordinated. And we empower the underwriter to make the decision but we make sure that every underwriter is fully informed about the quantum of the overall relationship.

And your next question is from Meyer Shields with KBW.

Kevin, you mentioned that the standalone reinsurance business model is attractive to clients; is that changing -- in other words, is it becoming more attractive than it was a year or two ago?

We've always found it to be attractive, so I think there is fewer others, so this scarcity value having the ability to have a conversation with somebody who doesn't compete with them I think might be increasingly important but it's something that we always thought was important.

Also within casualty and specialty, so you talked about rates and loss trends basically offsetting each other from a local and margin perspective; when you see loss trends accelerate does that itself catalyze more demand for reinsurance solutions?

There is a lag between what you're observing and then what's happening in the current market. I'd said that it's not always as cleanly connected as that.

When you look at -- I guess so you correctly anticipated for example, the LAE inflation or aggregate coverage; on the LAE side, do current 2017 catastrophe reserves include any potential acceleration of 2018 as a difficult year?

Let me rephrase your question and see if this is what you're asking. Are we anticipating that if there is losses in 2018 loss adjustment, expenses would be yielding higher because some of the adjustors are deployed on 2017 events?

I'm at the other way around, in other words since these claims take a little bit longer to settle if there are events this year then loss adjustment expenses related to claims incurred last year would go up even more.

The scarcity of adjustors could impact either this years or last year's loss adjustment expense. I think from our perspective I think what we have within our -- particularly for property cat we have a demand surge which is a component of how we think about pricing; so I think we do consider that there is inflation associated with events. I think what you're pointing to is what about the specific element and it's something that I think what we were to set reserves for events that could occur in the third or fourth quarter for 2018, we would certainly consider the availability of adjusters to make sure we understand the impact on loss adjustment expense.

And we have no further questions.

Thank you everybody for participating on today's call, and we look forward to speaking with you next quarter. Thank you.

This does conclude today's conference. You may now disconnect.