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RenaissanceRE Holdings Ltd. (RNR)

Bank of America Merrill Lynch Insurance Conference Call

February 15, 2011 1:10 pm ET


Unidentified Host – Bank of America Merrill Lynch

Neill A. Currie – President, Chief Executive Officer & Director


Unidentified Analysts


Unidentified Host – Bank of America Merrill Lynch

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When you come to these conferences, and certainly when I listen to people present, I’m always looking for a company that sounds a little different than the others, that present themselves in a unique way. I frankly think Selective falls into that category and I think the next company does too, RenaissanceRE just sounds and feels different than other reinsurance companies. Neill Currie, the CEO is going to present and you can blame him for this because he was one of the founding members of this company that goes back almost 20 years now.

So to talk about what makes them different and to give us a glimpse into the future, I’ll turn it over to Neill Currie.

Neill A. Currie

I want to look and sound different. I’ve got cowboy boots on so that’s a little different and many people would say that I sound different, a little bit of a southern accent going on there. Here’s our story, a fascinating slide about Safe Harbor. An overview, so as [Jay] mentioned, our company was formed in 1993 in Bermuda as a result frankly, of Hurricane Andrew and the catastrophes that had happened in recent years. There was a huge supply and demand imbalance.

We have become, over the years, a leading global provider of reinsurance, insurance, and related services. Our market cap is about $3.7 billion as of February 10, 2012. It’s a crazy world we live in isn’t it in terms of how market caps can bounce around so much. We had an earnings call the other morning and we popped up to $79.11 for a brief moment, flirting with $80. I look forward to going north of $80 at some future date.

When we started back in 1993, I look at that market cap figure, we started with $141,200,000 of capital. I was the number two guy, the CEO put in $1 million, I put in $200,000 which for me was a fortune to put in and we got the ball rolling. Since that time we’ve been fortunate. Our operating ROE has averaged 22% and tangible book value per common share plus change in accumulated dividends has grown at a compounded annual rate of 20% since we got started.

The next line there says total shareholder return has been good compared to the S&P and the S&P P&C index. We’ve got good financial ratings, we want to keep them that way. We’ve got a AA- from S&P, A+ from A. M. Best, and we’ve had an excellent ERM rating from S&P I think since they started doing those ratings.

So, I look back at this Slide and I think if you fall asleep later, that will be alright but I’ll catch you, I’ll maybe ask you a question if I see you nodding off, but this I think is the most important slide we have. It sort of captures what we do and frankly, I think what any insurance operation should do. If you can execute properly in these three areas: superior customer relations; superior risk selection; and superior capital management you’ve got a really good operation. If you only do well on one or two of these you’re not going to do that well.

We’ve got a young fella that’s been with us for about two or three years now and helps us on strategic planning. He’s an ex consultant with Bain, I think. He’s a smart young man. He’s turned these two three superiors and I like that, it’s got that sort of religious [inaudible] about it and they really are important.

Superior customer relationships, I think when people think of RenRE they think of a bunch of smart guys and ladies, we’ve got a bunch of clients, a bunch of PhDs, we’ve got brains all over the place. So people think of us as good underwriters, thank goodness, but really superior customer relationships is the first thing you need to do. You need to get the business coming in the door, you need to keep the business coming in the door, and I think this is one of the least appreciated advantages that we have at RenRE.

One of the things that we do is we try – well, let’s go back to inception. Here we were after Hurricane Andrew, a huge supply and demand imbalance, if there was a program that came out and it was a four layer program and the first layer was the best layer, you could say, “I want 50% of that layer,” and you’d get it. Customers really were in dire need of help then and from the very beginning we tried to be helpful to our customers and it has evolved to helping them understand their risk but certainly in the early days basically to be there with capacity that would pay.

We would underwrite, we would say, “We really like the first layer but we’ll take some of the second and the third,” because they were great layers as well. We really wanted to be helpful. I think we’ve been seen over the years as being helpful to our clients. When we come in and have a meeting we try to help them understand the risk. You’ve heard about these model changes like RMS11, we have a whole team of people that will go and look at these model changes. We have our own models, and spend thousands of man hours trying to understand these model changes.

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