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CHICAGO--([ BUSINESS WIRE ])--Fitch Ratings has affirmed the ratings of RenaissanceRe Holdings Ltd. (NYSE: RNR) and its subsidiaries, including the Issuer Default Rating (IDR) for RNR at 'A', and the Insurer Financial Strength (IFS) rating of Renaissance Reinsurance Ltd. at 'A+'. A full rating list is shown below. The Rating Outlook is Stable.

Fitch's rationale for the affirmation of RNR's ratings reflects the company's continued strong leadership position in the property catastrophe reinsurance market, RNR's reasonable operating and financial leverage, and overall high quality and liquid portfolio of fixed-income and short-term investments. The ratings also reflect anticipated challenges in the competitive, but generally improving, property catastrophe market rate environment, volatile profitability as recently reflected in unfavorable underwriting results in 2011, and potential volatility from the company's alternative investments.

RNR recorded a net loss of $174 million for the first nine months of 2011 due to sizable catastrophe losses from the Japanese earthquake and tsunami, New Zealand earthquake, large U.S. tornadoes, aggregate loss contracts, Hurricane Irene, and Australian flooding. As a result, RNR's GAAP calendar year combined ratio increased to 140.5% for the first nine months of 2011 compared to 52.3% for the first nine months of 2010. Excluding the impact of catastrophes (105.3 points) and favorable reserve development (12.9 points), RNR's combined ratio for the first nine months of 2011 was 48.1%, up slightly from 45.9% for the comparable prior nine-month accident year period excluding catastrophes.

Fitch views RNR's year-to-year underwriting profitability and returns on capital as volatile, but the effect of this volatility on the company's ratings is mitigated somewhat by RNR's low combined ratios and strong returns on capital over extended periods of time. Fitch considers this as an important factor supporting the company's ratings and as evidence of the company's underwriting and catastrophe modeling skills.

Fitch believes that RNR has a leading position in the property catastrophe reinsurance market derived largely from the company's ability to provide consistent capacity in the marketplace and its ability to effectively underwrite and price catastrophe-related risks. RNR uses a proprietary model in conjunction with vendor models in its underwriting and risk evaluation process and Fitch views RNR's property catastrophe underwriters as having a demonstrated record of expertise.

Fitch's ratings consider RNR's modeled exposure to potential annual aggregate losses from catastrophes as generally comparable to those of peer companies that generate a similar level of premiums from property catastrophe reinsurance. Fitch also stress tests RNR's reported underwriting results and operating leverage ratios to include a modeled probable maximum loss (PML) for 100-year and 250-year return periods. Based on this analysis, the company performs better overall than other reinsurers that focus predominately on property catastrophe reinsurance and in line with similarly rated property/casualty reinsurers.

Fitch believes that RNR's capital position provides an adequate cushion against the operational and financial risks the company faces. Market conditions in RNR's core property catastrophe reinsurance market can change rapidly, and Fitch believes that RNR manages capital to take advantage of favorable market conditions and to deploy their underwriting expertise. RNR utilizes a reasonable amount of operating leverage with a ratio of net premiums written to shareholders' equity of 0.2 times (x)-0.3x in recent periods, which is low compared to the overall reinsurance industry, but in line with those of other reinsurers with property catastrophe concentrations. Furthermore, Fitch considers RNR to use a moderate amount of financial leverage in its capital structure, with an equity-credit adjusted debt-to-total capital ratio of 13.8% at Sept. 30, 2011, down from 15.7% at Dec. 31, 2010.

Key rating triggers that could lead to a downgrade include significant deterioration in RNR's historically strong profitability, as demonstrated by sustained underwriting losses or adverse investment portfolio results, material weakening in the company's current balance sheet strength as measured by net premiums written to shareholders' equity above 0.5x or equity-credit adjusted financial leverage above 25%, and a catastrophe event loss that is 25% or more of shareholders' equity.

Fitch considers a rating upgrade to be unlikely in the near term due to the earnings and capital volatility inherent in the company's property catastrophe reinsurance focus. Key rating triggers that could lead to an upgrade over the long term include continued favorable underwriting results relative to other property catastrophe reinsurers and comparably rated property/casualty (re)insurer peers, improvement in RNR's competitive position in profitable market segments outside of property catastrophe reinsurance, including its specialty reinsurance and Lloyd's business, and material risk adjusted capital growth.

Fitch affirms the following ratings with a Stable Outlook:

RenaissanceRe Holdings Ltd.

--Issuer Default Rating (IDR) at 'A';

--$100 million 5.875% senior notes due 2013 at 'A-';

--$250 million 6.08% series C preferred stock at 'BBB';

--$300 million 6.6% series D preferred stock at 'BBB'.

RenRe North America Holdings, Inc.

--$250 million 5.75% senior notes due 2020 at 'A-'.

Renaissance Reinsurance Ltd.

--IFS at 'A+'.

Additional information is available at '[ www.fitchratings.com ]'. The ratings above were unsolicited and have been provided by Fitch as a service to investors.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology' (Sept. 22, 2011);

--'Rating Hybrid Securities' (July 28, 2011).

Applicable Criteria and Related Research:

Rating Hybrid Securities

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647091 ]

Insurance Rating Methodology

[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=651018 ]

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