RenaissanceRe Annual Report 2011

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FY2011 Annual Report · RenaissanceRe

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RenaissanceRe Holdings Ltd.
Renaissance House
12 Crow Lane
Pembroke HM19
Bermuda

Telephone: +1 441 295 4513
Fax: +1 441 295 4327
www.renre.com

RenaissanceRe Holdings Ltd. 2011 Annual Report

420932 Cover.cs5.indd 1

3/21/12 2:10 PM

Board of Directors

Financial and
Investor Information

RenaissanceRe Holdings Ltd.

RenaissanceRe Holdings Ltd. and Subsidiaries

Neill A. Currie
President and Chief Executive Officer
RenaissanceRe Holdings Ltd.

Ralph B. Levy
Chairman
RenaissanceRe Holdings Ltd.

David C. Bushnell
Retired Chief Administrative Officer
Citigroup Inc.

Thomas A. Cooper
Chief Executive Officer
TAC Associates

James L. Gibbons
President, Chief Executive Officer and Chairman
CAPITAL G Bank Limited

Jean D. Hamilton
Private Investor
Independent Consultant

Henry Klehm III
Partner
Jones Day

W. James MacGinnitie
Former Chairman
RenaissanceRe Holdings Ltd.
Independent Consultant

Anthony M. Santomero
Former Senior Advisor
McKinsey & Company

Nicholas L. Trivisonno
Retired Chairman and CEO
ACNielsen Corporation

Edward J. Zore
Retired Chairman and CEO
The Northwestern Mutual Life Insurance Company

The cover stock is Green Seal Certified and contains 30% post
consumer waste. The narrative stock is FSC certified and contains
10% recycled fiber with chlorine free (TCF/ECF) pulp using timber
from managed forests. The financial stock is FSC certified, elemental
chlorine free and contains 30% post consumer waste.

Printed at a zero-discharge facility using soy-based inks.

Please recycle this publication. Printed on paper containing
post consumer materials.

General Information about the Company

For the Company’s Annual Report, press releases, Forms 10-K and
10-Q or other filings, please visit our website: www.renre.com

Or contact:
Kekst and Company, 437 Madison Avenue,
19th Floor, New York, NY 10022
Tel: +1 212 521 4800

Investor inquiries should be directed to:
Investor Relations, RenaissanceRe Holdings Ltd.
Tel: +1 441 295 4513 E-mail: investorrelations@renre.com

Additional requests can be directed to:
The Company Secretary, RenaissanceRe Holdings Ltd.
Tel: +1 441 295 4513 E-mail: secretary@renre.com

Stock Information

The Company’s stock is listed on The New York Stock Exchange under
the symbol ‘RNR’.

The following table sets forth, for the period indicated, the high and low
closing prices per share or our common shares as reported in composite
New York Stock Exchange trading.

Price range of common shares

2011

2010

High

Low

High

Low

$70.58

$60.64

$57.36

$50.81

73.93

72.30

75.16

67.58

59.50

60.34

59.28

60.30

64.50

52.19

54.69

58.93

Period

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Certifications

The Chief Executive Officer and Chief Financial Officer have certified
in writing to the Securities and Exchange Commission (SEC) as to the
integrity of the Company’s financial statements included in this Annual
Report and in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2011 filed with the SEC and as to the
effectiveness of the Company’s disclosure controls and procedures
and internal control over financial reporting.

The certifications are filed as Exhibit 31 and Exhibit 32 to our Form
10-K. The Chief Executive Officer has also certified to the New York
Stock Exchange in 2011 that he is not aware of any violation by the
Company of the New York Stock Exchange corporate governance
listing standards.

Independent Registered Public Accounting Firm

Ernst & Young Ltd., Hamilton, Bermuda

Registrar and Transfer Agent

Computershare Shareowner Services LLC
480 Washington Boulevard
Jersey City, NJ 07310
Tel: +1 866 245 5019 or +1 201 680 6578
www.computershare.com

Contents

Financial Highlights

Company Overview

Letter to Shareholders

Message from the Chairman

Superior Customer Relationships

Comments on Regulation G

Form 10-K

Senior Officers

Board of Directors

Financial and Investor Information

Last Page

Inside Back Cover

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Financial Highlights

Financial Highlights for RenaissanceRe Holdings Ltd. and Subsidiaries
(In thousands of United States dollars, except per share amounts and percentages)

Gross premiums written

2011

2010

2009

1,434,976

1,165,295

1,228,881

Operating (loss) income (attributable) available to RenaissanceRe common shareholders (1)

(162,393)

536,394

768,177

Net (loss) income (attributable) available to RenaissanceRe common shareholders

Total assets

Total shareholders’ equity

Per common share amounts

(92,235)

702,613

838,858

7,744,912

8,138,278

7,926,212

3,608,533

3,939,214

3,840,786

Operating (loss) income (attributable) available to RenaissanceRe common shareholders
per common share – diluted (1)

(3.22)

9.32

12.25

Net (loss) income (attributable) available to RenaissanceRe common shareholders per common share – diluted

(1.84)

12.31

13.40

Tangible book value per common share (1)

Dividends per common share

Operating ratios

Operating return on average common equity (1)

Net claims and claim expense ratio

Underwriting expense ratio

Combined ratio

58.45

60.55

49.73

1.04

1.00

0.96

(5.3)

16.5

27.6

90.6

28.0

118.6

15.0

30.1

45.1

(8.0)

29.2

21.2

Gross Managed Premiums
Written (in millions) (1)

Tangible Book Value Per Common Share
Plus Accumulated Dividends ($) (1)

1,600

1,200

800

400

Managed Catastrophe

Specialty

Lloyd’s

Insurance

Tangible Book Value Per Common Share

Accumulated Dividends

(1) In this annual report we refer to various non-GAAP measures, which are explained in the comments on Regulation G on pages 19 and 20.

Thinking for the Long Term

Company Overview

RenaissanceRe is a leading provider of property catastrophe
reinsurance and insurance worldwide. Founded in Bermuda in
1993, the Company has gained recognition for excellence in the
industry through disciplined underwriting, capital management
expertise, sophisticated risk modeling and responsive client service.
RenaissanceRe is traded on the New York Stock Exchange under
the ticker symbol ‘RNR’.

Reinsurance – Property Catastrophe

Reinsurance – Specialty

One of the leading providers of property catastrophe
reinsurance in the world based on managed
catastrophe premium, our principal products include
catastrophe excess of loss reinsurance and excess
of loss retrocessional reinsurance.

We underwrite our reinsurance business primarily
through Renaissance Reinsurance Ltd., DaVinci
Reinsurance Ltd. and Top Layer Reinsurance Ltd.
Using sophisticated computer modeling and
our proprietary technology for risk analysis and
management, our seasoned team of underwriters
seeks to construct a superior risk portfolio, while
cultivating long-term relationships with clients who
appreciate our problem-solving capabilities.

In addition to our expertise in property catastrophe
reinsurance, we offer global specialty reinsurance
products principally on an excess of loss basis
through Renaissance Reinsurance Ltd. and DaVinci
Reinsurance Ltd., and on a proportional basis
through Glencoe Insurance Ltd. As a result of our
financial strength, we have the ability to provide
significant capacity for select risks as well as
participate in market placements.

Our coverages include aviation, casualty clash,
excess casualty, professional liability, political risk,
trade credit, surety, terrorism and catastrophe-
exposed workers’ compensation reinsurance.

RenaissanceRe Holdings Ltd. 2011 Annual Report

Lloyd’s

Ventures

RenaissanceRe operates through Syndicate 1458
at Lloyd’s. The extensive distribution network and
worldwide licenses of the Lloyd’s marketplace
complement and extend both our strategy and
our strong underwriting platform in Bermuda.

Coverages currently include property catastrophe
reinsurance, property insurance, casualty treaty,
casualty insurance and crop reinsurance. The
disciplined underwriting approach and rigorous risk
management which underpin our Bermuda operations
are reflected by our London team.

RenaissanceRe’s Ventures unit structures and manages
joint ventures as well as other strategic relationships
that leverage the Company’s underwriting expertise
and experience. We manage several property
catastrophe joint ventures that provide additional high
quality capacity to our clients and generate fee income
for RenaissanceRe. Our principal joint ventures include
Top Layer Reinsurance Ltd. and DaVinci Reinsurance
Ltd., and we seek to structure other joint ventures when
market opportunities arise. We also make strategic
investments to provide capital to existing clients and
market participants in forms other than reinsurance.

Our weather and energy risk management operations,
RenRe Energy Advisors Ltd. (REAL), has been a
part of the RenaissanceRe group since 2007. This
unit offers risk management solutions pertaining
to weather and energy price risks, which include
weather derivatives, commodity and hybrid products.

Thinking for the Long Term

“The way we communicate with our customers
and help them understand more about their risks
is a differentiator for RenaissanceRe.”

RenaissanceRe Holdings Ltd. 2011 Annual Report

To Our Shareholders

In 2011, we demonstrated the strength of
our strategy, our infrastructure, and our people.

With worldwide insured catastrophe losses reaching
levels exceeded only by the losses of 2005 (the year
of Hurricane Katrina), the value of our long-held
commitment to managing our franchise for the long
term was highlighted. Through the string of natural
catastrophes and the volatility of the financial markets,
we calmly set about doing what we are in business
to do: serving our clients, meeting our promise to pay,
and refining our understanding of risk.

While we incurred the second operating loss in the history
of the Company as a result of the multiple high-severity
events that characterized 2011, the loss outcomes were
within our expectations for events of such magnitude and
we remained appropriately capitalized.

We have always maintained that our job is to manage a
portfolio of risk that has the potential to be quite volatile.
As a result, we know there will be years such as 2011
when we will incur net losses. However, over time, we
believe shareholders will be appropriately rewarded for
accepting this volatility and we prepare ourselves well
for the tradeoff. In fact, we ended 2011 with a sound
capital position, a high level of liquidity, strong ratings
and excellent client relationships.

Providing Value and Service through
Multiple Catastrophes

In a year that saw devastating earthquakes in New
Zealand and Japan, windstorms and tornadoes in the
U.S., and flooding in Australia and Thailand, we were able
to bring our hallmark risk management capabilities to
bear. Our team of scientists, which includes seismologists,
engineers and meteorologists, worked in tandem with our
underwriters to get an early read on our exposures and
incorporate new information related to each event into

our view of risk. We were able to respond quickly to our
clients and lead the way back into the market armed
with new information.

The way we communicate with our customers and help
them understand more about their risks is a differentiator
for RenaissanceRe. In Japan, we were able to map
our exposures against high resolution satellite images
to assess the impact of the tsunami inundation and
earthquake damage, even before information came in
from customers. In New Zealand, our engineers on the
ground were able to gain insight into the extent of the
damage suffered very early on, and we were also able to
adjust our view of the hazard following what we learned
from the realignment of tectonic plates. We shared our
research with clients and brokers, explaining our new
views based on analysis of the data, and we believe this
added to our credibility and reputation.

Commanding a Leadership Position in Property Cat

Our reinsurance coverage is not simply a commodity.
Rather, we offer customers sophisticated, specialized
knowledge, an independent view of their exposures
and a willingness to find solutions, all of which build
long-term relationships.

This differentiating approach served us well going into
2012 and allowed us to maintain the quality of our book.
At the January 1 renewals, although the overall U.S.
catastrophe limit purchased did not appear to grow
appreciably, we saw an increase in what we consider to
be the most desirable portion of the market, reflecting the
increase in the number of attractive risks. Along with that,
we saw rate increases in the market generally, with
loss-bearing accounts experiencing the greatest increases.

Opposite page:

Neill Currie
President & Chief Executive Officer

Thinking for the Long Term

“We concentrated our efforts and resources
on businesses where we believe our
strongest, most distinctive capabilities
provide the best value to our customers.”

Energizing Our Core Capabilities

After the sale of our U.S.-based insurance operations,
which I described in my letter last year, 2011 was a year
of renewed focus and purpose. We concentrated our
efforts and resources on businesses where we believe
our strongest, most distinctive capabilities provide the
best value to our customers and afford us the potential
to achieve superior shareholder returns over time.

Our specialty reinsurance gross premiums written grew
for the year, up 13% to $146 million, but as markets
remained relatively soft in most lines, we continued to
build our underwriting capability with greater emphasis
on developing ongoing franchises in select businesses.
One area that yielded growing interest was in financial
markets-related reinsurance, and we increased our activity
in trade credit and financial guaranty. Still, we remained
disciplined and patient overall.

Our Lloyd’s operation, RenaissanceRe Syndicate 1458,
continued to build market presence in property, casualty
and specialty lines as well as build relationships within
the London broker community. In 2011, gross premiums
written grew by more than 68%, to $112 million. Although
it is still in the growth and investment phase, we expect
that operation to make significant contributions to our
franchise in coming years. RenaissanceRe Syndicate
1458 offers a diversifying platform for insurance and
reinsurance opportunities alike, and provides another
resource for matching risk with the most appropriate
balance sheet within the RenaissanceRe group.

Our Ventures unit, which bridges the financial and
reinsurance markets, had a successful year raising
third-party capital. This unit provides us with the ability to
match capital to risk in a variety of ways. In 2011, we were

pleased to add new, long-term partners to our flagship
joint venture DaVinci Re, reducing our current equity
stake and bolstering our ability to offer long-term capacity.
Top Layer Re, our 50%-owned joint venture, incurred
losses for only the second time in its 12-year history
following the New Zealand and Tohoku earthquakes.
A reinsurer of the highest layers of catastrophe covers
for worldwide risks outside of the U.S., Top Layer Re
was there to accept renewal business for our clients
when they needed protection.

In January of 2012, we were able to support an opportunity
to write more aggregate retrocession protection by
establishing a new sidecar, Upsilon Re. This vehicle is
already proving to be successful and offers the flexibility
to be scaled up as opportunities demand. The fee income
we earn for managing our joint ventures helps boost our
bottom line and adds a measure of stability.

RenRe Energy Advisors Ltd. (REAL), which offers energy
and weather-related risk management solutions to clients
in the energy industry, increased its market presence and
expanded its footprint during 2011. The group entered into
an agreement with a well-known, well-capitalized partner;
this joint venture will facilitate REAL’s efforts to broaden
its activities in Europe and globally. This unit incurred a
sizeable loss of $34 million after tax during the year
resulting from unusually warm weather during the fourth
quarter, which has continued into the early part of 2012.
We expect REAL’s business to be volatile and seasonal
as it provides protection for its growing customer base.

Managing Capital in Challenging Times

For the year, the net loss attributable to RenaissanceRe
common shareholders was $92 million, or $1.84 per
diluted common share, in contrast to last year’s income
of $703 million, or $12.31 per diluted common share.

Opposite page above from left to right:

Below:

Ross Curtis
SVP, RenaissanceRe Holdings Ltd.,
Chief Underwriting Officer of
European Operations

Jon Paradine
SVP, RenaissanceRe Holdings Ltd.,
Chief Underwriting Officer of
Renaissance Reinsurance Ltd.

Ian Branagan
SVP, Chief Risk Officer,
RenaissanceRe Holdings Ltd.

Thinking for the Long Term

“Our investment strategy is to provide stability
and security first and foremost to support our
underwriting activities.”

Tangible Book Value Per Common Share Plus Accumulated Dividends ($) (1)

Tangible Book Value Per Common Share

Accumulated Dividends Per Common Share

(1) In this Annual Report, we refer to various non-GAAP measures, which are explained in the Comments on Regulation G on pages 19 and 20.

I have often referred to the metric of long-term growth in
tangible book value per common share, plus the change
in accumulated dividends. We consider this to be the most
appropriate indicator of performance for the Company,
and generally one in which our performance is superior
compared with our peer group over the long term. In the
second most significant insured loss year on record, it
stands to reason that this metric will have suffered for
2011. Tangible book value per common share, plus
accumulated dividends, declined 1.8% from last year to
$69.37 per share. Nevertheless, we believe we continue
to deliver superior performance in respect of this measure
over time, having achieved a 20% annual average return
since inception.

Compounding the year’s catastrophe losses, 2011 was
marked by new turmoil in global financial markets. Crisis
in the eurozone rattled markets far beyond Europe,
while a downgrade of the U.S. credit rating, gridlock in
Congress that paralyzed America’s fiscal policy, and the
threat of recession or slowdown in Europe, the U.S.
and China, all combined to contribute to the extreme

financial uncertainty. This led investors to flee to safety,
pushing interest rates down even further from their
multi-decade lows.

As the year unfolded, we adjusted the level of risk in our
investment portfolio. Along with the fixed income market
turmoil, equity values also fell. This affected the value
of our private equity investments, which constitute
approximately 6% of our portfolio. At year end, our
fixed income and short term investments portfolio was
conservatively positioned, with an average AA rating,
and highly liquid, with a relatively short duration of only
2.6 years. Overall, our investment portfolio returned 2.9%.

It is worth noting here that RenaissanceRe is less
dependent upon investment income than many others in
our industry. The short-tail nature of our exposures and
our need to pay large sums quickly mandate that we
remain highly liquid. While we seek to earn solid risk-
adjusted returns, we rely primarily on our underwriting
activities to generate the majority of our profits. Our
investment strategy is to provide stability and security
first and foremost to support our underwriting activities.

RenaissanceRe Holdings Ltd. 2011 Annual Report

“Another key tenet in our capital management is
to return cash to shareholders when appropriate.”

Credit Ratings

Reinsurance Segment (1)

Renaissance Reinsurance

DaVinci Re

Top Layer Re

Renaissance Reinsurance of Europe

Lloyd’s Segment

RenaissanceRe Syndicate 1458

Lloyd’s Overall Market Rating (2)

Insurance Segment (1)

Glencoe

RenaissanceRe (3)

A.M. Best

S&P (4)

Moody’s

Fitch

A+

–

AA-

A+

AA-

–

A+

Excellent

–

A+

–

A+

–

(1) The A.M. Best, S&P, Moody’s and Fitch ratings for the companies in the Reinsurance and Insurance segments reflect the insurer’s financial strength rating.

(2) The A.M. Best, S&P and Fitch ratings for the Lloyd’s Overall Market Rating represent its financial strength rating.

(3) The S&P rating for RenaissanceRe represents rating on its Enterprise Risk Management practices.

(4) The S&P ratings for the companies in the Reinsurance and Insurance segments reflect, in addition to the insurer’s financial strength rating, the insurer’s issuer credit rating.

Another key tenet in our capital management is to return
cash to shareholders when appropriate. Early in the
year, we repurchased $175 million worth of our shares,
but ceased when the Tohoku earthquake created
potentially more attractive use for our capital. By year
end, we modestly resumed our buybacks, bringing the
year’s total repurchase activities to $192 million.

Maintaining Our Technological Edge

The year’s significant number of low-frequency, high-
severity catastrophes had at least one positive aspect,
besides reaffirming the value of reinsurance. It yielded
a treasure trove of new data, especially for such hazards
as non-U.S. earthquakes, where good information has
been scarce and the full extent of ultimate damage has
often been difficult to assess. This year we were able to
incorporate valuable new information into our proprietary
risk management system. As a result, we were able to
address the market with confidence and hold ongoing,
risk-based discussions with our clients and partners.

While we believe our tools and technology are among
the best in our industry, we continued to upgrade our
technological platforms, completing a reconstruction of
our tools which will serve us well over the coming years.
In particular, we made strides in fine-tuning our systems in
London and in developing the complexity required by our
specialty business, further enhancing our ability to view
our risks across all our product lines and businesses in
aggregate, while providing granularity down to individual
transactions. Additionally, we improved our investment
management tools to provide a higher resolution picture
of our activities and the performance of individual assets,
which proved particularly useful in helping us reposition
our portfolio as the year unfolded.

Importantly, the year’s technological refinements have
built in the capability for adding on continual improvements,
so that future incremental upgrades can be part of an
ongoing process rather than necessitating a discrete

RenaissanceRe Holdings Ltd. 2011 Annual Report

“As always, continual review and updating
of our risk analysis technology remains a key
strategic imperative for RenaissanceRe.”

new project. As always, continual review and updating
of our risk analysis technology remains a key strategic
imperative for RenaissanceRe.

Meeting Our Regulatory
and Corporate Responsibilities

On the regulatory front, 2011 was a busy year. Solvency II,
which imposes heightened requirements on insurance
and reinsurance companies doing business in Europe,
looms not far ahead and we invested considerable effort
into bringing our Lloyd’s syndicate into compliance. That
said, we do not expect the advent of Solvency II to bring
significant change to the way we run our business. Aside
from the additional reporting it will require, we already
manage our Company with the transparency and capital
strength envisioned under the Solvency II guidelines –
a fact underlined by the reaffirmation this year of our
credit ratings and our “Excellent” Enterprise Risk
Management rating by Standard and Poor’s.

In our home jurisdiction, the Bermuda Monetary Authority
has made significant strides towards maintaining
Bermuda’s standing as a center of insurance industry
excellence and achieving global regulatory equivalency,
and we are prepared to comply with the BMA’s evolving,
rigorous standards.

We have continued our efforts to help raise risk mitigation
awareness with both the public and with policy-makers
through our thought leadership forums. Our Seismic Risk
Mitigation Leadership Forum was held in San Francisco
shortly after the Tohoku earthquake, and the leading
Japanese seismologists we invited shed valuable new
light on that recent disaster.

Operating Return On Average Equity (%) (1)

-15

(1) In this Annual Report, we refer to various non-GAAP measures, which are
explained in the Comments on Regulation G on pages 19 and 20.

Opportunities in a Changing Market

Looking ahead, I am optimistic about the prospects for our
Company. As I mentioned earlier, we have begun to see
a firming in market pricing for catastrophe reinsurance.
Unlike the sharp spike in pricing we witnessed in 2005
after Hurricane Katrina, we are seeing an orderly, steady
increase in rates over an extended time frame.

The magnitude of aggregate losses in 2011 has
reduced the size of the capital pool generally available
for catastrophe reinsurance, and the severity of events
has tempered appetites for this business segment.
Exposure to the European sovereign debt crisis is also
impacting purchasing behavior in international markets.

Opposite page above:

Middle from left to right:

Below:

Kevin O’Donnell
EVP, Global Chief
Underwriting Officer,
RenaissanceRe Holdings Ltd.

Todd Fonner
SVP, Chief Investment
Officer & Treasurer,
RenaissanceRe Holdings Ltd.

Stephen Weinstein
SVP, General Counsel,
Chief Compliance Officer & Secretary,
RenaissanceRe Holdings Ltd.

Jeff Kelly
EVP, Chief Financial Officer,
RenaissanceRe Holdings Ltd.

Thinking for the Long Term

“Above all, our leadership position
is a testament to the people who
make up this organization.”

At the same time, the perception of risk has been
heightened. With so many significant disasters occurring
worldwide – outside the traditionally higher-priced “peak”
U.S. zones – catastrophe insurers and reinsurers will be
forced to reevaluate both the price of risk and the amount
they are willing to retain. Upgrades to commercially
available vendor models through the past year have also
contributed to an overall perception of higher catastrophe
risk, which are in many cases more in line with the
independent views that we have held for some time.
This bodes well for RenaissanceRe.

Additionally, many participants in the market are seeking
new ways of managing their risk, which plays into
the strengths of our Ventures unit. As customers seek
alternatives such as joint ventures and temporary
sidecars, cat bonds and other index-linked securities, the
long-term experience we have in managing such vehicles
makes doing business with RenaissanceRe attractive.

We need to remain focused on maintaining our
technological edge and are committed to doing so.
Our proprietary systems allow us to make prompt
decisions and share valuable insights with clients on
their risk exposures. This is one of our core competitive
advantages and one we guard closely.

And we need to continue to attract and retain the highest
quality talent. I believe we have consistently succeeded
in doing so to date. I have had the pleasure of seeing
many of our senior officers mature in their careers and
gain greater experience. At the same time, we have
benefited from outstanding executives joining the
organization in the last few years. I am pleased with
the knowledge base, the depth and the breadth of
expertise of the current management team. I am also
pleased to see the talent development initiatives we

have under way engaging employees across our
organization. Executed properly, this will assure the
sustainability of our Company over time.

In Closing

It is a testament to our risk and capital management
processes that we emerge from a loss year like 2011
with ample capital and liquidity. Despite our losses,
RenaissanceRe’s common shares closed the year near
an all-time high with our price-to-book value currently
among the highest of our peer group – a reflection
that the market recognizes our achievements and our
strategy, and believes we are well positioned to capture
opportunities going forward.

Above all, our leadership position is a testament to the
people who make up this organization and I am proud of
our employees for their outstanding work and commitment
during a particularly challenging year. I would like to
thank our new Chairman, Ralph Levy, and our Board
of Directors, for their invaluable advice and experience.
Finally, I would like to thank you, our shareholders, for
your support. Together we are continuing to build our
Company for long-term success.

Sincerely,

Neill A. Currie
President and Chief Executive Officer

RenaissanceRe Holdings Ltd. 2011 Annual Report

Message from the Chairman

On behalf of the Board of Directors, I would like to
express appreciation to the entire RenaissanceRe team
for their performance during a particularly challenging
year. The smooth and rapid fulfillment of the Company’s
promises to its clients demonstrates once again the vital
role played by RenaissanceRe and our industry in
rebuilding in the wake of catastrophic events.

My fellow directors and I are proud of RenaissanceRe’s
achievements through 2011 in effectively deploying
the research and development resources necessary
to maintain the Company’s industry leadership, meeting
new and evolving regulatory requirements, and prudently
managing shareholders’ capital.

Since its inception, RenaissanceRe has been a leader
and a pioneer in the efficient and effective management
of risk, as reflected by our ratings and stakeholder
confidence even in periods of high volatility. The Board
continues to be dedicated to appropriate oversight of risk
management throughout the organization.

The Board also remains committed to the highest levels
of corporate governance and to the continuous evaluation
of our programs, to ensure that they are aligned with the
interests of our shareholders over the long term. The
Board strove in 2011 to pursue vigorous oversight and
understanding of evolving standards in compensation
disclosure, proxy practices and communications, and other
corporate governance developments. These will remain
areas of focus and commitment throughout 2012.

I would like to thank my fellow Board members for their
tremendous dedication to this enterprise, as well as our
shareholders, in whose interests we serve, for their
ongoing support.

Sincerely,

Ralph B. Levy
Chairman

RenaissanceRe Holdings Ltd. 2011 Annual Report

Superior Customer Relationships
– A Hallmark of RenaissanceRe

Superior customer relationships represent one
of our three core competencies, along with superior
risk selection and superior capital management.

When we formed RenaissanceRe in the aftermath
of Hurricane Andrew, we identified building superior
customer relationships as a core component of a
successful strategy. We outlined honoring our commitments
to our clients and optimizing their experience with
RenaissanceRe as core tenets of how we would seek to
run the business. As it turned out, we were quickly put to
the test. Only seven months after we opened for business
in January 1994, the Northridge earthquake struck.
From the very beginning, we established our ability
and willingness to pay claims quickly – and then our
commitment to building long-term customer relationships
by remaining in the market when others chose to flee.

As we define it, “superior customer relationships” means
a better reputation in the marketplace than our peers
for delivering the products we provide and as a result,
better access to the business we seek to assume in
constructing our portfolio of underwriting risk. The value
that we offer in order to achieve this is best expressed
under three headings:

(i) Expertise
(ii) Capacity
(iii) Service

Expertise

Our REMS© underwriting and portfolio management
system provides us with a sophisticated, proprietary view
of risk enabling us to assess risks, transaction structures
and pricing independently. This gives us the data and
information we need to communicate to clients why
we approach underwriting and structure programs
the way we do. Constantly evolving since its creation
in 1994, REMS© has allowed us to “score” and price
exposures, and design solutions on an individual basis
with industry-leading depth and speed.

Our team of modelers and developers continuously review
and refine our models. In 2011, when new vendor model
releases significantly recalibrated the world’s view of
Atlantic hurricane risk, we moved quickly with our internal
team of experts to assess the validity of these changes
and subsequently incorporated many new elements in
our own view of risk that we believe improved our ability
to model the risks we assume. With our ability to do this
independently and quickly, we were able to share best
thinking grounded in best science with our clients ahead
of many competitors.

Opposite page above from left to right:

Below:

Peter Durhager
EVP, Chief Administrative Officer,
RenaissanceRe Holdings Ltd.

Mark Wilcox
SVP, Chief Accounting Officer
& Corporate Controller,
RenaissanceRe Holdings Ltd.

Aditya Dutt
SVP, RenaissanceRe Holdings Ltd.,
President, RenaissanceRe Ventures Ltd.

Thinking for the Long Term

“Following a natural catastrophe, our
scientists, seismologists and engineers
work with our underwriters to reconstruct
the event and provide detailed analyses
of the damage.”

Our internal team of experts also adds value immediately
following large natural catastrophes when our clients seek
to understand the characteristics and impact of an event.
Following a significant natural catastrophe, our scientists,
seismologists and engineers work with our underwriters
to reconstruct the event and provide detailed analyses
of the damage. Our ability to conduct both top-down
and bottom-up analyses of an event enhances our
understanding of the hazard and enables us to refine
our proprietary systems with competitive speed.

Taking the recent Tohoku earthquake as an example,
our scientists mapped our largest exposures against high
resolution satellite images to assess the impact of the
tsunami inundation and earthquake damage. This allowed
us to gain a deep understanding of the impact of the
event before we or our clients had any claims information.
As a result, we were able to have informed discussions
with our clients shortly after the event as to how we
expected the situation would play out. We were also
quickly able to assimilate the data gathered by our
scientists into REMS© to further refine our ongoing view
of potential seismic risk in the region following the event.

Capacity

After the 2005 hurricanes, capacity for Atlantic hurricane
coverage came under pressure as some companies
withdrew capacity and many faced pressure from the
rating agencies to raise capital or reduce their writings.
This created a market dislocation for property catastrophe
reinsurance that rivaled the one created by the fallout
from Hurricane Andrew in 1993. We soon recognized
that there would likely be a shortfall in the capacity our
clients needed and moved quickly to address this. We

successfully raised additional capital so that we could
expand our underwriting capacity, growing our long-term
joint venture DaVinci Re’s capital base from $500 million
to $1.1 billion. We raised substantial additional capacity
for Florida through the Starbound Re and Timicuan Re
sidecars. Through strategic niche joint ventures such as
Timicuan Re, Timicuan Re II, Starbound Re and Starbound
Re II, we brought over $875 million of incremental
underwriting capacity into the market in 2006 and 2007
to serve our customers. This typifies our ability to provide
innovative solutions and access to third party capital to
best serve our clients as market conditions require.

Clients also appreciate our ability and willingness to offer
significant underwriting capacity for individual programs
at an efficient price, and are comfortable placing these
lines with us given the strength of our balance sheet, our
excellent credit ratings, and our strong claims-paying
history. Our proprietary underwriting and risk management
systems allow us to make a robust assessment of both
individual deals and our entire portfolio, ensuring that we
take an appropriate amount of risk in aggregate, given
the size of our capital base. This capability allows us to
be responsive to our clients, to provide firm order terms
quickly, and also allows us to allocate capital in real time
to those deals that we view as the best opportunities.

In judging us relative to our peers, clients also appreciate
our ability to ‘punch above our weight’ by bringing
additional pools of capital to bear through the flexibility
of the multiple balance sheets provided by us and with

RenaissanceRe Holdings Ltd. 2011 Annual Report

“Our goal is to have our clients walk away with
more knowledge about their risk than when
they arrived.”

our joint venture partners. Our Ventures unit acts as a
bridge between our reinsurance underwriting activities
and the capital markets, providing us with access to
additional capacity in joint ventures like DaVinci Re and
Top Layer Re as well as the ability to manage risk in
forms other than reinsurance, such as insurance-linked
securities or cat bonds.

Service

Perhaps above all else, we recognize that the product
our clients buy is ultimately our promise to pay their claims
– being there when they need us the most. Meeting this
promise is the cornerstone of our business, which is why
we spend the time and effort that we do in understanding
the risks that we assume and accessing the appropriate
amount of capital to support these risks. In our reinsurance
operations, we operate on the principle of paying valid
claims within 48 hours; we believe we are industry
leaders in this regard and are proud of the speed
with which we adjudicate and pay claims. We strive to
provide leading claims and payment service in our other
operations as well.

We also strive to lead the market in returning solutions
and quotes in a timely manner. Our track record shows
that in the event of a catastrophe, we not only stand
ready to pay claims quickly, but we stay in the market
continuing to quote business, often at times when
others choose to leave.

We encourage our clients to visit us at our offices, where
we are able to schedule longer meetings to interact more.
We take the time to walk through the data with them in
detail and our goal is to have our clients walk away with

more knowledge about their risk than when they arrived.
We understand that each client is unique, so when we
structure and price a program, we base it upon all the
salient information – not just on the models. We avoid
a “one size fits all” approach.

Sharing knowledge is deeply embedded in our corporate
culture. Our focus on the science and analysis of risk
– particularly hurricane risk – naturally extends into
research on risk mitigation technologies and resiliency.
We believe that hurricane disaster safety research and
development will not only contribute to reduced insurance
premium costs over time, it will ultimately save lives.
We remain engaged in sharing our research and raising
awareness about risk mitigation, not only with our clients,
but with policy-makers and legislators through such
initiatives as our Risk Mitigation Leadership Forum
Series. Our co-sponsorship of projects like the exhibit
“StormStruck™” at Epcot® at the Walt Disney World®
Resort has brought hurricane risk mitigation awareness
to millions of visitors.

We make it a firm-wide priority to make doing business
with RenaissanceRe both beneficial and enjoyable, and
we ensure that we have the people, tools and financial
resources required to serve our clients across the cycles.

An Enduring Culture

Two decades ago, we articulated our goal of being the
market of first call for our customers and brokers by
providing outstanding products and service. We identified
superior customer relationships, along with superior risk
selection and superior capital management, as core
components of our strategy and they remain embedded in
our culture today. It is our belief that our success comes in
the first instance from our unwavering focus on each, and
in the second from the seamless integration of all three.

Thinking for the Long Term

RenaissanceRe Holdings Ltd. 2011 Annual Report

Financial Information

RenaissanceRe Holdings Ltd. 2011 Annual Report

Comments on Regulation G

In addition to the generally accepted accounting principles (“GAAP”) financial measures set forth in this Annual Report, the Company
has included certain non-GAAP financial measures in this Annual Report within the meaning of Regulation G. The Company has consis-
tently provided these financial measurements in previous investor communications and the Company’s management believes that these
measurements are important to investors and other interested persons, and that investors and such other persons benefit from having
a consistent basis for comparison between years and for the comparison with other companies within the industry. These measures
may not, however, be comparable to similarly titled measures used by companies outside of the (re)insurance industry. Investors are
cautioned not to place undue reliance on these non-GAAP measures in assessing the Company’s overall financial performance.

The Company uses “operating (loss) income (attributable) available to RenaissanceRe common shareholders” as a measure to evalu-
ate the underlying fundamentals of its operations and believes it to be a useful measure of its corporate performance. “Operating (loss)
income (attributable) available to RenaissanceRe common shareholders” as used herein differs from “net (loss) income (attributable)
available to RenaissanceRe common shareholders,” which the Company believes is the most directly comparable GAAP measure, by
the exclusion of net realized and unrealized gains (losses) on investments from continuing and discontinued operations, net other-
than-temporary impairments from continuing and discontinued operations, the gain on sale of the Company’s ownership interest in
ChannelRe Holdings Ltd. (“ChannelRe”), net unrealized losses on credit derivatives issued by entities included in investments in other
ventures, under equity method and the cumulative effect of a change in accounting principle – goodwill. The Company’s management
believes that “operating (loss) income (attributable) available to RenaissanceRe common shareholders” is useful to investors because
it more accurately measures and predicts the Company’s results of operations by removing the variability arising from fluctuations in
the Company’s fixed maturity investment portfolio and equity investments portfolio, the gain associated with the sale of the Company’s
ownership in ChannelRe, net unrealized losses on credit derivatives issued by entities included in investments in other ventures, under
equity method and the cumulative effect of a change in accounting principle – goodwill. The Company also uses “operating (loss)
income (attributable) available to RenaissanceRe common shareholders” to calculate “operating (loss) income (attributable) available to
RenaissanceRe common shareholders per common share – diluted” and “operating return on average common equity”. The following
is a reconciliation of: 1) net (loss) income (attributable) available to RenaissanceRe common shareholders to operating (loss) income
(attributable) available to RenaissanceRe common shareholders; 2) net (loss) income (attributable) available to RenaissanceRe common
shareholders per common share – diluted to operating (loss) income (attributable) available to RenaissanceRe common shareholders
per common share – diluted; and 3) return on average common equity to operating return on average common equity:

(in thousands of United States dollars, except per
share amounts and percentages)

Net (loss) income (attributable) available to
RenaissanceRe common shareholders
Adjustment for net realized and unrealized (gains)

losses on investments

Adjustment for net other-than-temporary impairments *
Adjustment for gain on sale of ChannelRe
Adjustment for net unrealized losses on

credit derivatives issued by entities included in
investments in other ventures, under equity method

Adjustment for cumulative effect of a change
in accounting principle - FAS 142 - Goodwill

Operating (loss) income (attributable) available to
RenaissanceRe common shareholders

Year Ended December 31,

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

$(92,235)

$702,613 $838,858

$(13,280) $569,575 $761,635 $(281,413) $133,108 $605,992 $342,879

(70,710)
552
-

(151,213)
829
(15,835)

(93,162)
22,481

(10,700)
217,014

(26,806)
25,513

167,171

34,464

6,962

-
-

(23,442)
-
-

(80,504)
-
-

(10,177)
-
-

9,187

$(162,393)

$536,394 $768,177 $193,034 $735,453 $796,099 $(274,451) $109,666 $525,488 $341,889

Net (loss) income (attributable) available to
RenaissanceRe common shareholders
per common share - diluted
Adjustment for net realized and unrealized (gains)

losses on investments

Adjustment for net other-than-temporary impairments *
Adjustment for gain on sale of ChannelRe
Adjustment for net unrealized losses

on credit derivatives issued by entities included in
investments in other ventures, under equity method

Adjustment for cumulative effect of a change in

accounting principle - FAS 142 - Goodwill
Operating (loss) income (attributable) available to
RenaissanceRe common shareholders
per common share - diluted

Return on average common equity
Adjustment for net realized and unrealized

(gains) losses on investments

Adjustment for net other-than-temporary impairments *
Adjustment for gain on sale of ChannelRe
Adjustment for net unrealized losses on credit

derivatives issued by entities included in investments
in other ventures, under equity method

Adjustment for cumulative effect of a change
in accounting principle - FAS 142 - Goodwill

$(1.84)

$12.31

$13.40

$(0.21)

$7.93

$10.57

$(3.99)

$1.85

$8.53

$4.88

(1.39)
0.01

(2.72)
0.02
(0.29)

(1.52)
0.37

(0.17)
3.42

(0.38)
0.36

2.33

0.48

0.10

-
-

(0.32)
-
-

(1.13)
-
-

(0.14)
-
-

0.13

$(3.22)

$9.32

$12.25

$3.04

$10.24

$11.05

$(3.89)

$1.53

$7.40

$4.87

(3.0%)

21.7%

30.2%

(0.5%)

20.9%

36.3%

(13.6%)

6.2%

33.8%

27.0%

(2.3%)
-
-

(4.7%)
-
(0.5%)

(3.4%)
0.8%
-

(0.4%)
8.3%
-

(1.0%)
0.9%
-

1.6%
-
-

0.3%
-
-

(1.1%)
-
-

(4.5%)
-
-

(0.8%)
-
-

6.2%

0.7%

Operating return on average common equity

(5.3%)

16.5%

27.6%

7.4%

27.0%

37.9%

(13.3%)

5.1%

29.3%

26.9%

* For the years ending December 31, 2006 and prior, the Company included net other-than-temporary impairments in net realized and unrealized (gains) losses on investments.

The Company has also included in this Annual Report “gross managed premiums written” and “managed catastrophe premiums.” “Gross
managed premiums written” differs from gross premiums written, which the Company believes is the most directly comparable GAAP
measure, due to the inclusion of premiums written on behalf of the Company’s joint venture, Top Layer Reinsurance Ltd. (“Top Layer
Re”), which is accounted for under the equity method of accounting. “Managed catastrophe premiums” is defined as gross catastrophe
premiums written by Renaissance Reinsurance Ltd. and its related joint ventures, excluding catastrophe premiums assumed from the
Company’s Insurance segment. “Managed catastrophe premiums” differ from total catastrophe unit premiums, which the Company
believes is the most directly comparable GAAP measure, due to the inclusion of catastrophe premiums written on behalf of the Company’s
joint venture Top Layer Re, which is accounted for under the equity method of accounting, the inclusion of catastrophe premiums written
on behalf of the Company’s Lloyd’s segment, and the exclusion of catastrophe premiums assumed from the Company’s Insurance
segment. The Company’s management believes “gross managed premiums written” and “managed catastrophe premiums” are useful to
investors and other interested parties because they provide a measure of total gross premiums written and total catastrophe reinsurance
premiums assumed by the Company through its consolidated subsidiaries and related joint ventures. The following is a reconciliation of 1)
total catastrophe unit premiums to managed catastrophe premiums and 2) gross premiums written to gross managed premiums written:

(in thousands of U.S. dollars)

Total catastrophe unit premiums
Catastrophe premiums written on behalf of

our joint venture, Top Layer Re

Catastrophe premiums written in the Lloyd’s segment
Catastrophe premiums assumed from the Insurance segment

Year Ended December 31,

2011

2010

2009

$1,177,296

$994,233 $1,096,449

55,483
27,943

47,546
14,724
(9,481)

51,974
-
(12,650)

Total managed catastrophe premiums

$1,260,722

$1,047,022 $1,135,773

Gross premiums written
Catastrophe premiums written on behalf of our

joint venture, Top Layer Re

$1,434,976

$1,165,295 $1,228,881

55,483

47,546

51,974

Gross managed premiums written

$1,490,459

$1,212,841 $1,280,855

The Company has also included in this Annual Report “tangible book value per common share” and “tangible book value per common
share plus accumulated dividends.” “Tangible book value per common share” is defined as book value per common share excluding
goodwill and intangible assets; “tangible book value per common share plus accumulated dividends” is defined as book value per
common share excluding goodwill and intangible assets, plus accumulated dividends. “Tangible book value per common share” differs
from book value per common share, which the Company believes is the most directly comparable GAAP measure, due to the exclu-
sion of goodwill and intangible assets. “Tangible book value per common share plus accumulated dividends” differs from book value
per common share, which the Company believes is the most directly comparable GAAP measure, due to the exclusion of goodwill and
intangible assets and the inclusion of accumulated dividends. The Company’s management believes “tangible book value per common
share” and “tangible book value per common share plus accumulated dividends” are useful to investors because they provide a more
accurate measure of the realizable value of shareholder returns, excluding the impact of goodwill and intangible assets. The following is
a reconciliation of book value per common share to tangible book value per common share and tangible book value per common share
plus accumulated dividends:

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

At December 31,

Book value per common share
Adjustment for goodwill and other intangibles (1)

$59.27
(0.82)

$62.58
(2.03)

$51.68
(1.95)

$38.74
(2.01)

$41.03
(0.09)

$34.38
(0.08)

$24.52

$30.19

$29.61

$21.37

Tangible book value per common share
Adjustment for accumulated dividends

58.45
10.92

60.55
9.88

49.73
8.88

36.73
7.92

40.94
7.00

34.30
6.12

24.52
5.28

30.19
4.48

29.61
3.72

21.37
3.12

Tangible book value per common share plus accumulated dividends

$69.37

$70.43

$58.61

$44.65

$47.94

$40.42

$29.80

$34.67

$33.33

$24.49

(1) For 2011, 2010, 2009 and 2008, goodwill and other intangibles includes $33.5 million, $38.1 million, $43.8 million and $49.8 million, respectively, of goodwill and other intangibles included in investments in other

ventures, under equity method. For 2010 and 2009, goodwill and other intangibles includes $57.0 million and $61.4 million, respectively, of goodwill and other intangibles included in assets of discontinued operations
held for sale.

Book value per common share
Adjustment for goodwill and other intangibles

Tangible book value per common share
Adjustment for accumulated dividends

2001

2000

1999

1998

1997

1996

1995

1994

1993

$16.14
(0.14)

$11.91
(0.17)

$10.17
(0.11)

$9.43
(0.23)

$8.89

$7.74

$6.33

$3.93

$2.56

16.00
2.55

11.74
2.05

10.06
1.53

9.20
1.05

8.89
0.65

7.74
0.33

6.33
0.05

3.93

2.56

Tangible book value per common share plus accumulated dividends

$18.55

$13.79

$11.59

$10.25

$9.54

$8.07

$6.38

$3.93

$2.56

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-14428

RENAISSANCERE HOLDINGS LTD.
(Exact Name Of Registrant As Specified In Its Charter)

Bermuda
(State or Other Jurisdiction of
Incorporation or Organization)

98-014-1974
(I.R.S. Employer
Identification Number)

Renaissance House, 12 Crow Lane, Pembroke HM 19 Bermuda
(Address of Principal Executive Offices)

(441) 295-4513
(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Shares, Par Value $1.00 per share

Name of each exchange on which registered

New York Stock Exchange, Inc.

Series C 6.08% Preference Shares, Par Value $1.00 per share

New York Stock Exchange, Inc.

Series D 6.60% Preference Shares, Par Value $1.00 per share

New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
No
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and
post such files). Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this
chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or
a smaller reporting company, as defined in Rule 12b-2 of the Act. Large accelerated filer
accelerated filer

, Smaller reporting company

, Accelerated filer

, Non-

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes

The aggregate market value of Common Shares held by nonaffiliates of the registrant at June 30, 2011 was $3,347.1
million based on the closing sale price of the Common Shares on the New York Stock Exchange on that date.

The number of Common Shares outstanding at February 15, 2012 was 51,499,959.

The information required by Part III of this report, to the extent not set forth herein, is incorporated by reference to the
registrant’s Definitive Proxy Statement to be filed in respect of our 2012 Annual General Meeting of Shareholders.

RENAISSANCERE HOLDINGS LTD.
TABLE OF CONTENTS

PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 1.

ITEM 1A.

ITEM 1B.

ITEM 2.

ITEM 3.

ITEM 4.

BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II

ITEM 5.

ITEM 6.

ITEM 7.

ITEM 7A.

ITEM 8.

ITEM 9.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER

MATTERS AND ISSUER REPURCHASES OF EQUITY SECURITIES . . . . . . . . . . .
SELECTED CONSOLIDATED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. . . . . . .
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . .
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

ITEM 9A.

AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 9B.

ITEM 10.

ITEM 11.

ITEM 12.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. . . . . . . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT AND RELATED SHAREHOLDER MATTERS. . . . . . . . . . . . . . . . . .

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ITEM 14.

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page
4

143

146

147

148

149

154

NOTE ON FORWARD-LOOKING STATEMENTS

This Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). Forward-looking statements are necessarily based on estimates and assumptions that
are inherently subject to significant business, economic and competitive uncertainties and contingencies,
many of which, with respect to future business decisions, are subject to change. These uncertainties and
contingencies can affect actual results and could cause actual results to differ materially from those
expressed in any forward-looking statements made by, or on behalf of, us.

In particular, statements using words such as “may”, “should”, “estimate”, “expect”, “anticipate”, “intends”,
“believe”, “predict”, “potential”, or words of similar import generally involve forward-looking statements. For
example, we may include certain forward-looking statements in “Management's Discussion and Analysis of
Financial Condition and Results of Operations” with regard to trends in results, prices, volumes, operations,
investment results, margins, combined ratios, reserves, market conditions, risk management and exchange
rates. This Form 10-K also contains forward-looking statements with respect to our business and industry,
such as those relating to our strategy and management objectives, market standing and product volumes,
insured losses from loss events, government initiatives and regulatory matters affecting the reinsurance and
insurance industries.

In light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking
statements in this report should not be considered as a representation by us or any other person that our
objectives or plans will be achieved. Numerous factors could cause our actual results to differ materially
from those addressed by the forward-looking statements, including the following:

• we are exposed to significant losses from catastrophic events and other exposures that we cover,

which we expect to cause significant volatility in our financial results from time to time;

• the frequency and severity of catastrophic events or other events which we cover could exceed our

estimates and cause losses greater than we expect;

• the risk of the lowering or loss of any of the ratings of RenaissanceRe Holdings Ltd. or of one or more

of our subsidiaries or changes in the policies or practices of the rating agencies;

• risks associated with appropriately modeling, pricing for, and contractually addressing new or

potential factors in loss emergence, such as the trend toward potentially significant global warming
and other aspects of climate change which have the potential to adversely affect our business, which
could cause us to underestimate our exposures and potentially adversely impact our financial results;

• risks due to our dependence on a few insurance and reinsurance brokers for the preponderance of

our revenue, a risk we believe is increasing as a larger portion of our business is provided by a small
number of these brokers;

• the risk that our customers may fail to make premium payments due to us (a risk that we believe has
increased in certain of our key markets), as well as the risk of failures of our reinsurers, brokers or
other counterparties to honor their obligations to us, including as regards to the large catastrophic
events of 2010 and 2011, and also including their obligations to make third party payments for which
we might be liable;

• we operate in a highly competitive environment, which we expect to increase over time from new

competition from traditional and non-traditional participants, particularly as capital markets products
provide alternatives and replacements for our more traditional reinsurance and insurance products,
as new entrants or existing competitors attempt to replicate our business model, and as a result of
consolidation in the (re)insurance industry;

• the inherent uncertainties in our reserving process, particularly as regards to the large catastrophic

events of 2010 and 2011, and also including those related to the 2005 and 2008 catastrophes, which
uncertainties could increase as the product classes we offer evolve over time;

• risks relating to adverse legislative developments that could reduce the size of the private markets we

serve, or impede their future growth, including proposals to shift U.S. catastrophe risks to federal
mechanisms; proposals at the state level in the United States ("U.S."), including the risk of new
legislation in Florida to expand the reinsurance coverages offered by the Florida Hurricane
Catastrophe Fund (“FHCF”) and the insurance policies written by state-sponsored Citizens Property

Insurance Corporation (“Citizens”), or failing to implement reforms to reduce such coverages; and the
risk that new legislation will be enacted in the international markets we serve which might reduce
market opportunities in the private sector, weaken our customers or otherwise adversely impact us;

• risks relating to the inability, or delay, in the claims paying ability of Citizens, FHCF or of private

market participants in Florida, particularly following a large windstorm or of multiple smaller storms,
which we believe would further weaken or destabilize the Florida market and give rise to an
unpredictable range of impacts which might be adverse, perhaps materially so;

• changes in insurance regulations in the U.S. or other jurisdictions in which we operate, including risks
arising out of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-
Frank Act”) or its related rule making or implementation;

• the risk of potential challenges to the Company's claim of exemption from insurance regulation under

certain current laws and the risk of increased global regulation of the insurance and reinsurance
industry;

• the passage of federal or state legislation subjecting Renaissance Reinsurance Ltd. (“Renaissance
Reinsurance”) or our other Bermuda subsidiaries to supervision, regulation or taxation in the U.S. or
other jurisdictions in which we operate, or increasing the taxation of business ceded to us;

• a contention by the Internal Revenue Service that Renaissance Reinsurance, or any of our other

Bermuda subsidiaries, is subject to U.S. taxation;

• risks associated with implementing our business strategies and initiatives, including risks related to

developing or enhancing the operations, controls and other infrastructure necessary in respect of our
more recent, new or proposed initiatives;

• the risk that there could be regulatory or legislative changes adversely impacting us, as a Bermuda-
based company, relative to our competitors, or actions taken by multinational organizations having
such an impact;

• risks associated with highly subjective judgments, such as valuing our more illiquid assets, and

determining the impairments taken on our investments, which could impact our financial position or
operating results;

• risks associated with our investment portfolio, including the risk that investment managers may

breach our investment guidelines, or the inability of such guidelines to mitigate risks arising out of the
ongoing period of relative economic weakness;

• risks associated with inflation, which could cause loss costs to increase, and impact the performance
of our investment portfolio, thereby adversely impacting our financial position or operating results;

• the risk we might be bound to policyholder obligations beyond our underwriting intent, including due

to emerging claims and coverage issues;

• risks associated with counterparty credit risk, including with respect to reinsurance brokers,

customers, agents, retrocessionaires, capital providers, parties associated with our investment
portfolio and/or our energy trading business, and premiums and other receivables owed to us, which
risks we believe continue to be heightened as a result of the ongoing period of relative economic
weakness;

• loss of services of any one of our key senior officers, or difficulties associated with the transition of

new members of our senior management team;

• risks associated with our increased allocation of capital to our weather and energy risk management
operations, including the risks that these operations may give rise to unforeseen or unanticipated
losses;

• the risk that ongoing or future industry regulatory developments will disrupt our business, or that of
our business partners, or mandate changes in industry practices in ways that increase our costs,
decrease our revenues or require us to alter aspects of the way we do business;

• acts of terrorism, war or political unrest;

• risks that the advent of the new U.S. Federal Insurance Office ("FIO") or other related developments

may adversely impact our business, or significantly increase our operating costs;

• operational risks, including system or human failures;

• risks in connection with our management of third party capital;

• changes in economic conditions, including interest rate, currency, equity and credit conditions which
could affect our investment portfolio or declines in our investment returns for other reasons which
could reduce our profitability and hinder our ability to pay claims promptly in accordance with our
strategy, which risks we believe are currently enhanced in light of the ongoing period of relative
economic weakness, both globally, particularly in respect of Eurozone countries and companies, and
in the U.S.;

• the impact of the perceived inability of the U.S. to continue to pay its debt obligations when due,
including the downgrade of U.S. government securities by Standard & Poor's (“S&P”), and the
resulting effect on the value of securities in our investment portfolio as well as the uncertainty in the
market generally;

• risks relating to failure to comply with covenants in our debt agreements;

• risks relating to the inability of our operating subsidiaries to declare and pay dividends to

RenaissanceRe Holdings Ltd.;

• risks that we may require additional capital in the future, particularly after a catastrophic event or to

support potential growth opportunities in our business, which may not be available or may be
available only on unfavorable terms;

• risks that certain of our new or potentially expanding business lines could have a significant negative
impact on our financial results or cause significant volatility in our results for any particular period;

• risks arising out of possible changes in the distribution or placement of risks due to increased

consolidation of customers or insurance and reinsurance brokers, or from potential changes in their
business practices which may be required by future regulatory changes; and

• risks relating to changes in regulatory regimes and/or accounting rules, which could result in

significant changes to our financial results, including but not limited to, the European Union ("EU")
directive concerning capital adequacy, risk management and regulatory reporting for insurers.

The factors listed above should not be construed as exhaustive. Certain of these risk factors and others are
described in more detail in “Item 1A. Risk Factors” below. We undertake no obligation to release publicly the
results of any future revisions we may make to forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of unanticipated events.

PART I

ITEM 1. BUSINESS

Unless the context otherwise requires, references in this Form 10-K to “RenaissanceRe” or the “Company”
mean RenaissanceRe Holdings Ltd. and its subsidiaries, which principally include, but are not limited to,
Renaissance Reinsurance, Glencoe Insurance Ltd. (“Glencoe”), Renaissance Reinsurance of Europe
("ROE"), Renaissance Trading Ltd. (“Renaissance Trading”), RenRe Energy Advisors Ltd. (“REAL”) and the
Company’s Lloyd’s syndicate, RenaissanceRe Syndicate 1458 (“Syndicate 1458”).

We also underwrite reinsurance on behalf of joint ventures, principally including Top Layer Reinsurance Ltd.
(“Top Layer Re”), recorded under the equity method of accounting, and DaVinci Reinsurance Ltd.
(“DaVinci”). The financial results of DaVinci and DaVinci’s parent company, DaVinciRe Holdings Ltd.
(“DaVinciRe”), are consolidated in our financial statements. For your convenience, we have included a
“Glossary of Selected Insurance and Reinsurance Terms”. All dollar amounts referred to in this Form 10-K
are in U.S. dollars unless otherwise indicated. Any discrepancies in the tables included herein between the
amounts listed and the totals thereof are due to rounding.

GENERAL

RenaissanceRe was established in Bermuda in 1993 to write principally property catastrophe reinsurance
and today is a leading global provider of reinsurance and insurance coverages and related services. Our
aspiration is to be the world’s best underwriter of high-severity, low frequency risks. Through our operating
subsidiaries, we seek to produce superior returns for our shareholders by being a trusted, long-term partner
to our customers, for assessing and managing risk, delivering responsive solutions, and keeping our
promises. We accomplish this by leveraging our core capabilities of risk assessment and information
management, and by investing in our capabilities to serve our customers across the cycles that have
historically characterized our markets. Overall, our strategy focuses on superior risk selection, customer
relationships and capital management. We provide value to our customers and joint venture partners in the
form of financial security, innovative products, and responsive service. We are known as a leader in paying
valid reinsurance claims promptly. We principally measure our financial success through long-term growth
in tangible book value per common share plus the change in accumulated dividends, which we believe is
the most appropriate measure of our Company’s financial performance, and believe we have delivered
superior performance in respect of this measure over time.

Our core products include property catastrophe reinsurance, which we primarily write through our principal
operating subsidiary Renaissance Reinsurance, our Lloyd’s syndicate, Syndicate 1458, and joint ventures,
principally DaVinci and Top Layer Re; specialty reinsurance risks written through Renaissance
Reinsurance, Syndicate 1458 and DaVinci; and other insurance products primarily written through
Syndicate 1458. We believe that we are one of the world’s leading providers of property catastrophe
reinsurance. We also believe we have a strong position in certain specialty reinsurance lines of business.
Our reinsurance and insurance products are principally distributed through intermediaries, with whom we
seek to cultivate strong relationships.

Segments

As described in more detail below under “Business Segments”, our reportable segments include:
(1) Reinsurance, which includes catastrophe reinsurance, specialty reinsurance and certain property
catastrophe and specialty joint ventures, (2) Lloyd’s, which includes reinsurance and insurance business
written through Syndicate 1458, and (3) Insurance, which includes the Bermuda-based insurance
operations of our former Insurance segment which were not sold pursuant to the Stock Purchase
Agreement with QBE. In addition, our Other category primarily reflects our strategic investments, weather
and energy risk management operations, investments unit, corporate expenses, capital servicing costs and
noncontrolling interests.

For the year ended December 31, 2011, our Reinsurance, Lloyd’s and Insurance segments accounted for
92.2%, 7.8% and 0.0%, respectively, of our total consolidated gross premiums written. We currently expect
contributions from our Lloyd’s segment to increase over time, on both an absolute and relative basis,
although we cannot assure you we will succeed in meeting this goal. Financial data relating to our
segments is included in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations.”

CORPORATE STRATEGY

Our mission is to produce superior returns for our shareholders by being a trusted, long-term partner to our
customers, for assessing and managing risk, delivering responsive solutions, and keeping our promises.
Our aspiration is to be the world’s best underwriter of high-severity, low frequency risks. Our vision is to be
a leader in select financial services through our people and culture, expertise in risk, and passion for
exceeding customers’ expectations.

Since our inception, we have cultivated and endeavor to preserve certain competitive advantages that
position us to fulfill our strategic objectives. We believe these competitive advantages include:

• Superior Risk Selection. We seek to build a portfolio of risks that produces an attractive return on
utilized capital. We develop a perspective of the risk in each business opportunity using both our
underwriters’ expertise and sophisticated risk selection techniques including computer models and
databases, such as Renaissance Exposure Management System (“REMS©”). We pursue a
disciplined approach to underwriting and select only those risks that we believe will produce a
portfolio with an attractive return, subject to prudent risk constraints. We manage our portfolio of risks
dynamically, both within sub-portfolios and across the Company.

• Superior Customer Relationships. We believe our modeling and technical expertise, and the risk
management advice that we provide our customers, has enabled us to become a provider of first
choice in many lines of business to our customers worldwide. We seek to offer stable, predictable,
and consistent risk-based pricing and a prompt turnaround on our claims.

• Superior Capital Management. We seek to write as much attractively priced business as is available
to us and then manage our capital accordingly. We generally seek to raise capital when we forecast
an increased demand in the market, at times by accessing capital through joint ventures or other
structures, and seek to return capital to our shareholders or joint venture investors when the demand
for our coverages appears to decline and when we believe a return of capital would be beneficial to
our shareholders or joint venture investors. In using joint ventures, we intend to leverage our access
to business and our underwriting capabilities on an efficient capital base, develop fee income,
generate profit commissions and diversify our portfolio. We routinely evaluate and review potential
joint venture opportunities and strategic investments.

We believe we are well positioned to fulfill these objectives by virtue of the experience and skill of our
management team, our significant financial strength, and our strong relationships with brokers and
customers. In addition, we believe our superior service, our proprietary modeling technology, and our
extensive business relationships, which have enabled us to become a leader in the property catastrophe
reinsurance market, will be instrumental in allowing us to achieve our strategic objectives. In particular, we
believe our strategy, high performance culture, and commitment to our customers and joint venture partners
permit us to differentiate ourselves by offering specialized services and products at times and in markets
where capacity and alternatives may be limited.

BUSINESS SEGMENTS

Reinsurance Segment

Our Reinsurance segment is comprised of two main units: 1) property catastrophe reinsurance, primarily
written through Renaissance Reinsurance and DaVinci, and 2) specialty reinsurance, primarily written
through Renaissance Reinsurance and DaVinci. Our Reinsurance segment is managed by our Global
Chief Underwriting Officer, who leads a team of underwriters, risk modelers and other industry
professionals, who have access to our proprietary risk management, underwriting and modeling resources
and tools. We believe the expertise of our underwriting and modeling team and our proprietary analytic
tools, together with superior customer service, provide us with a significant competitive advantage.

Our portfolio of business has continued to be increasingly characterized by relatively large transactions with
ceding companies with whom we do business, although no current relationship exceeds 10% of our gross
premiums written. Accordingly, our gross premiums written are subject to significant fluctuations depending
on our success in maintaining or expanding our relationships with these large customers. We market our
reinsurance products worldwide exclusively through brokers, whose market has become extremely
consolidated in recent years. In 2011, three brokerage firms accounted for 90.7% of our Reinsurance

segment gross premiums written. We believe that recent market dynamics, and trends in our industry in
respect of potential future consolidation, have increased our exposure to the risks of broker, client and
counterparty concentration.

The following table shows our total Reinsurance segment gross premiums written split between catastrophe
and specialty reinsurance, respectively:

Year ended December 31,
(in thousands)
Renaissance catastrophe premiums
Renaissance specialty premiums
Total Renaissance premiums
DaVinci catastrophe premiums
DaVinci specialty premiums
Total DaVinci premiums

Total catastrophe unit premiums (1)
Total specialty unit premiums
Total Reinsurance segment premiums

2011

2010

2009

742,236
144,192
886,428
435,060
1,699
436,759
1,177,296
145,891
$ 1,323,187

630,080
126,848
756,928
364,153
2,538
366,691
994,233
129,386
$ 1,123,619

706,947
111,889
818,836
389,502
2,457
391,959
1,096,449
114,346
$ 1,210,795

(1) Total catastrophe premiums written includes $0.0 million, $9.5 million and $12.7 million of gross

premiums written assumed from our Insurance segment for the years ended December 31, 2011, 2010
and 2009, respectively.

Property Catastrophe Reinsurance

We believe we are one of the largest providers of property catastrophe reinsurance in the world, based on
our total catastrophe gross premiums written. Our principal property catastrophe reinsurance products
include catastrophe excess of loss reinsurance and excess of loss retrocessional reinsurance as described
below.

Catastrophe Excess of Loss Reinsurance. We principally write catastrophe reinsurance on an excess of
loss basis, which means we provide coverage to our insureds when aggregate claims and claim expenses
from a single occurrence of a covered peril exceed the attachment point specified in a particular contract.
Under these contracts, we indemnify an insurer for a portion of the losses on insurance policies in excess of
a specified loss amount, and up to an amount per loss specified in the contract. The coverage provided
under excess of loss reinsurance contracts may be on a worldwide basis or limited in scope to selected
geographic areas. Coverage can also vary from “all property” perils to limited coverage on selected perils,
such as “earthquake only” coverage.

Excess of Loss Retrocessional Reinsurance. We also write retrocessional reinsurance contracts that
provide property catastrophe coverage to other reinsurers or retrocedants. In providing retrocessional
reinsurance, we focus on property catastrophe retrocessional reinsurance, which covers the retrocedant on
an excess of loss basis when aggregate claims and claim expenses from a single occurrence of a covered
peril and from a multiple number of reinsureds exceed a specified attachment point. The coverage provided
under excess of loss retrocessional contracts may be on a worldwide basis or limited in scope to selected
geographic areas. Coverage can also vary from “all property” perils to limited coverage on selected perils,
such as “earthquake only” coverage. The information available to retrocessional underwriters concerning
the original primary risk can be less precise than the information received from primary companies directly.
Moreover, exposures from retrocessional business can change within a contract term as the underwriters of
a retrocedant alter their book of business after retrocessional coverage has been bound.

Our property catastrophe reinsurance contracts are generally “all risk” in nature. Our most significant
exposure is to losses from earthquakes and hurricanes and other windstorms, although we are also
exposed to claims arising from other catastrophes, such as tsunamis, freezes, floods, fires, tornadoes,
explosions and acts of terrorism in connection with the coverages we provide. Our predominant exposure
under such coverage is to property damage. However, other risks, including business interruption and other
non-property losses, may also be covered under our property reinsurance contracts when arising from a
covered peril. We offer our coverages on a worldwide basis. Because of the wide range of possible

catastrophic events to which we are exposed, including the size of such events and because of the potential
for multiple events to occur in the same time period, our catastrophe reinsurance business is volatile and
our results of operations reflect this volatility. Further, our financial condition may be impacted by this
volatility over time or at any point in time. The effects of claims from one or a number of severe
catastrophic events could have a material adverse effect on us. We expect that increases in the values and
concentrations of insured property and the effects of inflation will increase the severity of such occurrences
in the future.

Insurance-Linked Securities. We also invest in insurance-linked securities. Insurance-linked securities are
generally privately placed fixed income securities as to which all or a portion of the repayment of the
principal is linked to catastrophic events; for example, the occurrence of one or more hurricanes or
earthquakes producing industry losses exceeding certain specified thresholds. We underwrite, model,
evaluate and monitor these securities using similar tools and techniques used to evaluate our more
traditional property catastrophe reinsurance business assumed. In addition, we may enter into derivative
transactions, such as total return swaps, that are based on or referenced to underlying insurance-linked
securities. Based on an evaluation of the specific features of each insurance-linked security, we account for
these securities as reinsurance or at fair value, as applicable, in accordance with U.S. generally accepted
accounting principles (“GAAP”). In addition, in future periods we may utilize the growing market for
insurance-linked securities to expand our ceded reinsurance buying if we find the pricing and terms of such
coverage attractive.

We seek to moderate the volatility of our risk portfolio through superior risk selection, diversification and the
purchase of retrocessional coverages and other protections. In furtherance of our strategy, we may increase
or decrease our presence in the catastrophe reinsurance business based on market conditions and our
assessment of risk-adjusted pricing adequacy. We frequently seek to purchase reinsurance or other
protection for our own account to further reduce the financial impact that a large catastrophe or a series of
catastrophes could have on our results.

As a result of our position in the market and reputation for superior customer relationships, we believe we
have superior access to reinsurance business we view as desirable compared to the market as a whole. As
described above, we use our proprietary underwriting tools and guidelines to attempt to construct an
attractive portfolio from these opportunities. We dynamically model policy submissions against our current
in-force underwriting portfolio, comparing our estimate of the modeled expected returns of the contract
against the amount of capital that we allocate to the contract, based on our estimate of its marginal impact
on our overall risk portfolio. At times, our approach to portfolio management has resulted and may result in
the future in our having a relatively large market share of catastrophe reinsurance exposure in a particular
geographic region, such as Florida, or to a particular peril, such as U.S. hurricane risk, where we believe
supply and demand characteristics promote our providing significant capacity, or where the risks or class of
risks otherwise adds efficiency to our portfolio. Conversely, from time to time we may have a
disproportionately low market share in certain regions or perils where we believe our capital would be less
effectively deployed.

Specialty Reinsurance

We write a number of lines of reinsurance other than property catastrophe, such as catastrophe exposed
workers’ compensation, surety, terrorism, energy, aviation, crop, political risk, trade credit, financial,
mortgage guarantee, catastrophe-exposed personal lines property, casualty clash, certain other casualty
lines and other specialty lines of reinsurance that we collectively refer to as specialty reinsurance. We
believe that we are seen as a market leader in certain of these classes of business. As with our
catastrophe business, our team of experienced professionals seeks to underwrite these lines using a
disciplined underwriting approach and sophisticated analytical tools. We are seeking to expand our
specialty reinsurance operations over time, although we cannot assure you that we will do so, particularly in
light of current and forecasted market conditions.

We generally target lines of business where we believe we can adequately quantify the risks assumed and
where potential losses could be characterized as low frequency and high severity, similar to our catastrophe
reinsurance coverages. We also seek to identify market dislocations and write new lines of business whose
risk and return characteristics are estimated to exceed our hurdle rates. Furthermore, we also seek to
manage the correlations of this business with our overall portfolio, including our aggregate exposure to
single and aggregated catastrophe events. We believe that our underwriting and analytical capabilities
have positioned us well to manage this business.

We offer our specialty reinsurance products principally on an excess of loss basis, as described above with
respect to our catastrophe reinsurance products, and also provide some proportional coverage. In a
proportional reinsurance arrangement (also referred to as quota share reinsurance and pro-rata
reinsurance), the reinsurer shares a proportional part of the original premiums and losses of the reinsured.
The reinsurer pays the cedant a commission which is generally based on the cedant’s cost of acquiring the
business being reinsured (including commissions, premium taxes, assessments and miscellaneous
administrative expenses) and may also include a profit factor. Our products frequently include tailored
features such as limits or sub-limits which we believe help us manage our exposures. Any liability
exceeding, or otherwise not subject to, such limits reverts to the cedant. As with our catastrophe
reinsurance business, our specialty reinsurance frequently provides coverage for relatively large limits or
exposures, and thus we are subject to potential significant claims volatility.

We generally seek to write significant lines on our specialty reinsurance treaties. As a result of our financial
strength, we have the ability to offer significant capacity and, for select risks, we have made available
significant limits. We believe these capabilities, the strength of our specialty reinsurance underwriting team,
and our demonstrated ability and willingness to pay valid claims are competitive advantages of our specialty
reinsurance business. While we believe that these and other initiatives will support growth in our specialty
reinsurance unit, we intend to continue to apply our disciplined underwriting approach which, together with
currently prevailing market conditions, is likely to temper such growth in current and near term-term periods.

Ventures

We pursue a number of other opportunities through our ventures unit, which has responsibility for managing
our joint venture relationships, executing customized reinsurance transactions to assume or cede risk and
managing certain investments directed at classes of risk other than catastrophe reinsurance. We also
provide customized weather and energy risk management solutions to various customers on a worldwide
basis.

Property Catastrophe Managed Joint Ventures. We actively manage property catastrophe-oriented joint
ventures, which provide us with an additional presence in the market, enhance our client relationships and
generate fee income and profit commissions. These joint ventures allow us to leverage our access to
business and our underwriting capabilities on a larger capital base. Currently, our joint ventures include Top
Layer Re and DaVinci. Renaissance Underwriting Managers, Ltd. (“RUM”), a wholly owned subsidiary of
the Company, acts as the exclusive underwriting manager for each of these joint ventures.

DaVinci was established in 2001 and principally writes property catastrophe reinsurance and certain low
frequency, high severity specialty reinsurance lines of business on a global basis. In general, we seek to
construct for DaVinci a property catastrophe reinsurance portfolio with risk characteristics similar to those of
Renaissance Reinsurance’s property catastrophe reinsurance portfolio and certain lines of specialty
reinsurance such as terrorism and catastrophe exposed workers’ compensation. In accordance with
DaVinci’s underwriting guidelines, it can only participate in business that is underwritten by Renaissance
Reinsurance. We maintain majority voting control of DaVinciRe and, accordingly, consolidate the results of
DaVinciRe into our consolidated results of operations and financial position. We seek to manage DaVinci’s
capital efficiently over time in light of the market opportunities and needs we perceive and believe we are
able to serve. Our ownership in DaVinciRe was 42.8% and 41.2% at December 31, 2011 and 2010,
respectively. Effective January 1, 2012, we sold a portion of our shares of DaVinciRe to a new third party
shareholder, and subsequent to the transaction, our ownership interest in DaVinciRe decreased to 34.7%.
We expect our ownership in DaVinciRe to fluctuate over time. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations, Capital Resources" for additional information
with respect of DaVinci.

Top Layer Re writes high excess non-U.S. property catastrophe reinsurance. Top Layer Re is owned 50%
by State Farm Mutual Automobile Insurance Company (“State Farm”) and 50% by Renaissance
Reinsurance. State Farm provides $3.9 billion of stop loss reinsurance coverage to Top Layer Re. We
account for our equity ownership in Top Layer Re under the equity method of accounting and our
proportionate share of its results is reflected in equity in (losses) earnings of other ventures in our
consolidated statements of operations.

Effective January 1, 2012, we formed and launched a new managed joint venture, Upsilon Reinsurance Ltd.
(“Upsilon Re”), a Special Purpose Insurer ("SPI"), to provide additional capacity to the worldwide aggregate
and per-occurrence retrocessional property catastrophe excess of loss market for the 2012 underwriting
year. The original business was written by ROE, a wholly owned subsidiary of the Company, and included
$33.5 million of gross premiums written. This business was in turn ceded to Upsilon Re under a fully
collateralized retrocessional reinsurance contract, effective January 1, 2012. In conjunction with the
formation and launch of Upsilon Re, $15.0 million of non-voting Class B shares were sold to external
investors, and we invested $43.7 million in Upsilon Re's non-voting Class B shares, representing a 74.4%
ownership interest in Upsilon Re. In addition, another third party investor supplied $15.0 million of capital
through a reinsurance participation with ROE alongside Upsilon Re. Inclusive of the third party quota share
agreement, we have a 59.3% participation in the original risks assumed by ROE. Both Upsilon Re and a
third party reinsurance participation related to Upsilon Re are managed by RUM in return for an expense
override, as well as a potential underwriting profit commission. We maintain majority voting control of
Upsilon Re and, accordingly, we expect to consolidate the results of Upsilon Re into our consolidated
results of operations and financial position in 2012. We currently have an ownership interest in Upsilon Re
which we expect will change over time, perhaps materially so, and we may also elect to underwrite
additional risks within Upsilon Re and utilize Upsilon Re to write business in future underwriting years. We
cannot assure you that additional opportunities to grow the business we have accessed through Upsilon Re
will be realized, however.

Ventures works on a range of other customized reinsurance and financing transactions. For example, we
have participated in and continuously analyze other attractive opportunities in the market for insurance-
linked securities and derivatives. We believe our products contain a number of customized features
designed to fit the needs of our partners, as well as our risk management objectives.

Weather and Energy Risk Management Operations. We provide weather and energy related risk
management solutions and financial products primarily through Renaissance Trading and REAL and sell
certain financial products primarily to address weather risks, and engage in certain weather, energy and
commodity derivatives trading activities. Certain of these trading activities require the physical delivery of
energy-related commodities, including natural gas. We expect that our participation will increase in the
trading markets for securities and derivatives linked to energy, commodities, weather, other natural
phenomena, and/or products or indices linked in part to such phenomena. While our activities focus on
financial products that allow various energy, utility and other customers to manage their exposures to
energy related commodities, we expect our own results in this area to potentially be volatile over time. As
this unit grows, we intend to seek to continue to invest in operating and control environment systems and
procedures, hire staff and develop and install management information and other systems. Accordingly,
costs related to these operational investments have increased and may increase in the future. We continue
to allocate an increasing amount of capital to our weather and energy risk management operations, and
have offered certain new financial products within this group. We also continually seek new markets and
relationships for our weather and energy risk products, including leveraging strategic affiliations and ceding
risk where appropriate. Although there can be no assurances, it is possible that our results from these
activities will increase on an absolute or relative basis over time.

Strategic Investments. Ventures also pursues strategic investments where, rather than assuming exclusive
management responsibilities ourselves, we instead partner with other market participants. These
investments are directed at classes of risk other than catastrophe, and at times may also be directed at
non-insurance risks. We find these investments attractive both for their expected returns, and also because
they provide us diversification benefits and information and exposure to other aspects of the market.
Examples of these investments include our investments in Tower Hill Insurance Group, LLC. (“THIG”),
Tower Hill Holdings, Inc. ("Tower Hill") and Tower Hill Signature Insurance Holdings, Inc. ("Tower Hill
Signature"), (collectively, the “Tower Hill Companies”), Angus Partners, LLC. ("Angus"), Angus Fund L.P.
(the “Angus Fund”) and Essent Group Ltd. (“Essent”). THIG is a managing general agency specializing in

insurance coverage for site built and manufactured homes. Subsidiaries of THIG, namely Tower Hill Claims
Services, LLC, and Tower Hill Claims Management, LLC provide claim adjustment services through
exclusive agreements with THIG. Tower Hill is an insurance holding company. The subsidiaries of Tower
Hill, along with Tower Hill Signature, write residential property insurance. We invested in the Tower Hill
Companies, which operate primarily in the State of Florida, to expand our core platforms by obtaining
ownership in an additional distribution channel for the Florida homeowners market and to enhance our
relationships with other stakeholders. Angus and the Angus Fund provide commodity related risk
management products to third party customers. Essent provides mortgage insurance and reinsurance
coverage for mortgages located in the U.S.

Business activities that appear in our consolidated underwriting results, such as DaVinci and certain
reinsurance transactions, are included in our Reinsurance segment results; the results of our investments,
such as Top Layer Re and our weather and energy related activities and other ventures are included in the
“Other” category of our segment results.

Lloyd’s Segment

Our Lloyd’s segment includes insurance and reinsurance business written for our own account through
Syndicate 1458. Syndicate 1458 commenced business by writing certain lines of insurance and reinsurance
business incepting on or after June 1, 2009. The syndicate was established to enhance our underwriting
platform by providing access to Lloyd’s extensive distribution network and worldwide licenses.
RenaissanceRe Corporate Capital (UK) Limited (“RenaissanceRe CCL”), an indirect wholly owned
subsidiary of the Company, is the sole corporate member of Syndicate 1458. We anticipate that Syndicate
1458’s absolute and relative contributions to our consolidated results of operations may have a meaningful
impact over time.

Syndicate 1458 generally targets lines of business where we believe we can adequately quantify the risks
assumed and where potential losses could be characterized as low frequency and high severity, similar to
our catastrophe and specialty reinsurance coverages. We also seek to identify market dislocations and to
write new lines of business whose risk and return characteristics are estimated to exceed our hurdle rates.
Furthermore, we seek to manage the correlations of this business with our overall portfolio, including our
aggregate exposure to single and aggregated catastrophe events. We believe that our underwriting and
analytical capabilities have positioned us well to manage this business.

We offer a range of insurance and reinsurance products including, but not limited to, direct and facultative
property, property catastrophe, agriculture, medical malpractice, professional indemnity, political risk and
trade credit. As with our catastrophe and specialty reinsurance business, we frequently provide coverage
for relatively large limits or exposures, and thus we are subject to potential significant claims volatility.

Insurance Segment

Our Insurance segment includes the insurance policies previously written in connection with our Bermuda-
based insurance operations which were not sold to QBE. Our Insurance segment is managed by our Global
Chief Underwriting Officer. The Bermuda-based insurance business is written by Glencoe, a Bermuda
domiciled excess and surplus lines insurance company that is currently eligible to do business on an excess
and surplus lines basis in 49 U.S. states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.
We may from time to time evaluate potential opportunities for the Insurance segment, although we cannot
assure you we will succeed in doing so, or that any such initiatives would contribute materially to our
results.

Other

Our Other category primarily includes the results of: (1) our share of strategic investments in certain
markets we believe offer attractive risk-adjusted returns or where we believe our investment adds value,
such as our investments in the Tower Hill Companies and the Angus Fund, where, rather than assuming
exclusive management responsibilities ourselves, we partner with other market participants; (2) our weather
and energy risk management operations primarily through Renaissance Trading and REAL; (3) our
investment unit which manages and invests the funds generated by our consolidated operations;
(4) corporate expenses, capital servicing costs and noncontrolling interests; and (5) the results of our
discontinued operations.

COMPETITION

The markets in which we operate are highly competitive, and we believe that competition is in general
increasing and becoming more robust. Our competitors include independent reinsurance and insurance
companies, subsidiaries and/or affiliates of globally recognized insurance companies, reinsurance divisions
of certain insurance companies and domestic and international underwriting operations. As our business
evolves over time we expect our competitors to change as well.

Hedge funds, investment banks, exchanges and other capital market participants continue to show interest
in entering the reinsurance market. In addition, we continue to anticipate further, and perhaps accelerating,
growth in financial products such as exchange traded catastrophe options, insurance-linked securities,
unrated privately held reinsurance companies providing collateralized reinsurance, catastrophe-linked
derivative agreements and other financial products, intended to compete with traditional reinsurance. We
believe that competition from non-traditional sources such as these will increase in the future. Many of
these competitors have greater financial, marketing and management resources than we do. Further, we
believe new entrants or existing competitors may attempt to replicate all or part of our business model and
provide further competition in the markets in which we participate. In addition, the tax policies of the
countries where our customers operate, as well as government sponsored or backed catastrophe funds,
affect demand for reinsurance, sometimes significantly. Moreover, explicitly or implicitly government-
backed entities increasingly represent competition for the coverages that we provide directly, or for the
business of our customers, reducing the potential amount of third party private protection our clients might
need or desire. We are unable to predict the extent to which the foregoing new, proposed or potential
initiatives may affect the demand for our products or the risks for which we seek to provide coverage.

RATINGS

Financial strength ratings are an important factor in respect of the competitive position of reinsurance and
insurance companies. Rating organizations continually review the financial positions of our reinsurers and
insurers. We continue to receive high claims-paying and financial strength ratings from A.M. Best Co.
(“A.M. Best”), S&P, Moody’s Investors Service (“Moody’s) and Fitch Ratings Ltd. (“Fitch”). These ratings
represent independent opinions of an insurer’s financial strength, operating performance and ability to meet
policyholder obligations, and are not an evaluation directed toward the protection of investors or a
recommendation to buy, sell or hold any of our securities.

See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,
Capital Resources, Ratings” for the ratings of our principal operating subsidiaries and joint ventures by
segment, as well as the enterprise risk management (“ERM”) rating of RenaissanceRe and details of recent
ratings actions.

UNDERWRITING AND ENTERPRISE RISK MANAGEMENT

Underwriting

Our primary underwriting goal is to construct a portfolio of reinsurance and insurance contracts and other
financial risks that maximizes our return on shareholders’ equity, subject to prudent risk constraints, and to
generate long-term growth in tangible book value per common share plus the change in accumulated
dividends. We assess each new (re)insurance contract on the basis of the expected incremental return
relative to the incremental contribution to portfolio risk.

We have developed a proprietary, computer-based pricing and exposure management system, REMS©.
Since inception, we have continued to invest in and improve REMS©, incorporating our underwriting and
modeling experience, adding proprietary software and a significant amount of new industry data. REMS©
has analytic and modeling capabilities that help us to assess the risk and return of each incremental (re)
insurance contract in relation to our overall portfolio of (re)insurance contracts. We combine the analyses
generated by REMS© with other information available to us, including our own knowledge of the client
submitting the proposed program, to assess the premium offered against the risk of loss and the cost of
utilized capital which the program presents. The REMS© framework encompasses and facilitates risk
capture, analysis, correlation, portfolio aggregation and capital allocation within a single system for all of our
natural hazards and non-natural hazards (re)insurance contracts.

We utilize a multiple model approach combining both probabilistic and deterministic techniques. The
underlying risk models integrated into our underwriting and REMS© framework are a combination of
internally constructed and commercially available models. We use commercially available natural hazard
catastrophe models to assist with validating and stress testing our base model and REMS© results. We
continually strive to improve our analytical techniques for both natural hazard and non-natural hazard
models in REMS© and while our experience is most developed for analyzing natural hazard catastrophe
risks, we continue to make significant advances in our capabilities for assessing non-natural hazard
catastrophe risks. In addition, multiple members of our underwriting and risk management team review the
models, and their respective results.

We believe that REMS© is a robust underwriting and risk management system that has been successfully
integrated into our business processes and culture. Before we bind a (re)insurance risk, exposure data,
historical loss information and other risk data is gathered from customers. Using a combination of
proprietary software, underwriting experience, actuarial techniques and engineering expertise where
appropriate, the exposure data is reviewed and augmented. We use this data as primary inputs into the
REMS© modeling system as a base to create risk distributions to represent the risk being evaluated. We
believe that the REMS© modeling system helps us to analyze each policy on a consistent basis, assisting
our determination of what we believe to be an appropriate price to charge for each policy based upon the
risk to be assumed. REMS© combines computer-generated statistical simulations that estimate loss and
event probabilities with exposure and coverage information on each client’s (re)insurance contract to
produce expected claims for (re)insurance programs submitted to us. Operationally, on a deal-by-deal
basis, our models employ simulation techniques that have the ability to generate 40,000 years of loss
activity. When deemed necessary, we stress test the 40,000 year simulations with simulations of up to
1,000,000 years. At a consolidated level, we routinely utilize simulations of 500,000 years to incorporate
investment risk, expenses, and operational and other risks at a portfolio and risk assuming entity level. For
natural hazards, we simulate a large range of potential industry losses in respect of events by region and
peril. For some regions and perils, the extreme tails of these simulations include industry losses in excess
of $400 billion. From these simulations, we generate a probability distribution of potential outcomes for
each policy in our portfolio and for our total portfolio. In part, through the process described above and the
utilization of REMS©, we seek to compare our estimate of the expected returns in respect of a contract with
the amount of capital that we notionally allocate to the contract based on our estimate of its marginal impact
on our portfolio of risks. A key advantage of our REMS© framework is our ability to include additional perils,
risks and geographic areas that may not be captured in commercially available natural hazards risk models.

We periodically review the estimates and assumptions that are reflected in REMS© and our other tools. For
example, the recent earthquake events in New Zealand and Japan have provided new insight on certain
aspects of hazard and vulnerability to the global earthquake science community. Utilizing internal research
capabilities from our team of scientists at Weather Predict Consulting Inc. ("Weather Predict") and new
research from the global earthquake science community, we have updated several of our internal regional
representations of earthquake risk in advance of the commercially available models.

Our underwriters use this combination of our risk assessment and underwriting process, REMS© and other
tools in their pricing decisions, which we believe provides them with several competitive advantages. These
include the ability to:

• simulate a range of potential outcomes that adequately represents the risk to an individual contract;

• analyze the incremental impact of an individual reinsurance contract on our overall portfolio;

• better assess the underlying exposures associated with assumed retrocessional business;

• price contracts within a short time frame;

• capture various classes of risk, including catastrophe and other insurance risks;

• assess risk across multiple entities (including our various joint ventures) and across different

components of our capital structure; and

• provide consistent pricing information.

As part of our risk management process, we also use REMS© to assist us with the purchase of reinsurance
coverage for our own account.

Our underwriting and risk management process, in conjunction with REMS©, quantifies and manages our
exposure to claims from single events and the exposure to losses from a series of events. As part of our
pricing and underwriting process, we also assess a variety of other factors, including:

• the reputation of the proposed cedant and the likelihood of establishing a long-term relationship with

the cedant;

• the geographic area in which the cedant does business and its market share;

• historical loss data for the cedant and, where available, for the industry as a whole in the relevant

regions and lines of business, in order to compare the cedant’s historical catastrophe loss experience
to industry averages;

• the cedant’s pricing strategies; and

• the perceived financial strength of the cedant and factors such as the cedant’s historical record of

making premium payments in full and on a timely basis.

In order to estimate the risk profile of each line of non-natural hazard reinsurance (i.e., our specialty and
casualty lines of business), we establish probability distributions and assess the correlations with the rest of
our portfolio. In lines with catastrophe risk, such as excess workers’ compensation and terrorism, we seek
to directly leverage our skill in modeling for our property catastrophe reinsurance risks, and seek to
appropriately estimate and manage the correlations between these specialty lines and our catastrophe
reinsurance portfolio. For other classes of business, in which we believe we have little or no natural
catastrophe exposure, and therefore less correlation with our property catastrophe reinsurance coverages,
we derive probability distributions from a variety of underlying information sources, including recent
historical experience, and the application of judgment as appropriate. The nature of some of these
businesses lends itself less to the analysis that we use for our property catastrophe (re)insurance
coverages, reflecting both the nature of available exposure information, and the impact of human factors
such as tort exposure. We produce probability distributions to represent our estimates of the related
underlying risks which our products cover, which we believe helps us to make consistent underwriting
decisions and to manage our total risk portfolio.

Enterprise Risk Management

We believe that high-quality and effective risk management is best achieved through it being a shared
cultural value throughout the organization. We have sought to develop and utilize a series of tools and
processes that support a culture of risk management and to create a robust framework of ERM within our
organization. We consider ERM to be a key process which is the responsibility of every individual within the
Company. ERM is managed by our senior executive team under the oversight of our Board of Directors,
and implemented by personnel from across our organization. We believe that ERM helps us to identify
potential events that may affect us, to quantify, evaluate and manage the risks to which we are exposed,
and to provide reasonable assurance regarding the achievement of our objectives. We believe that
effective ERM can provide us with a significant competitive advantage. We also believe that effective ERM
assists our efforts to minimize the likelihood of suffering financial outcomes in excess of the ranges which
we have estimated in respect of specific investments, underwriting decisions, or other operating or business
activities, although we do not believe this risk can be eliminated. We believe that our risk management
tools support our strategy of pursuing opportunities and help us to identify opportunities that we believe to
be the most attractive. In particular, we utilize our risk management tools to support our efforts to monitor
our capital position, on a consolidated basis and for each of our major operating subsidiaries, and to
allocate an appropriate amount of capital to support the risks that we have assumed in the aggregate and
for each of our major operating subsidiaries. We believe that our risk management efforts are essential to
our corporate strategy and our goal of achieving long-term growth in tangible book value per share plus the
change in accumulated dividends for our shareholders.

Our ERM framework comprises three primary areas of focus, as set forth below:

(1) Assumed Risk. We define assumed risk as activities where we deliberately take risk against the

Company’s capital base, including underwriting risks and other quantifiable risks such as credit risk
and interest rate risk as they relate to investments, ceded reinsurance credit risk and strategic
investment risk, each of which can be analyzed in substantial part through quantitative tools and
techniques. Of these, we believe underwriting risk to be the most material to us. In order to
understand, monitor, quantify and proactively assess underwriting risk, we seek to develop and
deploy appropriate tools to, among other things, estimate the comparable expected returns on
potential business opportunities, and estimate the impact that such incremental business could
have on our overall risk profile. We use the tools and methods described above in “Underwriting” to
seek to achieve these objectives. Embedded within our consideration of assumed risk is our
management of the Company’s aggregate risk profile. In part through the utilization of REMS© and
our other systems and procedures, we seek to analyze our in-force aggregate assumed risk
portfolio on a daily basis. We believe this capability helps us to manage our aggregate exposures,
as well as to rigorously analyze individual proposed transactions and evaluate them in the context
of our in-force portfolio. This aggregation process captures line of business, segment and
corporate risk profiles, calculates internal and external capital tests and explicitly models ceded
reinsurance. Generally, additional data is added quarterly to our aggregate risk framework to reflect
updated or new information or estimates relating to matters such as interest rate risk, credit risk,
capital adequacy and liquidity. This information is used in day-to-day decision making for
underwriting, investments and operations and is also reviewed quarterly from both a unit level and
in respect of our consolidated financial position.

(2) Business Environment Risk. We define this as the risk of changes in the business, political or

regulatory environment that could negatively impact our short term or long-term financial results or
the markets in which we operate. Accordingly, these risks are predominately extrinsic to the
Company and in general, our ability to alter or eliminate these risks is limited. Rather, our efforts
focus on monitoring developments, assessing potential impacts of any such changes, and investing
in cost effective means to attempt to mitigate the consequences of and ensure compliance with any
new requirements applicable to us.

(3) Operational Risk. We believe we are subject to a number of additional risks arising out of

operational, regulatory, and other matters. We define operational risk as the risk that we fail to
create, manage, control or mitigate the people, processes, structures or functions required to
execute our strategic and tactical plans and assemble an optimized portfolio of assumed risk, and
to adjust to and comply with the evolving requirements of business environment risk applicable to
us. In light of the rapid evolution of our markets, business environment, and business initiatives, we
seek to continually invest in the tools, processes and procedures to mitigate our exposure to
operational risk on a cost-effective basis.

Identification and monitoring of business environment risk and operational risk is coordinated by senior
personnel including our Chief Financial Officer (“CFO”), General Counsel and Chief Compliance Officer
(“CCO”), Corporate Controller and Chief Accounting Officer (“CAO”), Chief Administrative Officer, Chief Risk
Officer (“CRO”), Chief Information Officer and Internal Audit, utilizing resources throughout the Company.

Although financial reporting is a key area of our focus, other operational risks are addressed through our
disaster recovery program, human resource practices such as motivating and retaining top talent, our strict
tax protocols and our legal and regulatory policies and procedures.

Controls and Compliance Committee. We believe that a key component of our current operational risk
management platform is our Controls and Compliance Committee. The Controls and Compliance
Committee is comprised of our CFO, CCO, CAO, Chief Administrative Officer, CRO, staff compliance
professionals and representatives from our business units. The purpose of the Controls and Compliance
Committee is to establish, assess the effectiveness of, and enforce policies, procedures and practices
relating to accounting, financial reporting, internal controls, regulatory, legal, compliance and related
matters, for ensuring compliance with applicable laws and regulations, the Company’s Code of Ethics and
Conduct (the “Code of Ethics”), and other relevant standards. In addition, the Controls and Compliance
Committee is charged with reviewing certain transactions that potentially raise complex and/or significant
tax, legal, accounting, regulatory, financial reporting, reputational or compliance issues.

Ongoing Development and Enhancement. We seek to reflect and categorize risks we monitor in part
through quantitative risk distributions, even where we believe that such quantitative analysis is not as robust
or well developed as our tools and models for measuring and evaluating other risks, such as catastrophe
and market risks. We also seek to improve the methods by which we measure risks. We believe effective
risk management is a core attribute of our culture and is a continual process that requires ongoing
improvement and development. We seek from time to time to identify new best practices or additional
developments both from within our industry and from other sectors. We believe that our ongoing efforts to
embed ERM throughout our organization are important to our efforts to produce and maintain a competitive
advantage to achieve our corporate goals.

GEOGRAPHIC BREAKDOWN

Our exposures are generally diversified across geographic zones, but are also a function of market
conditions and opportunities. Our largest exposure has historically been to the U.S. and Caribbean
property catastrophe market, which represented 61.7% of the Company’s gross premiums written for the
year ended December 31, 2011. A significant amount of our U.S. and Caribbean premium provides
coverage against windstorms, mainly U.S. Atlantic hurricanes, as well as earthquakes and other natural and
man-made catastrophes. The following table sets forth the percentage of our gross premiums written
allocated to the territory of coverage exposure:

2011

2010

2009

Gross
Premiums
Written

Percentage
of Gross
Premiums
Written

Gross
Premiums
Written

Percentage
of Gross
Premiums
Written

Gross
Premiums
Written

Percentage
of Gross
Premiums
Written

Year ended December 31,

(in thousands, except percentages)

Catastrophe

U.S. and Caribbean

786,721

54.8 %

720,250

61.8 %

828,490

67.4 %

Worldwide (excluding U.S.) (1)

Worldwide

Japan

Europe

Australia and New Zealand

Other

Total catastrophe

Specialty

Worldwide

U.S. and Caribbean

Europe

Australia and New Zealand

Other

Total specialty

Total Reinsurance

Lloyd’s

U.S. and Caribbean

Worldwide

Europe

Australia and New Zealand

Worldwide (excluding U.S.) (1)

Other

Total Lloyd’s

Insurance (2)

Eliminations (3)

164,112

124,797

49,021

31,888

16,818

3,939

11.4 %

113,270

8.7 %

3.4 %

2.2 %

1.2 %

0.3 %

65,500

26,188

59,480

6,269

3,276

9.7 %

5.6 %

2.2 %

5.1 %

0.5 %

0.3 %

78,222

92,586

29,436

60,363

5,293

2,059

6.4 %

7.5 %

2.4 %

4.9 %

0.4 %

0.2 %

1,177,296

82.0 %

994,233

85.2 %

1,096,449

89.2 %

91,032

49,832

3,595

792

640

6.3 %

3.5 %

0.3 %

0.1 %

— %

59,636

57,461

2,786

8,934

569

5.2 %

4.9 %

0.2 %

0.8 %

— %

68,704

39,712

5,037

842

145,891

1,323,187

10.2 %

92.2 %

129,386

1,123,619

11.1 %

96.3 %

114,346

1,210,795

48,435

47,605

8,044

2,060

238

5,202

111,584

282

(77)

3.4 %

3.3 %

0.6 %

0.1 %

— %

0.4 %

7.8 %

— %

43,178

16,207

3,174

1,049

2,510

66,209

2,585

3.7 %

1.4 %

0.3 %

— %

0.1 %

0.2 %

5.7 %

0.3 %

(27,118)

(2.3)%

—

30,736

(12,650)

5.6 %

3.2 %

0.4 %

— %

0.1 %

9.3 %

98.5 %

— %

2.5 %

(1.0)%

Total gross premiums written

$ 1,434,976

100.0 %

$ 1,165,295

100.0 %

$ 1,228,881

100.0 %

(1) The category “Worldwide (excluding U.S.)” consists of contracts that cover more than one geographic
region (other than the U.S.). The exposure in this category for gross premiums written to date is
predominantly from Europe and Japan.

(2) The category Insurance consists of contracts that are primarily exposed to U.S. risks.

(3) Represents $0.1 million of gross premiums ceded from the Reinsurance segment to the Lloyd’s

segment, for the year ended December 31, 2011 (2010 - $9.5 million, $17.4 million and $0.2 million of
gross premiums ceded from the Insurance segment to the Reinsurance segment, from the Insurance
segment to the Lloyd’s segment and from the Reinsurance segment to the Lloyd’s segment,
respectively, 2009 - $12.7 million gross premiums ceded from the Insurance segment to the
Reinsurance segment).

RESERVES FOR CLAIMS AND CLAIM EXPENSES

We believe the most significant accounting judgment made by management is our estimate of claims and
claim expense reserves. Claims and claim expense reserves represent estimates, including actuarial and
statistical projections at a given point in time, of the ultimate settlement and administration costs for unpaid
claims and claim expenses arising from the insurance and reinsurance contracts we sell. We establish our
claims and claim expense reserves by taking claims reported to us by insureds and ceding companies, but
which have not yet been paid (“case reserves”), adding the costs for additional case reserves (“additional
case reserves”) which represent our estimates for claims previously reported to us which we believe may
not be adequately reserved as of that date, and adding estimates for the anticipated cost of claims incurred
but not yet reported to us (“IBNR”).

The following table summarizes our claims and claim expense reserves by line of business and split
between case reserves, additional case reserves and IBNR at December 31, 2011 and 2010:

At December 31, 2011

(in thousands)
Catastrophe
Specialty
Total Reinsurance
Lloyd’s
Insurance
Total

At December 31, 2010
(in thousands)
Catastrophe
Specialty
Total Reinsurance
Lloyd's
Insurance
Total

Case
Reserves

Additional
Case Reserves

IBNR

Total

681,771
120,189
801,960
17,909
32,944
852,813

173,157
102,521
275,678
172
40,943
316,793

271,990
49,840
321,830
14,459
3,515
339,804

281,202
60,196
341,398
6,874
3,317
351,589

388,147
301,589
689,736
55,127
54,874
799,737

$ 1,341,908
471,618
1,813,526
87,495
91,333
$ 1,992,354

163,021
350,573
513,594
12,985
62,882
589,461

617,380
513,290
1,130,670
20,031
107,142
$ 1,257,843

Our estimates of claims and claim expense reserves are not precise in that, among other matters, they are
based on predictions of future developments and estimates of future trends and other variable factors.
Some, but not all, of our reserves are further subject to the uncertainty inherent in actuarial methodologies
and estimates. Because a reserve estimate is simply an insurer’s estimate at a point in time of its ultimate
liability, and because there are numerous factors which affect reserves and claims payments that cannot be
determined with certainty in advance, our ultimate payments will vary, perhaps materially, from our
estimates of reserves. If we determine in a subsequent period that adjustments to our previously
established reserves are appropriate, such adjustments are recorded in the period in which they are
identified. During the year ended December 31, 2011, changes to prior year estimated claims reserves
decreased our net loss by $132.0 million (2010 - increased our net income by $302.1 million, 2009 -
increased our net income by $266.2 million), excluding the consideration of changes in reinstatement
premium, profit commissions, redeemable noncontrolling interest - DaVinciRe, equity in net claims and
claim expenses of Top Layer Re and income tax.

Our reserving methodology for each line of business uses a loss reserving process that calculates a point
estimate for the Company’s ultimate settlement and administration costs for claims and claim expenses.
We do not calculate a range of estimates. We use this point estimate, along with paid claims and case
reserves, to record our best estimate of additional case reserves and IBNR in our consolidated financial
statements. Under GAAP, we are not permitted to establish estimates for catastrophe claims and claim
expense reserves until an event occurs that gives rise to a loss.

Reserving for our reinsurance claims involves other uncertainties, such as the dependence on information
from ceding companies, which among other matters, includes the time lag inherent in reporting information
from the primary insurer to us or to our ceding companies and differing reserving practices among ceding
companies. The information received from ceding companies is typically in the form of bordereaux, broker
notifications of loss and/or discussions with ceding companies or their brokers. This information can be
received on a monthly, quarterly or transactional basis and normally includes estimates of paid claims and
case reserves. We sometimes also receive an estimate or provision for IBNR. This information is often
updated and adjusted from time to time during the loss settlement period as new data or facts in respect of
initial claims, client accounts, industry or event trends may be reported or emerge in addition to changes in
applicable statutory and case laws.

Our estimates of losses from the large events of 2011, 2010 and 2008 are based on factors including
currently available information derived from the Company's claims information from certain customers and
brokers, industry assessments of losses from the events, proprietary models, and the terms and conditions
of our contracts. The uncertainty of our estimates for the 2011 and 2010 events is additionally impacted by
the preliminary nature of the information available, the magnitude and relative infrequency of the events, the
expected duration of the respective claims development period, inadequacies in the data provided thus far
by industry participants and the potential for further reporting lags or insufficiencies (particularly in respect of
the Chilean, September 2010 New Zealand, February 2011 New Zealand and Tohoku earthquakes); and in
the case of the Australian flooding and the recent Thailand flooding, significant uncertainty as to the form of
the claims and legal issues including, but not limited to, the number, nature and fiscal periods of the loss
events under the relevant terms of insurance contracts and reinsurance treaties. In addition, a significant
portion of the net claims and claim expenses associated with the New Zealand and Tohoku earthquakes are
concentrated with a few large clients and therefore the loss estimates for these events may vary
significantly based on the claims experience of those clients. Loss reserve estimation in respect of our
retrocessional contracts poses further challenges compared to directly assumed reinsurance. A significant
portion of our reinsurance recoverable relates to the New Zealand and Tohoku earthquakes. There is
inherent uncertainty and complexity in evaluating loss reserve levels and reinsurance recoverable amounts,
due to the nature of the losses relating to earthquake events, including that loss development time frames
tend to take longer with respect to earthquake events. The contingent nature of business interruption and
other exposures will also impact losses in a meaningful way, especially with regard to the Tohoku
earthquake and Thailand flooding, which we believe may give rise to significant complexity in respect of
claims handling, claims adjustment and other coverage issues, over time. Given the magnitude and
relatively recent occurrence of these events, meaningful uncertainty remains regarding total covered losses
for the insurance industry and, accordingly, several of the key assumptions underlying our loss estimates.
In addition, our actual net losses from these events may increase if our reinsurers or other obligors fail to
meet their obligations.

Because of the inherent uncertainties discussed above, we have developed a reserving philosophy which
attempts to incorporate prudent assumptions and estimates, and we have generally experienced favorable
net development on prior year reserves in the last several years. However, there is no assurance that this
will occur in future periods.

Our reserving techniques, assumptions and processes differ between our property catastrophe reinsurance,
specialty reinsurance and insurance businesses within our Reinsurance, Lloyd’s and Insurance segments.
Refer to our “Claims and Claim Expense Reserves Critical Accounting Estimates” discussion in “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more
information on the risks we insure and reinsure, the reserving techniques, assumptions and processes we
follow to estimate our claims and claim expense reserves, and our current estimates versus our initial
estimates of our claims reserves, for each of these units.

The following table represents the development of our GAAP balance sheet reserves for December 31,
2001 through December 31, 2011. This table does not present accident or policy year development data.
The top line of the table shows the gross reserves for claims and claim expenses at the balance sheet date
for each of the indicated years. This represents the estimated amounts of claims and claim expenses
arising in the current year and all prior years that are unpaid at the balance sheet date, including additional
case reserves and IBNR reserves. The table also shows the re-estimated amount of the previously
recorded reserves based on experience as of the end of each succeeding year. The estimate changes as
more information becomes known about the frequency and severity of claims for individual years. The
“cumulative redundancy on net reserves” represents the aggregate change to date from the indicated
estimate of the gross reserve for claims and claim expenses, net of reinsurance recoverable on the second
line of the table. The table also shows the cumulative net paid amounts as of successive years with respect
to the net reserve liability. At the bottom of the table is a reconciliation of the gross reserve for claims and
claim expenses to the net reserve for claims and claim expenses, the gross re-estimated liability to the net
re-estimated liability for claims and claim expenses, and the cumulative redundancy on gross reserves.

With respect to the information in the table below, note that each amount includes the effects of all changes in
amounts for prior periods, including the effect of foreign exchange rates.

Year ended
December 31,

(in millions)

Gross reserve

for claims and
claim
expenses
Reserve for
claims and
claim
expenses, net
of reinsurance
recoverable
1 Year Later

2 Years Later

3 Years Later

4 Years Later

5 Years Later

6 Years Later

7 Years Later

8 Years Later

9 Years Later

10 Years Later

Cumulative

redundancy
on net
reserves

Cumulative Net
Paid Losses

1 Year Later

2 Years Later

3 Years Later

4 Years Later

5 Years Later

6 Years Later

7 Years Later

8 Years Later

9 Years Later

10 Years Later

Gross reserve

for claims and
claim
expenses
Reinsurance
recoverable
on unpaid
losses

Net reserve for
claims and
claim
expenses
Gross liability
re-estimated

Reinsurance
recoverable
on unpaid
losses re-
estimated
Net liability re-
estimated
Cumulative

redundancy
on gross
reserves

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

$ 502.7

$ 747.9

$ 924.4

$1,295.0

$2,381.4

$1,811.0

$1,717.2

$1,758.8

$1,344.4

$1,257.8

$1,992.3

$ 346.2

$ 595.0

$ 810.6

$1,099.2

$1,742.2

$1,591.3

$1,609.5

$1,565.2

$1,260.3

$1,156.1

$1,588.3

373.6

332.7

292.0

195.4

190.8

180.9

164.2

162.1

144.6

135.7

494.8

449.5

270.8

258.7

246.3

220.2

210.8

186.0

174.7

—

661.5

379.5

362.8

332.9

312.2

301.5

266.2

251.2

—

878.6

844.0

749.1

717.2

683.7

628.9

609.2

—

1,610.7

1,368.3

1,412.6

1,299.0

1,449.1

1,225.9

1,199.0

1,045.1

958.2

857.6

1,333.7

1,092.2

1,231.6

1,077.8

1,022.7

—

911.1

847.2

—

997.8

923.0

—

961.4

—

1,024.1

—

$ 210.5

$ 420.3

$ 559.4

$ 490.0

$ 719.5

$ 744.1

$ 686.5

$ 603.8

$ 402.7

$ 132.0

—

91.6

155.9

111.4

123.2

102.1

105.8

116.9

116.4

110.3

105.5

81.1

85.3

113.0

91.8

85.9

102.8

109.6

103.0

99.1

—

58.0

100.6

107.5

96.4

129.8

136.1

137.3

139.2

—

302.8

370.8

395.7

446.8

472.7

482.7

492.2

—

354.8

548.4

712.6

782.9

812.0

833.1

—

247.6

435.8

529.5

569.4

594.2

—

337.1

469.5

553.0

605.7

—

191.5

369.1

471.6

—

182.8

301.5

—

129.7

—

$ 502.7

$ 747.9

$ 924.4

$1,295.0

$2,381.4

$1,811.0

$1,717.2

$1,758.8

$1,344.4

$1,257.8

$1,992.3

156.5

152.9

113.8

195.8

639.2

219.7

107.7

193.6

84.1

101.7

404.0

$ 346.2

$ 595.0

$ 810.6

$1,099.2

$1,742.2

$1,591.3

$1,609.5

$1,565.2

$1,260.3

$1,156.1

$1,588.3

$ 247.9

$ 307.7

$ 365.4

$ 803.9

$1,632.3

$1,053.8

$ 993.0

$1,112.5

$ 920.3

$1,113.2

—

112.2

133.0

114.2

194.7

609.6

206.6

70.0

151.1

62.7

89.1

$ 135.7

$ 174.7

$ 251.2

$ 609.2

$1,022.7

$ 847.2

$ 923.0

$ 961.4

$ 857.6

$1,024.1

—

$ 254.8

$ 440.2

$ 559.0

$ 491.1

$ 749.1

$ 757.2

$ 724.2

$ 646.3

$ 424.1

$ 144.6

—

The following table presents an analysis of our paid, unpaid and incurred losses and loss expenses and a
reconciliation of beginning and ending reserves for claims and claim expenses for the years indicated:

Year ended December 31,
(in thousands)
Net reserves as of January 1
Net incurred related to:

Current year
Prior years

Total net incurred
Net paid related to:

Current year
Prior years
Total net paid
Total net reserves as of December 31
Reinsurance recoverable as of December 31
Total gross reserves as of December 31

2011

2010

2009

$ 1,156,132

$ 1,260,334

$ 1,565,230

993,168
(131,989)
861,179

431,476
(302,131)
129,345

195,518
(266,216)
(70,698)

299,299
129,687
428,986
1,588,325
404,029
$ 1,992,354

50,793
182,754
233,547
1,156,132
101,711
$ 1,257,843

42,712
191,486
234,198
1,260,334
84,099
$ 1,344,433

For the year ended December 31, 2011, the prior year favorable development of $132.0 million (2010 –
$302.1 million, 2009 – $266.2 million) included favorable development of $136.9 million attributable to our
Reinsurance segment, and $0.5 million and $4.4 million of adverse development attributable to our Lloyd’s
and Insurance segments, respectively (2010 - favorable development of $286.0 million, $0.2 million and
$15.9 million, respectively, 2009 – favorable development of $249.5 million and $16.7 million attributable to
our Reinsurance and Insurance segments, respectively). Within our Reinsurance segment, our catastrophe
unit and specialty unit experienced $59.1 million and $77.8 million, respectively, of favorable development
on prior years’ claims and claim expense reserves (2010 - $157.5 million and $128.6 million, respectively,
2009 - $184.4 million and $65.1 million, respectively).

Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,
Summary of Critical Accounting Estimates, Claims and Claim Expense Reserves” for additional discussion
regarding the Company’s reserving methodologies, including key assumptions and sensitivity analysis and
a discussion regarding the Company’s accounting treatment and favorable development on prior years net
claims and claim expenses.

INVESTMENTS

Our investment guidelines stress preservation of capital, market liquidity, and diversification of risk. The
majority of our investments consist of highly rated fixed income securities. We also hold a significant
amount of short term investments. Short term investments are managed as part of our investment portfolio
and have a maturity of one year or less when purchased. In addition, we have an allocation to other
investments including hedge funds, private equity partnerships, senior secured bank loan funds and other
investments; and to certain equity securities. We may from time to time re-evaluate our investment
guidelines and explore investment allocations to other asset classes. Our investments are subject to
market-wide risks and fluctuations, as well as to risks inherent in particular securities.

The table below shows the aggregate amounts of our invested assets:

At December 31,

(in thousands, except percentages)
U.S. treasuries

Agencies

Non-U.S. government (Sovereign debt)

FDIC guaranteed corporate

Non-U.S. government-backed corporate

Corporate

Agency mortgage-backed

Non-agency mortgage-backed

Commercial mortgage-backed

Asset-backed

Total fixed maturity investments, at fair value

Short term investments, at fair value

Equity investments trading, at fair value

Other investments, at fair value

Total managed investment portfolio

Investments in other ventures, under equity method

2011

2010

885,152

14.3%

761,461

12.4%

158,561

227,912

423,630

641,082

1,206,904

441,749

104,771

325,729

18,027

4,433,517

905,477

50,560

748,984

6,138,538

70,714

2.6%

3.7%

6.8%

10.3%

19.4%

7.1%

1.7%

5.2%

0.3%

71.4%

14.6%

0.8%

12.1%

98.9%

1.1%

216,963

184,387

388,468

357,504

3.6%

3.0%

6.4%

5.9%

1,512,411

24.7%

401,807

34,149

219,440

40,107

4,116,697

1,110,364

—

787,548

6,014,609

85,603

6.6%

0.6%

3.6%

0.7%

67.5%

18.2%

—%

12.9%

98.6%

1.4%

Total investments

$ 6,209,252

100.0%

$ 6,100,212

100.0%

For additional information regarding the investment portfolio, refer to “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations, Summary of Results of Operations for 2011,
2010 and 2009, Liquidity and Capital Resources, Investments”.

MARKETING

We believe that our modeling and technical expertise, the risk management advice that we provide to our
customers, and our reputation for paying claims promptly has enabled us to become a provider of first
choice in many lines of business to our customers worldwide. We market our products worldwide primarily
through reinsurance brokers and we focus our marketing efforts on targeted brokers and partners. We
believe that our existing portfolio of business is a valuable asset and, therefore, we attempt to continually
strengthen relationships with our existing brokers and customers. We target prospects that are capable of
supplying detailed and accurate underwriting data and that potentially add further diversification to our book
of business.

We believe that primary insurers’ and brokers’ willingness to use a particular reinsurer is based not just on
pricing, but also on the financial security of the reinsurer, its claim paying ability ratings and demonstrated
willingness to promptly pay valid claims, the quality of a reinsurer’s service, the reinsurer’s willingness and
ability to design customized programs, its long-term stability and its commitment to provide reinsurance
capacity. We believe we have established a reputation with our brokers and customers for prompt
response on underwriting submissions, fast claims payments and a reputation for providing creative
solutions to our customers’ needs. Since we selectively write large lines on a limited number of property
catastrophe and specialty reinsurance contracts, we can establish terms and conditions on those contracts
that are attractive in our judgment, make large commitments to the most attractive programs and provide
superior client responsiveness. We believe that our willingness and ability to design customized programs
and to provide advice on risk management has helped us to develop long-term relationships with brokers
and customers.

Our brokers assess client needs and perform data collection, contract preparation and other administrative
tasks, enabling us to market our products cost effectively by maintaining a smaller staff. We believe that by
maintaining close relationships with brokers, we are able to obtain access to a broad range of potential
reinsureds. In recent years, our distribution has become increasingly reliant on a small and relatively
decreasing number of such relationships reflecting consolidation in the broker sector. We expect this
concentration to continue and perhaps increase.

The following table shows the percentage of our Reinsurance segment gross premiums written generated
through our largest brokers for the years ended December 31, 2011, 2010 and 2009:

Year ended December 31,
Percentage of Reinsurance segment gross premiums written

2011

2010

2009

AON Benfield
Marsh Inc.
Willis Group

Total of largest brokers

All others

Total percentage of Reinsurance segment gross

premiums written

56.1%
21.9%
12.7%
90.7%
9.3%

53.5%
23.1%
11.6%
88.2%
11.8%

58.7%
20.9%
10.5%
90.1%
9.9%

100.0%

During 2011, our Reinsurance segment issued authorization for coverage on programs submitted by 44
brokers worldwide (2010 – 41 brokers). We received approximately 3,733 program submissions during
2011 (2010 – approximately 3,174). Of these submissions, we issued authorizations for coverage for
approximately 1,021 programs, or approximately 27% of the program submissions received (2010 –
approximately 933 programs, or approximately 29%).

Our Lloyd’s segment received approximately 3,390 program submissions during 2011 (2010 –
approximately 2,080), from 46 different brokers worldwide (2010 – 38 brokers). Of these submissions, we
issued authorizations for coverage for approximately 654 programs, or approximately 19% of the program
submissions received (2010 – approximately 372 programs, or approximately 18%).

New Business

For information related to New Business, refer to “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations, Overview”.

EMPLOYEES

At February 15, 2012, we employed approximately 311 people worldwide (February 16, 2011 - 517,
February 10, 2010 - 506). As part of the sale of our U.S.-based insurance operations, which closed on
March 4, 2011, our overall headcount was reduced by approximately 204 employees that were formerly
employed in the U.S.-based insurance operations. We believe our strong employee relations are among
our most significant strengths. None of our employees are subject to collective bargaining agreements. We
are not aware of any current efforts to implement such agreements at any of our subsidiaries. The
Company has historically looked for opportunities to strengthen its operations during periods of softening
markets in anticipation of improving market conditions, however, we may from time to time reevaluate our
operational needs based on various factors, including the changing nature of such market conditions and
changes in our strategy or tactical plans.

We currently expect to continue to experience a degree of employee growth in the U.K. and other markets,
including but not limited to our weather and energy risk operations, which will increase our compliance
complexity and expenses, although we do not expect these increases to be material to the Company as a
whole.

INFORMATION TECHNOLOGY

Our information technology infrastructure is important to our business. Our information technology platform,
supported by a team of professionals, is currently principally located in our corporate headquarters and
principal corporate offices in Bermuda. Additional information technology assets are maintained at the
office locations of our operating subsidiaries. We have implemented backup procedures that seek to
ensure that our key business systems and data are backed up, generally on a daily basis, and can be
restored promptly if and as needed. In addition, we generally store backup information at off-site locations,
in order to seek to minimize our risk of loss of key data in the event of a disaster.

We depend on the proper functioning and availability of our information technology platform. This includes
communications and data processing systems used in operating our business. These systems consist of
proprietary software programs that are integral to the efficient operation of our business (including REMS©,
our proprietary computer-based pricing and exposure management system). In addition, we frequently
transmit and receive personal, confidential and proprietary information by email and other electronic means,
as required in connection with our business, with our internal operations and with facilitating the oversight
conducted by our Board of Directors. Computer viruses, hackers, employee misuse or misconduct and
other external hazards could expose our data systems to security breaches, cyber attacks or other
disruptions.

We believe that the preponderance of our business and support functions utilize information systems that
provide critical services to both our employees and our customers. We are also required to effect electronic
transmissions with third parties including brokers, clients vendors and others with whom we do business,
While we seek to ensure that our information is appropriately protected by these parties, we may be unable
to put in place secure capabilities with all of them; in addition, these third parties may not have appropriate
controls in place to protect the confidentiality of the information.

Cyber incidents that impact the availability, reliability, speed, accuracy or other proper functioning of these
systems could have a significant impact on our operations, and potentially on our results. We also operate
in a number of jurisdictions with strict data privacy and other related laws, which could be violated in the
event of a significant cybersecurity incident. Failure to comply with these obligations can give rise to
monetary fines and other penalties, which could be significant.

Our information systems are protected through physical and software safeguards as well as backup
systems considered appropriate by management. However, it is not practicable to protect against every
potential power loss, telecommunications failure, cybersecurity attack or similar event that may arise.
Moreover, the safeguards we have chosen to utilize are subject to human implementation and maintenance
and to other uncertainties.

A significant cyber incident, including system failure, security breach, disruption by malware or other
damage could interrupt or delay our operations. This type of incident may result in a violation of applicable
privacy and other laws and could damage our reputation potentially causing a loss of customers.
Management is not aware of a cybersecurity incident that has had a material effect on our operations,
although there can be no assurances that a cyber incident that could have a material impact on us will not
occur in the future.

We have implemented and periodically test our disaster recovery plans with respect to our information
technology infrastructure. Among other things, our recovery plans involve arrangements with off-site,
secure data centers in alternative locations. We believe we will be able to access our systems from these
facilities in the event that our primary systems are unavailable due to a scenario such as a natural disaster.
However, we have not prepared for every conceivable disaster or every scenario which might arise in
respect of the disaster for which we have prepared, and cannot assure you our efforts in respect of disaster
recovery will succeed, or will be sufficiently rapid to avoid harms to our business.

REGULATION

U.S. Regulation

Dodd-Frank Act. On July 21, 2010, President Obama signed into law the Dodd-Frank Act which effects
sweeping reforms of the financial services industries. The Dodd-Frank Act does not implement the federal
regulation of insurance, but it does establish federal measures that will impact the U.S. insurance business
and preempt certain state insurance measures. It may then lay the foundation for ultimately establishing
some form of federal regulation of insurance in the future.

The Dodd-Frank Act establishes the Financial Services Oversight Council (the “FSOC”) to identify risks to
the financial stability of the U.S., promote market discipline and respond to emerging threats to the financial
stability of the U.S. The FSOC will determine whether the material financial distress or failure of a non-bank
financial company, including insurance companies, would threaten the financial stability of the U.S. The
FSOC’s determination that a non-bank financial company is systemically significant will result in supervision
by the Board of Governors of the Federal Reserve (the “Federal Reserve”) and the imposition of standards
and supervision including stress tests, liquidity requirements, a resolution plan and enhanced public
disclosures. In early 2011, the FSOC released a proposed rule regarding its authority to require the
supervision and regulation of systemically significant non-bank financial companies, which was followed by
a second proposed rule in late 2011. A final rule and designations of systemically significant financial
companies are currently expected later in 2012. The FSOC’s recommendation of measures to address
systemic risk in the insurance industry could affect our U.S.-based insurance and reinsurance operations as
could a determination that we or our counterparties are systemically significant and subject to supervision
by the Federal Reserve.

The Dodd-Frank Act also creates the first office in the Federal government focused on insurance - the
Federal Insurance Office (the “FIO”). Although the FIO has preemption authority over state insurance laws
that conflict with certain international agreements, the Dodd-Frank Act does not grant the FIO general
supervisory or regulatory authority over the business of insurance. Certain functions of the FIO relate to
systemic risk. Specifically, the FIO is authorized to monitor the U.S. insurance industry and identify potential
regulatory gaps that could contribute to systemic risk to the insurance industry and the U.S. financial
system. In addition, the FIO may recommend insurers for supervision by the FSOC.

With respect to certain aspects of international insurance regulations, the FIO will represent the U.S. at the
International Association of Insurance Supervisors. The Dodd-Frank Act authorizes the Treasury Secretary
and U.S. Trade Representative to enter into international agreements of mutual recognition regarding the
prudential regulation of insurance (“Covered Agreements”). Significantly, the FIO is authorized to preempt
state measures that (i) are inconsistent with a Covered Agreement and (ii) disfavor non-U.S. insurers
subject to a Covered Agreement.

In furtherance of its duties to monitor the U.S. insurance business, represent the U.S. on an international
stage and consult with the states on insurance regulation, the FIO is authorized to collect information from
insurers and from state insurance regulators. The FIO will report to Congress annually on the insurance
industry and any preemption actions regarding Covered Agreements. The FIO will also report to Congress
no later than September 30, 2012 describing the breadth of the global reinsurance market and its critical
role in supporting the U.S. insurance system. In addition, by January 2012, the FIO was scheduled to report
to Congress on how to modernize and improve the system of insurance regulation in the U.S. including
considerations of international coordination of insurance regulation. The FIO has not yet issued this report.
The potential impact of the Dodd-Frank Act on our U.S. cedants and on the U.S. treatment of global
reinsurance matters is not clear at this time. We are monitoring developments at the FSOC and the FIO in
connection with the possible impact on our U.S. insurance and reinsurance business. The Dodd-Frank Act
also provides for the specific preemption of certain state insurance laws in the areas of reinsurance and
surplus insurance regulation .

At this time, it is difficult to predict the extent to which the Dodd-Frank Act or the resulting regulations will
impact our business. However, compliance with these new laws and regulations will result in additional
costs, which may adversely impact our results of operations, financial condition or liquidity. Although we do
not expect these costs to be material to us as a whole, we cannot be certain that this expectation will prove
accurate or that the Dodd-Frank Act will not impact our business more adversely than we currently estimate.

Reinsurance Regulation. Our Bermuda-domiciled insurance operations and joint ventures principally
consist of Renaissance Reinsurance, DaVinci, Top Layer Re and Glencoe. Renaissance Reinsurance,
DaVinci and Top Layer Re are Bermuda-based companies that operate as reinsurers. Although none of
these companies is admitted to transact the business of insurance in any jurisdiction except Bermuda, the
insurance laws of each state of the U.S. regulate the sale of reinsurance to ceding insurers authorized in
the state by non-admitted alien reinsurers, such as Renaissance Reinsurance or DaVinci, acting from
locations outside the state. Rates, contract terms and conditions of reinsurance agreements generally are
not subject to regulation by any governmental authority. A primary insurer ordinarily will enter into a
reinsurance agreement, however, only if it can obtain credit for the reinsurance ceded on its statutory
financial statements.

In general, regulators permit ceding insurers to take credit for reinsurance under the following
circumstances if the contract contains certain minimum provisions: if the reinsurer is licensed or accredited,
if the reinsurer is domiciled in a state with substantially similar regulatory requirements as the primary
insurer’s domiciliary jurisdiction and meets certain financial requirements, or if the reinsurance obligations
are collateralized appropriately. Recently New York and Florida have changed their credit for reinsurance
laws. For example, effective January 1, 2011, New York requires domestic ceding insurers to exercise
prudent reinsurance credit risk management. For a New York domestic ceding insurer to exercise financial
prudence when entering into any reinsurance arrangement, it must take into account the recoverability of
future reinsurance proceeds and the security of a reinsurer. Domestic ceding insurers are also required to
monitor reinsurance programs. New York law also establishes a basis for an unauthorized non-U.S.
reinsurer to reduce its reinsurance collateral obligations based on a secure rating assigned by the New York
Insurance Department. A similar provision was enacted in Florida.

The Dodd-Frank Act also addresses states’ extraterritorial regulation of credit for reinsurance and the
solvency regulation of U.S. reinsurers. The Dodd-Frank Act prohibits a state in which a U.S. ceding insurer
is licensed, but not domiciled, from denying credit for reinsurance if the ceding insurer’s domestic state
recognizes credit for reinsurance for the insurer’s ceded risk and is a state accredited by the National
Association of Insurance Commissioners (the “NAIC”) (or has substantially similar financial solvency
requirements). With limited exceptions, the provisions of the Dodd-Frank Act affecting reinsurance become
effective July 21, 2011.

As alien companies, our Bermuda subsidiaries collateralize their reinsurance obligations to U.S. insurance
companies. States are expected to change their credit for reinsurance laws to comply with Dodd-Frank Act
requirements. Although these changes may benefit our Bermuda based reinsurers by prohibiting states’
extraterritorial application of credit for reinsurance laws and streamlining the credit for reinsurance process,
states may also impose heightened standards on U.S. ceding insurers’ reinsurance selections which could
have an adverse impact on our business. At this time, we are unable to determine the effect of changes in
the U.S. reinsurance regulatory framework on our operations or financial condition. With some exceptions,
the sale of insurance or reinsurance within a jurisdiction where the insurer is not admitted to do business is
prohibited. None of Renaissance Reinsurance, DaVinci or Top Layer Re intends to maintain an office or to
solicit, advertise, settle claims or conduct other insurance activities in any jurisdiction, other than Bermuda,
where the conduct of such activities would require that each company be so admitted.

Excess and Surplus Lines Regulation. Glencoe, domiciled in Bermuda, is not licensed in the U.S. but is
eligible to offer coverage in the U.S. exclusively in the surplus lines market. Glencoe is eligible to write
surplus lines primary insurance in 49 U.S. states, the District of Columbia, Puerto Rico and the U.S. Virgin
Islands, and is subject to the surplus lines regulation and reporting requirements of the jurisdictions in which
it is eligible to write surplus lines primary insurance. In accordance with certain provisions of the NAIC
Nonadmitted Insurance Model Act, which provisions have been adopted by a number of states, Glencoe
has established, and is required to maintain, a trust funded to a minimum amount as a condition of its status
as an eligible, non-admitted insurer in the U.S. Under the Dodd-Frank Act, effective July 21, 2011, the
states are required to amend their laws to provide that any insurer listed on the NAIC/IID Quarterly listing is
eligible in the state as a surplus lines insurer. Glencoe is listed on the NAIC/IID Quarterly listing. Although
surplus lines business is generally less regulated than the admitted market, strict regulations apply to
surplus lines placements under the laws of every state, and the regulation of surplus lines insurance may
undergo changes in the future.

In 2008, the Florida Supreme Court held that surplus lines insurers were subject to insurance law provisions
governing policy delivery, policy forms, the payment of attorney fees and other matters; however, in 2009,
the Florida legislature passed FL SB 1894 and HB 853 to clarify the limited applicability of Florida insurance
law to surplus lines insurers (exempt from the provisions governing policy delivery, policy forms, etc.). This
case, though not supported by courts in a number of other jurisdictions at this time, could foreshadow more
extensive oversight of surplus lines insurance by other jurisdictions. Any increase in our regulatory burden
may impact our operations and ultimately could impact our financial condition as well.

Legislative and Regulatory Proposals. Government intervention in the insurance and reinsurance markets
in the U.S. continues to evolve. Although U.S. state regulation is currently the primary form of regulation of
insurance and reinsurance, in addition to changes brought about by the Dodd-Frank Act, Congress has
considered over the past years various proposals relating to the creation of an optional federal charter,
repeal of the insurance company antitrust exemption from the McCarran Ferguson Act, and tax law
changes, including changes to increase the taxation of reinsurance premiums paid to off-shore affiliates
with respect to U.S. risks. We are unable to predict what reforms will be proposed or adopted or the effect, if
any, that such reforms would have on our operations and financial condition.

In 2007, Florida enacted legislation which enabled the FHCF to offer increased amounts of coverage in
addition to the mandatory coverage amount, at below-market rates. Further, the legislation expanded the
ability of the state-sponsored insurer, Citizens, to compete with private insurance companies, and other
companies that cede business to us. This legislation reduced the role of the private insurance and
reinsurance markets in Florida, a key target market of ours. In May 2009, the Florida legislature took steps
to strengthen the financial condition of FHCF and Citizens, which a government-appointed task force
determined to have been impaired by issues including the crisis in the credit markets, widespread rate
inadequacy, and issues arising out of the application of discounts for housing retrofits and mitigation
features. A bill was passed in 2009 permitting Citizens to raise its rates by up to 10% starting in 2010 and
every year thereafter until its current shortfall is corrected and Citizens has sufficient funds to pay its claims
and expenses. For 2012, Citizens' rates will increase a statewide average of 6.2%. The rate increases and
cut back on coverage by FHCF and Citizens are expected to support, over time, a relatively increased role
of the private insurers in Florida, a market in which we have established substantial market share.

It is possible that other states, particularly those with Atlantic or Gulf Coast exposures, may enact new or
expanded legislation based on the earlier Florida precedent, or may otherwise enact legislation which would
further diminish aggregate private market demand for our products. Alternatively, legislation adversely
impacting the private markets could be enacted on a regional or Federal level. For example, in the past,
federal bills have been proposed in Congress (and, in prior congressional sessions, passed by the House of
Representatives) which would, if enacted, create a federal reinsurance backstop or guarantee mechanism
for catastrophic risks, including those we currently insure and reinsure in the private markets. In 2009 the
Catastrophe Obligation Guarantee Act was introduced in the Senate and House (S. 886) (the “COGA”) to
federally guarantee bond issuances by certain government entities, potentially including the FHCF, the
Texas Windstorm Insurance Association, the California Earthquake Authority, and others. Similar legislation
was introduced in the House of Representatives. While the COGA legislation was not enacted, any similar
legislation, if proposed and enacted, would, we believe, likely contribute to growth of these state entities or
to their inception or alteration in a manner adverse to us. If enacted, bills of this nature would likely further
erode the role of private market catastrophe reinsurers and could adversely impact our financial results,
perhaps materially. Moreover, we believe that numerous modeled potential catastrophes could exceed the
actual or politically acceptable bonded capacity of Citizens and of the FHCF, which could lead either to a
severe dislocation or the necessity of federal intervention in the Florida market, either of which would
adversely impact the private insurance and reinsurance industry. See "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations, Current Outlook, Legislative and Regulatory
Update" for further information regarding recent legislative and regulatory proposals.

The potential for further expansion into additional insurance markets could expose us or our subsidiaries to
increasing regulatory oversight, including the oversight of countries other than Bermuda and the U.S.
However, we intend to continue to conduct our operations so as to minimize the likelihood that Renaissance
Reinsurance, DaVinci, Top Layer Re, Glencoe, or any of our other Bermudian subsidiaries will become
subject to direct U.S. regulation. In addition, as discussed above, REAL and Renaissance Trading are
involved in certain commodities trading activities relating to weather, natural gas, heating oil, power, crude
oil, agricultural commodities and cross-commodity structures. While REAL’s and Renaissance Trading’s

operations currently are not subject to significant federal oversight, we are monitoring carefully new or
revised legislation or regulation in the U.S. or otherwise, which could increase the regulatory burden and
operating expenses of these operations. For example, certain provisions of the Dodd-Frank Act will
establish greater oversight over derivatives trading and could impose restrictions on the Company’s trading
activities.

Bermuda Regulation

All Bermuda companies must comply with the provisions of the Companies Act 1981. In addition, the
Insurance Act 1978, and related regulations (the “Insurance Act”), regulate the business of our Bermuda
insurance, reinsurance and management company subsidiaries.

As a holding company, RenaissanceRe is not currently subject to the Insurance Act. However, the
Insurance Act regulates the insurance and reinsurance business of our operating insurance companies. The
Company’s most significant operating subsidiaries include Renaissance Reinsurance and DaVinci which
are registered as Class 4 general business insurers and Glencoe and Top Layer Re which are registered as
Class 3A general business insurers under the Insurance Act. The Company also has operating subsidiaries
registered as SPIs under the Insurance Act, including most recently, Upsilon Re. RUM is registered as an
insurance manager.

The Insurance Act imposes solvency and liquidity standards as well as auditing and reporting requirements
and confers on the Bermuda Monetary Authority (“BMA”) powers to supervise, investigate and intervene in
the affairs of insurance companies. Significant requirements of the Insurance Act include the appointment of
an independent auditor and loss reserve specialist (both of whom must be approved by the BMA), the filing
of an annual financial return and provisions relating to the payment of distributions and dividends. In
particular:

• Class 3A and Class 4 general business insurers must prepare annual statutory financial statements
which must be submitted as part of its statutory financial return no later than four months after the
insurer’s financial year end (unless specifically extended). The annual statutory financial statements
give detailed information and analyses regarding premiums, claims, reinsurance, reserves and
investments. The statutory financial return includes, among other items: a report of the approved
independent auditor on the statutory financial statements; a declaration of statutory ratios; a solvency
certificate; the statutory financial statements themselves; the opinion of the approved loss reserve
specialist; and details concerning ceded reinsurance. The statutory financial statements and the
statutory financial return do not form part of the public records maintained by the BMA.

• In addition to preparing statutory financial statements, all Class 4 insurers must prepare financial

statements in respect of their insurance business in accordance with GAAP or International Financial
Reporting Standards (“IFRS”).

• An insurer’s statutory assets must exceed its statutory liabilities by an amount, equal to or greater than

the prescribed minimum solvency margin, which varies with the category of its registration and net
premiums written and loss reserves posted (“Minimum Solvency Margin”). The Minimum Solvency
Margin that must be maintained by a Class 4 insurer is the greater of (i) $100.0 million, or (ii) 50% of net
premiums written (with a credit for reinsurance ceded not exceeding 25% of gross premiums) or
(iii) 15% of net discounted aggregate loss and loss expense provisions and other insurance reserves.
The Minimum Solvency Margin for a Class 3A insurer is the greater of (i) $1.0 million, or (ii) 20% of the
first $6.0 million of net premiums written; if in excess of $6.0 million, the figure is $1.2 million plus 15%
of net premiums written in excess of $6.0 million, or (iii) 15% of net discounted aggregate loss and loss
expense provisions and other insurance reserves.

• In addition, each Class 4 insurer must maintain its capital at a level equal to its enhanced capital

requirement (“ECR”) which is established by reference to the Bermuda Solvency Capital Requirement
(“BSCR”) model. Alternatively, under the Insurance Act, insurers may, subject to the terms of the
Insurance Act and to the BMA’s oversight, elect to utilize an approved internal capital model to
determine regulatory capital. In either case, the ECR shall at all times equal or exceed the Class 4
insurer’s Minimum Solvency Margin and may be adjusted in circumstances where the BMA concludes
that the insurer’s risk profile deviates significantly from the assumptions underlying its ECR or the
insurer’s assessment of its risk management policies and practices used to calculate the ECR

applicable to it. While not specifically referred to in the Insurance Act, the BMA has also established a
target capital level (“TCL”) for each Class 4 insurer equal to 120% of its ECR. While a Class 4 insurer is
not currently required to maintain its statutory capital and surplus at this level, the TCL serves as an
early warning tool for the BMA and failure to maintain statutory capital at least equal to the TCL will
likely result in increased BMA regulatory oversight.

• An insurer engaged in general business is required to maintain the value of its relevant assets at not

less than 75% of the amount of its relevant liabilities (“Minimum Liquidity Ratio”).

• Both Class 3A and Class 4 insurers are prohibited from declaring or paying any dividends if in breach of
the required Minimum Solvency Margin or Minimum Liquidity Ratio (the “Relevant Margins”) or if the
declaration or payment of such dividend would cause the insurer to fail to meet the Relevant Margins.
Where an insurer fails to meet its Relevant Margins on the last day of any financial year, it is prohibited
from declaring or paying any dividends during the next financial year without the prior approval of the
BMA. Further, a Class 4 insurer is prohibited from declaring or paying in any financial year dividends of
more than 25% of its total statutory capital and surplus (as shown on its previous financial year’s
statutory balance sheet) unless it files (at least seven days before payment of such dividends) with the
BMA an affidavit stating that it will continue to meet its Relevant Margins. Class 3A and Class 4 insurers
must obtain the BMA’s prior approval for a reduction by 15% or more of the total statutory capital as set
forth in its previous year’s financial statements. These restrictions on declaring or paying dividends and
distributions under the Insurance Act are in addition to the solvency requirements under the Companies
Act which apply to all Bermuda companies.

• Unlike other (re)insurers, SPIs are fully funded to meet their (re)insurance obligations and are not

exposed to insolvency, therefore the application and supervision processes are streamlined to facilitate
the transparent structure. Further, SPIs are exempt from filing annual loss reserve specialist opinions
and the BMA has the discretion to modify such insurer's accounting requirements under the Insurance
Act. Like other (re)insurers, the Principal Representative of an SPI has a duty to inform the BMA in
relation to solvency matters, where applicable.

• The BMA maintains supervision over the controllers (as defined herein) of all Bermuda registered

insurers. Currently the Insurance Act states that no person shall become a controller of any description
of a registered insurer unless he has first served the BMA notice in writing stating that he intends to
become such a controller and the BMA has either, before the end of 45 days following the date of
notification, provided notice to the proposed controller that it does not object to his becoming such a
controller or the full 45 days has elapsed without the Authority filing an objection. A controller includes
the managing director and chief executive of the registered insurer or its parent company; a 10%, 20%,
33% or 50% shareholder controller; and any person in accordance with whose directions or instructions
the directors of the registered insurer or of its parent company are accustomed to act. In addition, all
Bermuda insurers are also required to give the BMA written notice of the fact that a person has
become, or ceased to be, a controller or officer of the registered insurer within 45 days of becoming
aware of such fact. An officer in relation to a registered insurer includes a director, secretary, chief
executive or senior executive by whatever name called. Where it appears to the BMA that a person
who is a controller of any description of a registered person is not or is no longer a fit and proper person
to be such a controller, it may serve him with a written notice of objection to his being such a controller
of the registered person.

• All registered insurers are required to give the BMA notice of certain matters that are likely to be of
material significance (each a “Material Change”) to the BMA in carrying out its supervisory function
under the Insurance Act. No registered insurer shall take any steps to give effect to a Material Change
unless it has notified the BMA that it intends to effect such Material Change and before the end of 14
days, either the BMA has advised in writing that it has no objection to such change or that period has
lapsed without the BMA having issued a notice of objection.

• All Bermuda insurers are required to comply with the BMA’s Insurance Code of Conduct which

establishes duties, requirements and standards to be complied with under the Insurance Act. Beginning
with its 2012 filing, every Bermuda insurer will be required to submit as part of its annual statutory
return, a statutory declaration confirming that the Company is in compliance with the Code of Conduct.
Failure to comply with these requirements will be a factor taken into account by the BMA in determining
whether an insurer is conducting its business in a sound and prudent manner under the Insurance Act.

• Under the Insurance Act, the BMA may determine that it is appropriate for it to act as group supervisor

of any group that conducts exclusively, or mainly, insurance business. Pursuant to these provisions, the
BMA has advised RUM that it intends to act as group supervisor of the RenaissanceRe group of
companies (the “RenaissanceRe Group”) and that it has designated Renaissance Reinsurance to be
the "designated insurer" in respect of the RenaissanceRe Group. The designated insurer is required to
ensure that the RenaissanceRe Group complies with the provisions of the Insurance Act pertaining to
groups. Beginning in 2012, the RenaissanceRe Group will be required to prepare and submit annually
to the BMA group GAAP financial statements, a group statutory financial return and a group capital and
solvency return; our Board of Directors must establish solvency self assessment procedures for the
RenaissanceRe Group that factor in all foreseeable material risks; the designated insurer must ensure
that the RenaissanceRe Group's assets exceed the amount of the RenaissanceRe Group's liabilities by
the aggregate minimum margin of solvency of each qualifying member and that available
RenaissanceRe Group capital and surplus is maintained at a level equal to or in excess of the
RenaissanceRe Group's ECR which is established by reference to either the RenaissanceRe Group
BSCR model or an approved group internal capital model; and our Board of Directors must establish
and effectively implement corporate governance policies and procedures to ensure they support the
overall organizational strategy of the RenaissanceRe Group.

• If the BMA believes that an investigation is required in the interests of an insurer’s policyholders or
persons who may become policyholders, it may appoint an inspector who has extensive powers of
investigation. If it appears to the BMA to be desirable in the interests of policyholders, the BMA may
also exercise these powers in relation to holding companies, subsidiaries and other affiliates of insurers.
If it appears to the BMA that there is a risk of an insurer becoming insolvent, or that the insurer is in
breach of the Insurance Act or any conditions of its registration, the BMA may exercise extensive
powers of intervention including directing the insurer not to take on any new insurance business or
prohibiting the company from declaring and paying dividends or other distributions.

• Under the provisions of the Insurance Act, the BMA may, from time to time, conduct “on site” visits at
the offices of insurers it regulates. Over the past several years the BMA has conducted several "on
site" reviews in respect of our Bermuda-domiciled operating insurers. No remedial actions were
communicated to us as a result of any of the on-site reviews to date.

• The BMA may cancel an insurer’s registration on certain grounds specified in the Insurance Act,
including without limitation, (i) the failure of that insurer to comply with its obligations under the
Insurance Act or (ii) the failure of that insurer in the opinion of the BMA to carry on its business in
accordance with sound insurance principles.

Under current Bermuda law, the Company is not subject to any tax computed on profits or income or
computed on any capital asset, gain or appreciation. The Company has been exempted from any such tax
until March 2016 pursuant to the Bermuda Exempted Undertakings Tax Protection Act of 1966. During
June 2011, the Minister of Finance of Bermuda granted an extension of this assurance to the Company with
effect until March 2035.

U.K. Regulation

Lloyd’s Regulation

General. The operations of RenaissanceRe Syndicate Management Limited (“RSML”) are franchised by
Lloyd’s. The Lloyd’s Franchise Board was formally constituted on January 1, 2003. The Franchise Board
establishes guidelines and operates a business planning and monitoring process for all Lloyd's syndicates.
RSML’s business plan for Syndicate 1458 requires annual approval by the Lloyd’s Franchise Board
including maximum underwriting capacity. The Lloyd’s Franchise Board may require changes to any
business plan presented to it or additional capital to be provided to support the underwriting plan. Lloyd’s
also imposes various charges and assessments on its members. If material changes in the business plan
for Syndicate 1458 were required by the Lloyd’s Franchise Board, or if charges and assessments payable
to Lloyd’s by RenaissanceRe CCL were to increase significantly, these events could have an adverse effect
on the operations and financial results of RSML. The Company has deposited certain assets with Lloyd’s to
support RenaissanceRe CCL’s underwriting business at Lloyd’s. Dividends from a Lloyd’s managing agent
and a Lloyd’s corporate member can be declared and paid provided the relevant company has sufficient
profits available for distribution.

By entering into a membership agreement with Lloyd’s, RenaissanceRe CCL has undertaken to comply with
all Lloyd’s bye-laws and regulations as well as the provisions of the Lloyd’s Acts and the Financial Services
and Markets Act 2000 (the “FSMA”) that are applicable to it.

Capital Requirements. Capital is supplied on the basis of an annual venture, with continuing support from
capital providers and the members of Lloyd's, and requires affirmation each year. The underwriting capacity
of a member of Lloyd’s must be supported by providing a deposit (referred to as “Funds at Lloyd’s”) in the
form of cash, securities or letters of credit in an amount determined under the Individual Capital Adequacy
regime of the U.K.’s Financial Services Authority (the “FSA”). The amount of such deposit is calculated for
each member through the completion of an annual capital adequacy exercise. Under these requirements,
Lloyd’s must demonstrate that each member has sufficient assets to meet its underwriting liabilities plus a
required solvency margin.

Restrictions. A Reinsurance to Close (“RITC”) in general is put in place after the third year of operations of
a syndicate year of account. On successful conclusion of a RITC, any profit from the syndicate's operations
for that year of account can be remitted by the managing agent to the syndicate's members. If the
syndicate’s managing agency concludes that an appropriate RITC cannot be determined or negotiated on
commercially acceptable terms in respect of a particular underwriting year, it must determine that the
underwriting year remain open and be placed into run-off. During this period there cannot be a release of
the Funds at Lloyd’s of a member of that syndicate without the consent of Lloyd’s and such consent will only
be considered where the member has surplus Funds at Lloyd’s over and above the capital requirement.

The financial security of the Lloyd’s market is regularly assessed by three independent rating agencies
(A.M. Best, S&P and Fitch). A satisfactory credit rating issued by an accredited rating agency is necessary
for Lloyd’s syndicates to be able to trade in certain classes of business at current levels. RSML and
RenaissanceRe CCL would be adversely affected if Lloyd’s current ratings were downgraded.

Intervention Powers. The Council of Lloyd’s has wide discretionary powers to regulate members’
underwriting at Lloyd’s. It may, for instance, change the basis on which syndicate expenses are allocated or
vary the Funds at Lloyd’s requirements or the investment criteria applicable to the provision of Funds at
Lloyd’s. Exercising any of these powers might affect the return on the corporate member’s participation in a
given underwriting year. If a member of Lloyd’s is unable to pay its debts to policyholders, such debts may
be payable by the Lloyd’s Central Fund, which in many respects acts as an equivalent to a state guaranty
fund in the U.S. If Lloyd’s determines that the Central Fund needs to be increased, it has the power to
assess premium levies on current Lloyd’s members. The Council of Lloyd’s has discretion to call or assess
up to 3% of a member’s underwriting capacity in any one year as a Central Fund contribution.

Lloyd’s approval is also required before any person can acquire control (as defined below in relation to the
FSMA and giving prior notification to the FSA) of a Lloyd’s managing agent or Lloyd’s corporate member.

FSA Regulation

The FSA has ultimate responsibility for the regulation of the Lloyd's market and has substantial powers of
intervention in relation to Lloyd’s managing agents, such as RSML, including the power to remove an
agent's authorization to manage Lloyd’s syndicates. In addition, each year the FSA requires Lloyd’s to
satisfy an annual solvency test which measures whether Lloyd’s has sufficient assets in the aggregate to
meet all outstanding liabilities of its members, both current and run-off. If Lloyd’s fails this test, the FSA may
require the entire Lloyd’s market to cease underwriting or individual Lloyd's members may be required to
cease or reduce their underwriting.

Lloyd’s as a whole is authorized by the FSA and is required to implement certain rules prescribed by the
FSA; such rules to be implemented by Lloyd's pursuant to its powers under the Lloyd’s Act 1982 relating to
the operation of the Lloyd’s market. Lloyd’s prescribes, in respect of its managing agents and corporate
members, certain minimum standards relating to their management and control, solvency and various other
requirements. The FSA directly monitors Lloyd’s managing agents’ compliance with the systems and
controls prescribed by Lloyd’s. If it appears to the FSA that either Lloyd’s is not fulfilling its delegated
regulatory responsibilities or that managing agents are not complying with the applicable regulatory rules
and guidance, the FSA may intervene at its discretion. Future regulatory changes or rulings by the FSA
could impact RSML’s business strategy or financial assumptions, possibly resulting in an adverse effect on
RSML’s financial condition and operating results.

Regulatory Reform in the UK. By the end of 2012, regulatory responsibility for insurance undertakings in
the UK will have passed from the FSA to two new bodies, the Prudential Regulation Authority (“PRA”) and
the Financial Conduct Authority (“FCA”). Few details have emerged of how regulation by the PRA and the
FCA may differ from regulation under the FSA. It is expected that Lloyd's will enjoy the same or similar
delegation of regulatory authority from these two bodies as it currently enjoys from the FSA. However, there
is considerable uncertainty over how this change to the regulatory architecture in the U.K. will affect
operations at Lloyd's.

Change of Control. The FSA regulates the acquisition of control of any Lloyd’s managing agent which is
authorized under the FSMA. Any company or individual that, together with its or his associates, directly or
indirectly acquires 10% or more of the shares in a Lloyd’s managing agent or its parent company, or is
entitled to exercise or control the exercise of 10% or more of the voting power in such Lloyd’s managing
agent or its parent company, would be considered to have acquired control for the purposes of the relevant
legislation, as would a person who had significant influence over the management of such Lloyd’s
managing agent or its parent company by virtue of his shareholding or voting power in either. A purchaser of
10% or more of RenaissanceRe’s common shares or voting power would therefore be considered to have
acquired control of RSML. Under the FSMA, any person or entity proposing to acquire control over a Lloyd’s
managing agent must give prior notification to the FSA of his or the entity’s intention to do so. The FSA
would then have sixty working days to consider the application to acquire control. Failure to make the
relevant prior application could result in action being taken against RSML by the FSA. Lloyd’s approval is
also required before any person can acquire control (using the same definition as for the FSA) of a Lloyd’s
managing agent or Lloyd’s corporate member.

Other Applicable Laws. Lloyd’s worldwide insurance and reinsurance business is subject to various
regulations, laws, treaties and other applicable policies of the European Union, as well as each nation, state
and locality in which it operates. Material changes in governmental requirements and laws could have an
adverse affect on Lloyd’s and its member companies, including RSML and RenaissanceRe CCL.

Solvency II

Solvency II was adopted by the European Parliament in April of 2009. Implementation of Solvency II by the
European Commission is expected to take effect January 1, 2013 (with full compliance to be phased in by
January 1, 2014) in the European Union Member States, and will replace the current solvency
requirements. Solvency II adopts a risk-based approach to insurance regulation. Its principal goals are to
improve the correlation between capital and risk, effect group supervision of insurance and reinsurance
affiliates, implement a uniform capital adequacy structure for (re)insurers across the European Union
Member States, establish consistent corporate governance standards for insurance and reinsurance
companies, and establish transparency through standard reporting of insurance operations. Under Solvency
II, an insurer’s or reinsurer’s capital adequacy in relation to various insurance and business risks may be
measured with an internal model developed by the insurer or reinsurer and approved for use by the
Member State’s regulator or pursuant to a standard formula developed by the European Commission.
Lloyd's requires all managing agents to develop internal models for the syndicate they manage. During
2011, the development of an internal model for use in calculating RenaissanceRe Syndicate 1458's
Solvency Capital Requirement required us to utilize a significant amount of resources to ensure compliance
with Solvency II. We are monitoring the ongoing legislative and regulatory steps following adoption of
Solvency II. The principles, standards and requirements of Solvency II may also, directly or indirectly,
impact the future supervision of additional operating subsidiaries of ours.

Environmental and Climate Change Matters

Our principal coverages and services relate to natural disasters and catastrophes, such as earthquakes or
hurricanes. We believe, and believe the consensus view of current scientific studies substantiates, that
changes in climate conditions, primarily global temperatures and expected sea levels, are likely to increase
the severity, and possibly the frequency, of weather related natural disasters and catastrophes relative to
the historical experience over the past 100 years. Coupled with currently projected demographic trends in
catastrophe-exposed regions, we currently estimate that this expected increase in tropical cyclone intensity
over coming periods will increase the average economic value of expected losses, increase the number of
people exposed per year to natural disasters and in general exacerbate disaster risk, including risks to
infrastructure, global supply chains and agricultural production.

Accordingly, we currently estimate that these trends will increase the risk of claims arising from our property
and casualty lines of business, particularly with respect to properties located in coastal areas, among
others. While a substantial portion of our coverages may be adversely impacted by climate change, we
have taken certain measures, to the extent permissible by law and prevailing market conditions, to mitigate
against such losses by giving consideration to these risks in our underwriting decisions. We seek to
continuously monitor and adjust, as we believe appropriate, our risk management models to reflect our
judgment of how to interpret current developments and information such as the studies referred to
above. However, it is possible that, even after these assessments, we will have underestimated the
frequency or severity of tropical cyclones or of other catastrophes. To the extent broad environmental
factors, exacerbated by climate change or otherwise, lead to increases in insured losses, particularly if
those losses exceed expectations and the prior estimates of market participants, regulators or other
stakeholders, the markets and clients we serve may be disrupted and adversely impacted, and we may be
adversely affected, directly or indirectly. Further, certain of our investments such as catastrophe-linked
securities and property catastrophe managed joint ventures related to hurricane coverage, could also be
adversely impacted by climate change.

An increasing number of federal, state, local and foreign government requirements and international
agreements apply to environmental and climate change, in particular by seeking to limit or penalize the
discharge of materials such as greenhouse gas (“GHG”) into the environment or otherwise relating to the
protection of the environment. Although our operations are characterized by a small number of professional
office facilities, and we have not been directly, materially impacted by these changes to date, it is our policy
to monitor and seek to ensure compliance with these requirements, as applicable. We believe that, as a
general matter, our policies, practices and procedures are properly designed to identify and manage
environmental and climate-related risks, particularly the risks of potential financial liability in connection with
our reinsurance, insurance and trading businesses. However, we believe that some risk of environmental
damage is inherent in respect of any commercial operation, and may increase for us if our business
continues to expand and diversify, including as a result of the possible expansion of the products and
services offered by REAL, or by investments which we have made or may make through REAL or other
subsidiaries. For example, our weather and energy risk management operations and our customers of such
services could be impacted by climate change and increased GHG regulation. Likewise, certain of our
investments may also be adversely affected by climate change and increased governmental regulation of,
or international agreements pertaining to, GHG emissions. Moreover, our evaluation may be flawed or may
reflect inaccurate or incomplete information, and it is possible our exposure to climate change or other
environmental risks is greater than we have currently estimated.

At this time, we do not believe that any existing or currently pending climate change legislation, regulation,
or international treaty or accord known to us would be reasonably likely to have a material effect in the
foreseeable future on our business or on our results of operations, capital expenditures or financial position.
However, it is possible that future developments, such as increasingly strict environmental laws and
standards and enforcement policies, could give rise to more severe exposure, more costly compliance
requirements, or otherwise bring into question our current policies and practices. In addition, it is possible
that state insurance regulation could impact the ability of our customers, or of the Company, to manage
property exposures in areas vulnerable to significant climate-driven losses. For example, if our customers or
operations are unable to utilize actuarially sound, risk-based pricing, to modify policy terms if necessary to
reflect changes in the underlying risks, or to otherwise manage exposures appropriately to reflect the risk of
increased loss from both large scale natural catastrophes and smaller scale weather events, our markets,
customers, or our own financial results may all be adversely affected. We will continue to monitor emerging
developments in this area.

AVAILABLE INFORMATION

We maintain a website at http://www.renre.com. The information on our website is not incorporated by
reference in this Form 10-K.

We make available, free of charge through our website, our Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we
electronically file such material with, or furnish such material to, the Securities and Exchange Commission
(“SEC”). We also make available, free of charge from our website, our Audit Committee Charter,
Compensation/Governance Committee Charter, Corporate Governance Guidelines, and Code of Ethics.
Such information is also available in print for any shareholder who sends a request to RenaissanceRe
Holdings Ltd., Attn: Office of the Corporate Secretary, P.O. Box HM 2527, Hamilton, HMGX, Bermuda.
Reports filed with the SEC may also be viewed or obtained at the SEC Public Reference Room at 100 F
Street, N.E., Washington, DC 20549. Information on the operation of the SEC Public Reference Room may
be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains
reports, proxy and information statements, and other information regarding issuers, including the Company,
that file electronically with the SEC. The address of the SEC’s website is http://www.sec.gov.

ITEM 1A. RISK FACTORS

Factors that could cause our actual results to differ materially from those in the forward-looking statements
contained in this Form 10-K and other documents we file with the SEC include the following:

Risks Related to Our Company

Our exposure to catastrophic events and other exposures that we cover could cause our financial results to
vary significantly from one period to the next.

Our largest product based on total gross premiums written is property catastrophe reinsurance. We also sell
lines of specialty reinsurance products and insurance products that are exposed to catastrophe risk. We
therefore have a large overall exposure to natural and man-made disasters, such as earthquakes,
hurricanes, tsunamis, winter storms, freezes, floods, fires, tornados, hailstorms, drought and other natural
or man-made disasters, such as acts of terrorism. Our relative exposure to catastrophe risk has recently
increased, including as a result of the sale of substantially all of our U.S.-based insurance operations in
early 2011, which diminished the diversification of our exposure to non-catastrophe perils to a degree. As a
result, our operating results have historically been, and we expect will continue to be, significantly affected
by relatively few events of a large magnitude.

We expect claims from catastrophic events to cause substantial volatility in our financial results for any
fiscal quarter or year; moreover, catastrophic claims could adversely affect our financial condition, results of
operations and cash flows. Our ability to write new business could also be affected. We believe that
increases in the value and geographic concentration of insured property, particularly along coastal regions,
and the effects of inflation may continue to increase the severity of claims from catastrophic events in the
future.

From time to time, we expect to have greater exposures in one or more specific geographic areas than our
overall share of the worldwide market would otherwise suggest. Accordingly, when and if catastrophes
occur in these areas, we may experience relatively more severe net negative impacts from such events
than our competitors. In particular, we have historically had a relatively large percentage of its coverage
exposures concentrated in the State of Florida.

Through Renaissance Trading and REAL, we sell certain financial products primarily to address weather
risks, and engage in certain weather, energy and commodity derivatives trading activities. The trading
markets for these derivatives are generally linked to energy and agriculture commodities, weather and other
natural phenomena. We expect our results from these activities will be subject to volatility, both potentially
as a result of the occurrence or non-occurrence of the event or events which might trigger counterparty
payments under these contracts, and as a result of the potential for variance in the reportable fair value of
these contracts between periods as a result of a wide number of potential factors. It is possible that our
exposures through Renaissance Trading and REAL are more volatile, or more correlated with our
reinsurance exposures, than we estimate.

Our claims and claim expense reserves are subject to inherent uncertainties.

Our claims and claim expense reserves reflect our estimates, using actuarial and statistical projections at a
given point in time, of our expectations of the ultimate settlement and administration costs of claims
incurred. Although we use actuarial and computer models as well as historical reinsurance and insurance
industry loss statistics, we also rely heavily on management’s experience and judgment to assist in the
establishment of appropriate claims and claim expense reserves. However, because of the many
assumptions and estimates involved in establishing reserves, the reserving process is inherently uncertain.
Our estimates and judgments are based on numerous factors, and may be revised as additional experience
and other data become available and are reviewed, as new or improved methodologies are developed, as
loss trends and claims inflation impact future payments, or as current laws or interpretations thereof
change.

Our specialty reinsurance operations are expected to produce claims which at times can only be resolved
through lengthy and unpredictable litigation. The measures required to resolve such claims, including the
adjudication process, present more reserve challenges than property losses (which, on the whole, tend to
be reported comparatively more promptly and to be settled within a relatively shorter period of time,
although every catastrophic event is comprised of a unique set of circumstances). Actual net claims and
claim expenses paid and reported may deviate, perhaps substantially, from the reserve estimates reflected
in our financial statements.

We expect that some of our assumptions or estimates will prove to be inaccurate, and that our actual net
claims and claim expenses paid and reported will differ, perhaps substantially, from the reserve estimates
reflected in our financial statements. To the extent that our actual claims and claim expenses exceed our
expectations, we would be required to increase claims and claim expense reserves. This would reduce our
net income by a corresponding amount in the period in which the deficiency is identified. To the extent that
our actual claims and claim expenses are lower than our expectations, we would be required to decrease
claims and claim expense reserves and this would increase our net income.

Estimates of losses are based on a review of potentially exposed contracts, information reported by and
discussions with counterparties, and our estimate of losses related to those contracts and are subject to
change as more information is reported and becomes available.

As an example, our estimates of losses from catastrophic events, such as the recent Thailand and
Australian flooding, and the 2011 and 2010 earthquakes, are based on factors including currently available
information derived from claims information from certain customers and brokers, industry assessments of
losses from the events, proprietary models, and the terms and conditions of our contracts. Due to the
magnitude and unusual complexity of the legal and claims issues relating to these events, particularly the
recent Thailand and Australian flooding, and the 2011 and 2010 earthquakes, meaningful uncertainty
remains regarding total covered losses for the insurance industry and, accordingly, several of the key
assumptions underlying our loss estimates. In addition, actual losses from these events may increase if our
reinsurers or other obligors fail to meet their obligations to us. Our actual losses from these events will likely
vary, perhaps materially, from these current estimates due to the inherent uncertainties in reserving for such
losses, including the nature of the available information, the potential inaccuracies and inadequacies in the
data provided by customers and brokers, the potential lengthy claims development period, the inherent
uncertainty of modeling techniques and the application of such techniques, the effects of any demand surge
on claims activity and complex coverage and other legal issues.

A decline in the ratings assigned to our financial strength may adversely impact our business, perhaps
materially so.

Third party rating agencies assess and rate the financial strength of reinsurers and insurers, such as
Renaissance Reinsurance and certain of our other operating subsidiaries and joint ventures. These ratings
are based upon criteria established by the rating agencies. Periodically, the rating agencies evaluate us and
may downgrade or withdraw their financial strength ratings in the future if we do not continue to meet the
criteria of the ratings previously assigned to us. The financial strength ratings assigned by rating agencies
to reinsurance or insurance companies are based upon factors relevant to policyholders and are not
directed toward the protection of investors.

These ratings are subject to periodic review and may be revised or revoked by the agencies which issue
them. In addition, from time to time one or more rating agencies have effected changes in their capital
models and rating methodologies, which have generally served to increase the amounts of capital required
to support the ratings, and it is possible that legislation arising as a result of the financial crisis that
preceded the ongoing period of relative economic weakness may result in additional changes. Negative
ratings actions in the future could have an adverse effect on our ability to fully realize the market
opportunities we currently expect to participate in. In addition, it is increasingly common for our reinsurance
contracts to contain provisions permitting our customers to cancel coverage pro-rata if our relevant
operating subsidiary is downgraded below a certain rating level. Whether a client would exercise this right
would depend, among other factors, on the reason for such a downgrade, the extent of the downgrade, the
prevailing market conditions and the pricing and availability of replacement reinsurance coverage.
Therefore, in the event of a downgrade, it is not possible to predict in advance the extent to which this
cancellation right would be exercised, if at all, or what effect such cancellations would have on our financial
condition or future operations, but such effect potentially could be material. To date, we are not aware that
we have experienced such a cancellation.

Our ability to compete with other reinsurers and insurers, and our results of operations, could be materially
adversely affected by any such ratings downgrade. For example, following a ratings downgrade we might
lose customers to more highly rated competitors or retain a lower share of the business of our customers.

For the current ratings of certain of our subsidiaries and joint ventures, refer to “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources,
Ratings” for additional information.

Because we depend on a few insurance and reinsurance brokers in our Reinsurance segment for a
preponderance of our revenue, loss of business provided by them could adversely affect us.

Our Reinsurance business markets insurance and reinsurance products worldwide exclusively through
insurance and reinsurance brokers. Three brokerage firms accounted for 90.7% of our Reinsurance
segment gross premiums written for the year ended December 31, 2011. Subsidiaries and affiliates of AON
Benfield, Marsh Inc. and the Willis Group accounted for approximately 56.1%, 21.9% and 12.7%,
respectively, of our Reinsurance segment gross premiums written in 2011. The loss of a substantial portion
of the business provided by our brokers would have a material adverse effect on us. Our ability to market
our products could decline as a result of any loss of the business provided by these brokers and it is
possible that our premiums written would decrease.

The emergence of matters which may impact certain of our coverages, such as the asserted trend toward
potentially significant global warming and the ongoing period of relative economic weakness, could cause
us to underestimate our exposures and potentially adversely impact our financial results, perhaps
significantly.

In our Reinsurance business, we use analytic and modeling capabilities that help us to assess the risk and
return of each reinsurance contract in relation to our overall portfolio of reinsurance contracts. See “Item 1.
Business, Underwriting and Enterprise Risk Management.”

In general, our techniques for evaluating catastrophe risk are much better developed than those for other
classes of risk in businesses that we have entered into more recently. Our models and databases may not
accurately address the emergence of a variety of matters which might be deemed to impact certain of our
coverages. Accordingly, our models may understate the exposures we are assuming and our financial
results may be adversely impacted, perhaps significantly. These risks may increase if we succeed in
increasing the contributions from our specialty reinsurance unit or from our Lloyd’s segment, either on an
absolute or relative basis.

We believe, and believe the consensus view of current scientific studies substantiates, that changes in
climate conditions, primarily global temperatures and expected sea levels, are likely to increase the severity
and possibly the frequency of natural catastrophes relative to the historical experience over the past 100
years. Coupled with currently projected demographic trends in catastrophe-exposed regions, we currently
estimate that this expected increase in tropical cyclone intensity over coming periods may significantly
increase the average economic value of expected losses, increase the number of people exposed per year
to natural disasters and in general exacerbate disaster risk, including risks to infrastructure, global supply
chains and agricultural production.

Accordingly, we currently estimate that these trends may increase claims under our property and casualty
lines of business, particularly with respect to properties located in coastal and flood-exposed areas, among
others. Furthermore, certain energy and agriculture-related products that we offer could also be negatively
impacted by dramatically changing climactic conditions. While we believe a substantial portion of our
insureds may be adversely impacted by climate change, we have taken certain measures, to the extent
permissible by law and prevailing market conditions, to mitigate against such losses by giving consideration
to these risks in our underwriting decisions. We continuously monitor and adjust, as we believe appropriate,
our risk management models to reflect our judgment of how to interpret current developments and
information such as these studies. However, it is possible that, even after these assessments, we will have
underestimated the scale of the risks, such as the frequency or severity of hurricanes or other catastrophes
or may have failed to identify new or increased risks. To the extent broad environmental factors,
exacerbated by climate change or otherwise, lead to increases in likely insured losses, particularly if those
losses exceed expectations and the prior estimates of market participants, regulators or other stakeholders,
the markets and clients we serve may be disrupted and adversely impacted, and we may be adversely
affected, directly or indirectly. Further, certain of our investments such as insurance-linked securities and
property catastrophe managed joint ventures related to hurricane coverage could also be adversely
impacted by climate change.

The ongoing relative weakness in business and economic conditions generally or specifically in the principal
markets in which we do business could adversely affect our business and operating results.

The U.S. and numerous other leading markets around the world continue to experience significant
recessionary conditions, and we believe meaningful risk remains of potential further deterioration in
economic conditions, including substantial and continuing financial market disruptions. In particular, global
economic markets, including many of the key markets which we serve, may continue to be adversely
impacted by the financial and fiscal instability of several European jurisdictions and, increasingly, the
Eurozone market as a whole, the rising cost of oil and for energy more generally, the rising prices for
various agricultural and other commodities, and other factors. While many governments, including the U.S.
federal government, have taken substantial steps to stabilize economic conditions in an effort to increase
liquidity and capital availability, if economic conditions deteriorate further, the business environment in our
principal markets would be further adversely affected, which accordingly could adversely affect demand for
the products sold by us or our customers. Economic conditions could also be adversely affected by an
increase in global political instability, which might impact the price of energy products, agricultural goods
and other commodities, or otherwise harm the markets in which we participate. In addition, during an
economic downturn we believe our consolidated credit risk, reflecting our counterparty dealings with agents,
brokers, customers, retrocessionaires, capital providers and parties associated with our investment
portfolio, among others, is likely to be increased.

The further downgrade of U.S. government securities by credit rating agencies and the economic crisis in
Europe could have a material adverse effect on our business, financial condition and results of operations.

Recent U.S. debt ceiling and budget deficit concerns, together with signs of deteriorating sovereign debt
conditions in Europe, have increased the possibility of additional credit rating downgrades and economic
slowdowns. In August 2011, S&P lowered its long-term sovereign credit rating on the United States from
“AAA” to “AA+”. In January 2012, S&P removed the former "AAA" ratings from France and Austria and
downgraded seven others, including Spain, Italy and Portugal; and in in February 2012, Moody's adjusted
the sovereign debt ratings of several EU countries. According to these agencies, the downward
adjustments reflected the susceptibility of these sovereign issuers to the growing financial and
macroeconomic risks emanating from the European crisis and how these risks exacerbate the affected
countries' own specific challenges. Subsequently, leading rating agencies have issued negative
adjustments to EU corporate issuers, government-related issuers, structured financing vehicles and other
entities.

The impact of this or any further downgrades to the U.S. government's sovereign credit rating, or its
perceived creditworthiness, and the impact of the current crisis in Europe with respect to the ability of
certain EU countries to continue to service their sovereign debt obligations is inherently unpredictable and
could adversely affect U.S. and global financial markets and economic conditions. In addition, any further
downgrade of U.S. government securities by credit rating agencies, and/or with the worsening of the current
crisis in Europe, may have an adverse impact on fixed income markets, which in turn could cause our net
income to decline or have a material adverse effect on our financial condition.

Further, although we do not directly hold a material amount of investment securities related to distressed
Eurozone countries, we believe that many of our customers and counterparties hold positions in these
instruments. If the European crisis were to continue, or were to expand to other countries within Europe,
we would be subject to enhanced risk of counterparty failure as well as related problems arising from a lack
of liquidity in our markets. The continuation of the European crisis may affect other aspects of our business
for a variety of reasons. For example, the European crisis may cause the value of the Euro to deteriorate,
which could cause a member country to exit from the EU and introduce a new currency to replace the Euro.
If such new currency is undervalued in relation to the Euro, customers and/or brokers in such country may
be unable to pay the amounts owed to us under our existing contracts with them and they may seek to
renegotiate such contracts in the new currency on terms that are less favorable to us.

There can be no assurance that governmental or other measures to aid economic recovery will be effective.
These developments and the government's credit concerns in general, could cause interest rates and
borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable
terms. In addition, any decreased credit rating of U.S. government securities could create broader financial
turmoil and uncertainty, which may exert downward pressure on the price of our common shares. Continued
adverse economic conditions could have a material adverse effect on our business, financial condition and
results of operations.

Some of our investments are relatively illiquid and are in asset classes that may experience significant
market valuation fluctuations.

Although we invest primarily in highly liquid securities in order to ensure our ability to pay valid claims in a
prompt manner, we do hold certain investments that may lack liquidity, such as our alternative investments,
which include, but are not limited to, private equity investments, hedge funds, bank loan fund investments
and insurance-linked securities. If we require significant amounts of cash on short notice in excess of our
normal cash requirements or are required to post or return collateral in connection with our investment
portfolio, we may have difficulty selling these investments in a timely manner, be forced to sell them for less
than we otherwise would have been able to realize, or both.

At times, the reported value of our relatively illiquid types of investments and of our high quality, generally
more liquid asset classes, do not necessarily reflect the lowest current market price for the asset. If we were
forced to sell certain of our assets in the current market, there can be no assurance that we will be able to
sell them for the prices at which we have recorded them and we may be forced to sell them at significantly
lower prices.

A reduction in market liquidity may make it difficult to value certain of our securities as trading becomes less
frequent. As such, valuations may include assumptions or estimates that may be more susceptible to
significant period-to-period changes which could have a material adverse effect on our consolidated results
of operations or financial condition.

The determination of impairments taken on our investments, investments in other ventures, under equity
method, goodwill and other intangible assets and loans is highly subjective and could materially impact our
financial position or results of operations.

The determination of impairments taken varies by type and is based upon our periodic evaluation and
assessment of known and inherent risks associated with the respective asset class. Such evaluations and
assessments are revised as conditions change and new information becomes available. Management
updates its evaluations regularly and reflects impairments in operations as such evaluations are revised.
There can be no assurance that our management has accurately assessed the level of impairments taken
in our financial statements. Furthermore, additional impairments may need to be taken in the future, which
could materially impact our financial position or results of operations. Historical trends may not be indicative
of future impairments.

A decline in our investment performance could reduce our profitability and hinder our ability to pay claims
promptly in accordance with our strategy.

We have historically derived a meaningful portion of our income from our invested assets, which are
comprised of, among other things, fixed maturity securities, such as bonds, asset-backed securities,
mortgage-backed securities and investments in bank loan funds, hedge funds and private equity
partnerships. Accordingly, our financial results are subject to a variety of investment risks, including risks
relating to general economic conditions, market volatility, interest rate fluctuations, foreign currency risk,
liquidity risk and credit and default risk. Additionally, with respect to certain of our investments, we are
subject to pre-payment or reinvestment risk.

Our invested assets have grown over the years and have come to effect a comparably greater contribution
to our financial results. Accordingly, a failure to successfully execute our investment strategy could have a
material adverse effect on our overall results. In the event of a significant or total loss in our investment
portfolio, our ability to pay any claims promptly in accordance with our strategy could be adversely affected.

The market value of our fixed maturity investments is subject to fluctuation depending on changes in
various factors, including prevailing interest rates and widening credit spreads.

Increases in interest rates could cause the market value of our investment portfolio to decrease, perhaps
substantially. Conversely, a decline in interest rates could reduce our investment yield, which would reduce
our overall profitability. Interest rates are highly sensitive to many factors, including governmental monetary
policies, domestic and international economic and political conditions and other factors beyond our control.
Any measures we take that are intended to manage the risks of operating in a changing interest rate
environment may not effectively mitigate such interest rate sensitivity.

A portion of our investment portfolio is allocated to other classes of investments which we expect to have
different risk characteristics than our investments in traditional fixed maturity securities and short term
investments. These other classes of investments include interests in alternative investment vehicles such
as private equity partnerships, hedge funds, senior secured bank loan funds and catastrophe bonds and are
recorded on our consolidated balance sheet at fair value. For the aforementioned classes of investments,
the fair value of the assets comprising the portfolio of an investment vehicle, and likewise the net asset
value of the investment vehicle itself, are generally established on the basis of the valuation criteria applied
by the investment managers as set forth in the governing documents of such investment vehicles. Such
valuations may differ significantly from the values that would have been used had ready markets existed for
the shares, partnership interests, notes or other securities representing interests in the relevant investment
vehicles. Interests in many of the investment classes described above are subject to restrictions on
redemptions and sales which are determined by the governing documents and limit our ability to liquidate
these investments in the short term. These classes of investments expose us to market risks including
interest rate risk, foreign currency risk, equity price risk and credit risk. The performance of these classes of
investments is also dependent on the individual investment managers and the investment strategies. It is
possible that the investment managers will leave and/or the investment strategies will become ineffective or
that such managers will fail to follow our investment guidelines. Any of the foregoing could result in a
material adverse change to our investment performance, and accordingly adversely affect our financial
results.

In addition to the foregoing, we may from time to time re-evaluate our investment approach and guidelines
and explore investment opportunities in respect of other asset classes not previously discussed above,
including, without limitation, by expanding our relatively small portfolio of direct investments in the equity
markets. Any such investments could expose us to systemic and price volatility risk, interest rate risk and
other market risks. Any investment in equity securities carries with it inherent volatility and there can be no
assurance that such an investment will prove profitable and we could, in fact, lose the value of our
investment. Accordingly, any such investment could impact our financial results, perhaps materially, over
both the short and the long term.

We are exposed to counterparty credit risk, including with respect to reinsurance brokers.

In accordance with industry practice, we pay virtually all amounts owed on claims under our policies to
reinsurance brokers, and these brokers, in turn, pay these amounts over to the insurers that have reinsured
a portion of their liabilities with us (we refer to these insurers as ceding insurers). Likewise, premiums due to
us by ceding insurers are virtually all paid to brokers, who then pass such amounts on to us. In many

jurisdictions, if a broker were to fail to make such a payment to a ceding insurer, we would remain liable to
the ceding insurer for the deficiency. Conversely, in many jurisdictions, when the ceding insurer pays
premiums for these policies to reinsurance brokers for payment over to us, these premiums are considered
to have been paid by the cedants and the ceding insurer will no longer be liable to us for those amounts,
whether or not we have actually received the premiums. Consequently, in connection with the settlement of
reinsurance balances, we assume a substantial degree of credit risk associated with brokers around the
world.

We are also exposed to the credit risk of our customers, who, pursuant to their contracts with us, frequently
pay us over time. Our premiums receivable at December 31, 2011 totaled $471.9 million, and these
amounts are generally not collateralized. To the extent such customers become unable to pay future
premiums, we would be required to recognize a downward adjustment to our premiums receivable in our
financial statements. We cannot assure you that all of such premiums will ever be collected or that
additional amounts will not be required to be written down in 2012 or future periods.

As a result of the ongoing period of relative economic weakness, our consolidated credit risk, reflecting our
counterparty dealings with agents, brokers, customers, retrocessionaires, capital providers, parties
associated with our investment portfolio and others has increased, perhaps materially so.

We are also exposed to counterparty credit risks in connection with our energy related trading business.

We undertake energy related trading activities through our operating subsidiaries, including Renaissance
Trading and REAL, where counterparty credit risk becomes a relevant factor. These operating subsidiaries
execute weather, energy and commodity derivative transactions whereby the value of the derivatives at any
point in time is dependent upon not only the market but also the viability of the counterparty. The failure or
perceived weakness of any of our counterparties has the potential to expose us to risk of loss in these
situations. Although these operating subsidiaries have credit risk management policies and procedures, we
cannot assure you that any of the policies or procedures will be effective. While many of the original trading
positions established in our energy related trading business are partially or substantially hedged, the
effectiveness of those hedges depends on the willingness and ability to pay of the parties with whom we
establish the hedge positions. The failure of our policies and procedures, or the failure of one or more of our
counterparties, could result in losses that substantially exceed our expectations and could have a material
adverse effect on our results of operations.

Retrocessional reinsurance may become unavailable on acceptable terms.

As part of our risk management, we buy reinsurance for our own account. This type of insurance when
purchased to protect reinsurance companies is known as “retrocessional reinsurance.”

From time to time, market conditions have limited, and in some cases have prevented, insurers and
reinsurers from obtaining reinsurance. Accordingly, we may not be able to obtain our desired amounts of
retrocessional reinsurance. In addition, even if we are able to obtain such retrocessional reinsurance, we
may not be able to negotiate terms as favorable to us as in the past. This could limit the amount of business
we are willing to write, or decrease the protection available to us as a result of large loss events.

When we purchase reinsurance or retrocessional reinsurance for our own account, the insolvency, inability
or reluctance of any of our reinsurers to make timely payments to us under the terms of our reinsurance
agreements could have a material adverse effect on us. Generally, we believe that the “willingness to pay”
of some reinsurers and retrocessionaires is declining, and that the overall industry ability to pay may be
impacted by renewed weakness in the financial and credit markets. This risk may be more significant to us
at present than at many times in the past. At December 31, 2011, we had recorded $404.0 million of
reinsurance recoverables, net of a valuation allowance of $7.3 million for uncollectible recoverables. We
cannot assure you that such recoverables will ever be collected or that additional amounts will not be
required to be written down in 2012 or future periods. A large portion of our reinsurance recoverables are
concentrated with a relatively small number of reinsurers. The risk of such concentration of retrocessional
coverage may be increased by recent and future consolidation within the industry.

Emerging claim and coverage issues, or other litigation, could adversely affect us.

Unanticipated developments in the law as well as changes in social and environmental conditions could
potentially result in unexpected claims for coverage under our insurance and reinsurance contracts. These
developments and changes may adversely affect us, perhaps materially so. For example, we could be
subject to developments that impose additional coverage obligations on us beyond our underwriting intent,
or to increases in the number or size of claims to which we are subject. With respect to our specialty
reinsurance operations, these legal, social and environmental changes may not become apparent until
some point in time after their occurrence. For example, we could be deemed liable for losses arising out of
a matter, such as the potential for industry losses arising out of an avian flu pandemic, that we had not
anticipated or had attempted to contractually exclude. Moreover, irrespective of the clarity and inclusiveness
of policy language, there can be no assurance that a court or arbitration panel will limit enforceability of
policy language or not issue a ruling adverse to us. Our exposure to these uncertainties could be
exacerbated by the increased willingness of some market participants to dispute insurance and reinsurance
contract and policy wordings. Alternatively, potential efforts by us to exclude such exposures could, if
successful, reduce the market’s acceptance of our related products. The full effects of these and other
unforeseen emerging claim and coverage issues are extremely hard to predict. As a result, the full extent of
our liability under our coverages may not be known for many years after a contract is issued. Our exposure
to this uncertainty will grow as our “long-tail” casualty businesses grow, because in these lines claims can
typically be made for many years, making them more susceptible to these trends than our traditional
catastrophe business, which is typically more “short-tail.” In addition, we could be adversely affected by the
growing trend of plaintiffs targeting participants in the property-liability insurance industry in purported class
action litigation relating to claim handling and other practices. While we continually seek to improve the
effectiveness of our contracts and claims capabilities, we may fail to mitigate our exposure to these growing
uncertainties.

We may be adversely impacted by inflation.

We monitor the risk that the principal markets in which we operate could experience increased inflationary
conditions, which would, among other things, cause loss costs to increase, and impact the performance of
our investment portfolio. The onset, duration and severity of an inflationary period cannot be estimated with
precision. The sovereign debt crisis in Europe and the related financial restructuring efforts has, among
other factors, made it more difficult to predict the inflationary environment.

Our utilization of third parties to support our business exposes us to operational and financial risks.

With respect to our Reinsurance operations we do not separately evaluate each primary risk assumed
under our reinsurance contracts and, accordingly, like other reinsurers, are heavily dependent on the
original underwriting decisions made by our ceding companies. We are therefore subject to the risk that our
customers may not have adequately evaluated the risks to be reinsured, or that the premiums ceded to us
will not adequately compensate us for the risks we assume, perhaps materially so.

The loss of key senior members of management could adversely affect us.

Our success has depended, and will continue to depend, in substantial part upon our ability to attract and
retain our senior officers. The loss of services of members of senior management in the future, and the
uncertain transition of new members of our senior management team, as applicable, may strain our ability
to execute our strategic initiatives. The loss of one or more of our senior officers could adversely impact our
business, by, for example, making it more difficult to retain customers or other business contacts whose
relationship depends in part on the service of the departing officer. In general, the loss of the services of any
members of our current senior management team may adversely affect our business, perhaps materially
so. We do not currently maintain key man life insurance policies with respect to any of our employees.

In addition, our ability to execute our business strategy is dependent on our ability to attract and retain a
staff of qualified underwriters and service personnel. The location of our global headquarters in Bermuda
may impede our ability to recruit and retain highly skilled employees. Under Bermuda law, non-Bermudians
(other than spouses of Bermudians, holders of Permanent Residents’ Certificates and holders of Working
Residents’ Certificates) may not engage in any gainful occupation in Bermuda without a valid government
work permit. Substantially all of our officers are working in Bermuda under work permits that will expire over
the next three years. The Bermuda government could refuse to extend these work permits, which would
adversely impact us. In addition, a Bermuda government policy limits the duration of work permits to a total

of six years, which is subject to certain exemptions only for key employees. A work permit is issued with an
expiry date (up to ten years) and no assurances can be given that any work permit will be issued or, if
issued, renewed upon the expiration of the relevant term. If any of our senior officers or key contributors
were not permitted to remain in Bermuda, or if we experience delays or failures to obtain permits for a
number of our professional staff, our operations could be disrupted and our financial performance could be
adversely affected as a result.

In late 2011, the Bermuda Parliament passed the Incentives for Job Makers Act 2011 ("Job Makers Act"),
which provides that a limited number of non-Bermudian executives of Bermuda companies may, subject to
their and their company's meeting the requirements under the Job Makers Act , apply for permission to
reside and work in Bermuda exempt from the requirement for a work permit. Eligibility to apply for status
under the Job Makers Act commences in January 2015; at this time we cannot assure you that the Job
Makers Act diminishes our risks of retaining and attracting senior executives to our Bermuda headquarters
location.

U.S. taxing authorities could contend that one or more of our Bermuda subsidiaries are subject to U.S.
corporate income tax, as a result of changes in law or regulations, or otherwise.

If the IRS were to contend successfully that one or more of our Bermuda subsidiaries is engaged in a trade
or business in the U.S., such subsidiary would, to the extent not exempted from tax by the U.S.-Bermuda
income tax treaty, be subject to U.S. corporate income tax on that portion of its net income treated as
effectively connected with a U.S. trade or business, as well as the U.S. corporate branch profits tax.
Although we would vigorously contest such an assertion, if we were ultimately held to be subject to taxation,
our earnings would correspondingly decline.

In addition, benefits of the U.S.-Bermuda income tax treaty which may limit any such tax to income
attributable to a permanent establishment maintained by one or more of our Bermuda subsidiaries in the
U.S. are only available to any of such subsidiaries if more than 50% of its shares are beneficially owned,
directly or indirectly, by individuals who are Bermuda residents or U.S. citizens or residents. Our Bermuda
subsidiaries may not be able to continually satisfy such beneficial ownership test or be able to establish it to
the satisfaction of the IRS. Finally, it is unclear whether the U.S.-Bermuda income tax treaty (assuming
satisfaction of the beneficial ownership test) applies to income other than premium income, such as
investment income.

Changes in U.S. tax law or regulations could increase the costs of our products and services or otherwise
reduce our profitability.

On February 7, 2012, U.S. Senators Carl Levin and Kent Conrad introduced legislation in the U.S. Senate
entitled the “Cut Unjustified Loopholes Act” (S. 2075). Senator Levin introduced similar legislation in 2011
and 2010. If enacted, this legislation would, among other things, cause to be treated as a U.S. corporation
for U.S. tax purposes generally, certain corporate entities if the “management and control” of such a
corporation is, directly or indirectly, treated as occurring primarily within the U.S. The proposed legislation
provides that a corporation will be so treated if substantially all of the executive officers and senior
management of the corporation who exercise day-to-day responsibility for making decisions involving
strategic, financial, and operational policies of the corporation are located primarily within the U.S. To date,
this legislation has not been approved by either the House of Representatives or the Senate. However, we
can provide no assurance that this legislation or similar legislation will not ultimately be adopted. While we
do not believe that the legislation would impact us, it is possible that an adopted bill would include additional
or expanded provisions which could negatively impact us, or that the interpretation or enforcement of the
current proposal, if enacted, would be more expansive or adverse than we currently estimate.

Regulatory challenges in the U.S. or elsewhere to our Bermuda operations’ claims of exemption from
insurance regulation could restrict our ability to operate, increase our costs, or otherwise adversely
impact us.

Renaissance Reinsurance, DaVinci and Top Layer Re are not licensed or admitted in any jurisdiction except
Bermuda. Renaissance Reinsurance, Glencoe, DaVinci and Top Layer Re each conduct business only from
their principal offices in Bermuda and do not maintain an office in the U.S. The insurance and reinsurance
regulatory framework continues to be subject to increased scrutiny in many jurisdictions, including the U.S.
and Europe. If our Bermuda insurance or reinsurance operations become subject to the insurance laws of
any state in the U.S., we could face inquiries or challenges to the future operations of these companies.

Moreover, we could be put at a competitive disadvantage in the future with respect to competitors that are
licensed and admitted in U.S. jurisdictions. Among other things, jurisdictions in the U.S. do not permit
insurance companies to take credit for reinsurance obtained from unlicensed or non-admitted insurers on
their statutory financial statements unless security is posted. Our contracts generally require us to post a
letter of credit or provide other security (e.g., through a multi-beneficiary reinsurance trust) after a reinsured
reports a claim. In order to post these letters of credit, issuing banks generally require collateral. It is
possible that the European Union or other countries might adopt a similar regime in the future, or that U.S.
rules could be altered in a way that treats Bermuda-based companies disproportionately. Any such
development, or if we are unable to post security in the form of letters of credit or trust funds when required,
could significantly and negatively affect our operations.

Glencoe is currently an eligible, non-admitted excess and surplus lines insurer in 49 U.S. states, the District
of Columbia, Puerto Rico and the U.S. Virgin Islands, and is subject to certain regulatory and reporting
requirements of these jurisdictions. However, Glencoe is not admitted or licensed in any U.S. jurisdiction;
moreover, Glencoe only conducts business from Bermuda. Accordingly, the scope of Glencoe’s activities in
the U.S. are limited, which could adversely affect its ability to compete. Although surplus lines business is
generally less regulated than the admitted market, the regulation of surplus lines insurance may undergo
changes in the future. Federal and/or state measures may be introduced and promulgated that could result
in increased oversight and regulation of surplus lines insurance. Additionally, some recent and pending
cases in Florida and California courts have raised potentially significant questions regarding surplus lines
insurance in those states such as whether surplus lines insurers will be subject to policy form content, filing
and approval requirements or additional taxes.

Our current or future business strategy could cause one or more of our currently unregulated non-insurance
subsidiaries to become subject to some form of regulation. Any failure to comply with applicable laws could
result in the imposition of significant restrictions on our ability to do business, and could also result in fines
and other sanctions, any or all of which could adversely affect our financial results and operations.

We could be required to allocate considerable time and resources to comply with any new or additional
regulatory requirements, and any such requirements may impact the operations of our insurance and/or
non-insurance subsidiaries and ultimately could impact our financial condition as well. In addition, we could
be adversely affected if a regulatory authority believed we had failed to comply with applicable law or
regulation.

Operational risks, including systems or human failures, are inherent in business, including ours.

We are subject to operational risks including fraud, employee errors, failure to document transactions
properly or to obtain proper internal authorization, failure to comply with regulatory requirements or
obligations under our agreements, or information technology failures. Losses from these risks may occur
from time to time and may be significant.

Our modeling, underwriting and information technology and application systems are critical to our success.
Moreover, our proprietary technology and application systems have been an important part of our
underwriting strategy and our ability to compete successfully. We have also licensed certain systems and
data from third parties. We cannot be certain that we will have access to these, or comparable, service
providers, or that our information technology or application systems will continue to operate as intended.
While we have implemented disaster recovery and other business contingency plans, a defect or failure in
our internal controls, information technology or application systems could result in reduced or delayed
revenue growth, higher than expected losses, management distraction, or harm to our reputation. We
believe appropriate controls and mitigation procedures are in place to prevent significant risk of defect in our
internal controls, information technology and application systems, but internal controls provide only
reasonable, not absolute, assurance as to the absence of errors or irregularities and any ineffectiveness of
such controls and procedures could have a material adverse effect on our business.

We are exposed to risks in connection with our management of third party capital.

Our operating subsidiaries may owe certain legal duties and obligations to third party investors (including
reporting obligations) and are subject to a variety of often complex laws and regulations relating to the
management of third party capital. Compliance with some of these laws and regulations requires significant
management time and attention. Although we seek to continually monitor our policies and procedures to
attempt to ensure compliance, faulty judgments, simple errors or mistakes, or the failure of our personnel to

adhere to established policies and procedures, could result in our failure to comply with applicable laws or
regulations which could result in significant liabilities, penalties or other losses to the Company, and
seriously harm our business and results of operations. In addition to the foregoing, our third party capital
providers may redeem their interests in our joint ventures, which could materially impact the financial
condition of such joint ventures, and could in turn materially impact our financial condition and results of
operations. Moreover, we can provide no assurance that we may be able to attract and raise additional third
party capital for our existing joint ventures or for potential new joint ventures and therefore we may forego
existing and/or potential attractive fee income and other income generating opportunities.

We may be adversely affected by foreign currency fluctuations.

Our functional currency is the U.S. dollar; however, as we expand geographically, an increasing portion of
our premium is, and likely will be, written in currencies other than the U.S. dollar and a portion of our claims
and claim expense reserves is also in non-U.S. dollar currencies. Moreover, we maintain a portion of our
cash and investments in currencies other than the U.S. dollar. Although we generally seek to hedge
significant non-U.S. dollar positions, we may, from time to time, experience losses resulting solely from
fluctuations in the values of these foreign currencies, which could cause our consolidated earnings to
decrease. In addition, failure to manage our foreign currency exposures could cause our results of
operations to be more volatile. The sovereign debt crisis in Europe and the related financial restructuring
efforts, which may cause the value of the Euro to deteriorate, may magnify these risks.

We may require additional capital in the future, which may not be available or only available on unfavorable
terms.

We monitor our capital adequacy on a regular basis. The capital requirements of our business depend on
many factors, including our ability to write new business successfully and to establish premium rates and
reserves at levels sufficient to cover losses. Our ability to sell our reinsurance, insurance and other products
is largely dependent upon the quality of our claims paying and financial strength ratings as evaluated by
independent rating agencies. To the extent that our existing capital is insufficient to support our future
operating requirements, we may need to raise additional funds through financings or limit our growth. While
we do not currently expect to require additional external capital in the near term due to our strong current
capital position, our operations are subject to the ever present potential for significant volatility in capital due
to our exposure to potentially significant catastrophic events. Any further equity or debt financing, or
capacity needed for letters of credit, if available at all, may be on terms that are unfavorable to us. Our
ability to raise such capital successfully would depend upon the facts and circumstances at the time,
including our financial position and operating results, market conditions, and applicable legal issues. If we
are unable to obtain adequate capital if and when needed, our business, results of operations and financial
condition would be adversely affected. In addition, in the future we may be unable to raise new capital for
our managed joint ventures and other private alternative investment vehicles, which would reduce our future
fee income and market capacity.

The covenants in our debt agreements limit our financial and operational flexibility, which could have an
adverse effect on our financial condition.

We have incurred indebtedness, and may incur additional indebtedness in the future. At December 31,
2011, we had an aggregate of $353.6 million of indebtedness outstanding and $576.8 million of outstanding
letters of credit. In addition, we have in place committed debt facilities which would permit us to borrow,
subject to their respective terms and conditions, up to another $155.6 million. Our indebtedness primarily
consists of publicly traded notes and letter of credit and revolving credit facilities. For more details on our
indebtedness, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations, Capital Resources”.

The agreements covering our indebtedness, particularly our bank loans, contain covenants that limit our
ability, among other things, to borrow money, make particular types of investments or other restricted
payments, sell assets, merge or consolidate. These agreements also require us to maintain specific
financial ratios. If we fail to comply with these covenants or meet these financial ratios, the lenders under
our credit facilities could declare a default and demand immediate repayment of all amounts owed to them,
cancel their commitments to lend or issue letters of credit, or both, and require us to pledge additional or a
different type of collateral.

Because we are a holding company, we are dependent on dividends and payments from our subsidiaries.

As a holding company with no direct operations, we rely on investment income, cash dividends and other
permitted payments from our subsidiaries to make principal and interest payments on our debt and to pay
dividends to our shareholders. The holding company does not have any operations and from time to time
may not have significant liquid assets. Bermuda law and various U.S. insurance regulations may limit the
ability of our subsidiaries to pay dividends. If our subsidiaries are restricted from paying dividends to us, we
may be unable to pay dividends or to repay our indebtedness.

Solvency II could adversely impact our financial results and operations.

Solvency II, a European Union directive concerning the capital adequacy, risk management and regulatory
reporting for insurers, which was adopted by the European Parliament in April of 2009, may adversely affect
our (re)insurance businesses. Implementation of Solvency II by the European Commission is expected to
take effect January 1, 2013 (with full compliance phased in by January 1, 2014) in the European Union
Member States, and will replace the current solvency requirements. Solvency II adopts a risk-based
approach to insurance regulation. Its principal goals are to improve the correlation between capital and risk,
effect group supervision of insurance and reinsurance affiliates, implement a uniform capital adequacy
structure for insurers across the European Union Member States, establish consistent corporate
governance standards for insurance and reinsurance companies, and establish transparency through
standard reporting of insurance operations. Under Solvency II, an insurer’s or reinsurer’s capital adequacy
in relation to various insurance and business risks may be measured with an internal model developed by
the insurer or reinsurer and approved for use by the Member State’s regulator or pursuant to a standard
formula developed by the European Commission. It is anticipated that insurers or reinsurers with approved
internal models will generally have lower capital needs. With respect to Syndicate 1458, implementation of
Solvency II may require increases in capital and may negatively impact our financial results. Conversely, as
implemented by other market participants Solvency II may not give rise to the increase in reinsurance
demand over time that has been estimated by certain leading brokers, industry analysts and other industry
observers. Nonetheless, implementation of Solvency II will require us to utilize a significant amount of
resources to ensure compliance. The European Union is in the process of considering the Solvency II
equivalence of Bermuda’s insurance regulatory and supervisory regime. The European Union equivalence
assessment considers whether Bermuda’s regulatory regime provides a similar level of policyholder
protection as provided under Solvency II. While we currently expect that Bermuda’s insurance regulatory
regime will be found equivalent in respect of oversight of internationally operating reinsurers and insurers
such as RenaissanceRe, an adverse or highly qualified finding could have an adverse effect on our
reinsurance operations and on our group solvency calculations. We are monitoring the ongoing legislative
and regulatory steps following adoption of Solvency II. The principles, standards and requirements of
Solvency II may also, directly or indirectly, impact the future supervision of additional operating subsidiaries
of ours.

The Dodd-Frank Act may adversely impact our business.

The U.S. Congress and the current administration have made, or called for consideration of, several
additional proposals relating to a variety of issues with respect to financial regulation reform, including
regulation of the over-the-counter derivatives market, the establishment of a single-state system of
licensure for U.S. and foreign reinsurers, executive compensation and others. One of those initiatives, the
Dodd-Frank Act, was signed into law by President Obama on July 21, 2010. The Dodd-Frank Act represents
a comprehensive overhaul of the financial services industry within the United States, establishes the new
federal Bureau of Consumer Financial Protection (the “BCFP”), and will require the BCFP and other federal
agencies to implement many new rules. At this time, it is difficult to predict the extent to which the Dodd-
Frank Act or the resulting regulations will impact our business. However, compliance with these new laws
and regulations will result in additional costs, which may adversely impact our results of operations,
financial condition or liquidity. Although we do not expect these costs to be material to RenaissanceRe as a
whole, we cannot assure you this expectation will prove accurate or that the Dodd-Frank Act will not impact
our business more adversely than we currently estimate.

Acquisitions or strategic investments that we have made or may make could turn out to be unsuccessful.

As part of our strategy, we frequently monitor and analyze opportunities to acquire or make a strategic
investment in new or other businesses that will not detract from our core Reinsurance operations. The
negotiation of potential acquisitions or strategic investments as well as the integration of an acquired
business or new personnel could result in a substantial diversion of management resources. Acquisitions
could involve numerous additional risks such as potential losses from unanticipated litigation or levels of
claims and inability to generate sufficient revenue to offset acquisition costs. Any failure by us to effectively
limit such risks or implement our acquisitions or strategic investment strategies could have a material
adverse effect on our business, financial condition or results of operations.

We are subject to cybersecurity risks and may incur increasing costs in an effort to minimize those risks.

We depend on the proper functioning and availability of our information technology platform, including
communications and data processing systems, in operating our business. These systems consist of
proprietary software programs that are integral to the efficient operation of our business, including our
proprietary pricing and exposure management system. We are also required to effect electronic
transmissions with third parties including brokers, clients vendors and others with whom we do business,
and to facilitate the oversight conducted by our Board of Directors. Security breaches could expose us to a
risk of loss or misuse of our information, litigation and potential liability. In addition, cyber incidents that
impact the availability, reliability, speed, accuracy or other proper functioning of these systems could have a
significant impact on our operations, and potentially on our results. We may not have the resources or
technical sophistication to anticipate or prevent rapidly evolving types of cyber attacks. A significant cyber
incident, including system failure, security breach, disruption by malware or other damage could interrupt or
delay our operations, result in a violation of applicable privacy and other laws, damage our reputation,
cause a loss of customers or give rise to monetary fines and other penalties, which could be significant.
See “Item 1. Business, Information Technology”.

Some aspects of our corporate structure may discourage third party takeovers and other transactions or
prevent the removal of our current board of directors and management.

Some provisions of our Amended and Restated Bye-Laws have the effect of making more difficult or
discouraging unsolicited takeover bids from third parties or preventing the removal of our current board of
directors and management. In particular, our Bye-Laws prohibit transfers of our capital shares if the transfer
would result in a person owning or controlling shares that constitute 9.9% or more of any class or series of
our shares. In addition, our Bye-Laws reduce the total voting power of any shareholder owning, directly or
indirectly, beneficially or otherwise, as described in our Bye-laws, more than 9.9% of our common shares to
not more than 9.9% of the total voting power of our capital stock unless otherwise waived at the discretion
of the Board. The primary purpose of these provisions is to reduce the likelihood that we will be deemed a
“controlled foreign corporation” within the meaning of the Internal Revenue Code for U.S. federal tax
purposes. However, these provisions may also have the effect of deterring purchases of large blocks of
common shares or proposals to acquire us, even if some or a majority of our shareholders might deem
these purchases or acquisition proposals to be in their best interests.

In addition, our Bye-Laws provide for, among other things:

• a classified Board, whose size is fixed and whose members may be removed by the shareholders

only for cause upon a 66 2/3% vote;

• restrictions on the ability of shareholders to nominate persons to serve as directors, submit

resolutions to a shareholder vote and requisition special general meetings;

• a large number of authorized but unissued shares which may be issued by the Board without further

shareholder action; and

• a 66 2/3% shareholder vote to amend, repeal or adopt any provision inconsistent with several

provisions of the Bye-Laws.

These Bye-Law provisions make it more difficult to acquire control of us by means of a tender offer, open
market purchase, proxy contest or otherwise. These provisions are designed to encourage persons seeking
to acquire control of us to negotiate with our directors, which we believe would generally best serve the
interests of our shareholders. However, these provisions could have the effect of discouraging a prospective

acquirer from making a tender offer or otherwise attempting to obtain control of us. In addition, these Bye-
Law provisions could prevent the removal of our current board of directors and management. To the extent
these provisions discourage takeover attempts, they could deprive shareholders of opportunities to realize
takeover premiums for their shares or could depress the market price of the shares.

In addition, similar provisions apply to our Lloyd’s managing agent, whereby the FSA regulates the
acquisition of control of any Lloyd’s managing agent which is authorized under the FSMA. Any company or
individual that, together with its or his associates, directly or indirectly acquires 10% or more of the shares in
a Lloyd’s managing agent or its parent company, or is entitled to exercise or control the exercise of 10% or
more of the voting power in such Lloyd’s managing agent or its parent company, would be considered to
have acquired control for the purposes of the relevant legislation, as would a person who had significant
influence over the management of such Lloyd’s managing agent or its parent company by virtue of his
shareholding or voting power in either.

Investors may have difficulties in serving process or enforcing judgments against us in the U.S.

We are a Bermuda company. In addition, certain of our officers and directors reside in countries outside the
U.S. All or a substantial portion of our assets and the assets of these officers and directors are or may be
located outside the U.S. Investors may have difficulty effecting service of process within the U.S. on our
directors and officers who reside outside the U.S. or recovering against us or these directors and officers on
judgments of U.S. courts based on civil liabilities provisions of the U.S. federal securities laws whether or
not we appoint an agent in the U.S. to receive service of process.

Risks Related to Our Industry

The reinsurance and insurance businesses are historically cyclical and the pricing and terms for our
products may decline, which would affect our profitability.

The reinsurance and insurance industries have historically been cyclical, characterized by periods of
decreasing prices followed by periods of increasing prices. Reinsurers have experienced significant
fluctuations in their results of operations due to numerous factors, including the frequency and severity of
catastrophic events, perceptions of risk, levels of capacity, general economic conditions and underwriting
results of other insurers and reinsurers. All of these factors fluctuate and may contribute to price declines
generally in the reinsurance and insurance industries. Following an increase in capital in our industry after
the 2005 catastrophe events and the subsequent period of substantial dislocation in the financial markets
which has resulted in ongoing relative economic weakness, the reinsurance and insurance markets have
experienced a prolonged period of generally softening markets with signs of increasing demand more
recently, driven by the near record level of insured catastrophe losses in 2011, including those from the
February 2011 New Zealand earthquake, the Tohoku earthquake and the Thailand flooding.

The catastrophe-exposed lines in which we are a market leader are affected significantly by volatile and
unpredictable developments, including natural and man-made disasters. The occurrence, or
nonoccurrence, of catastrophic events, the frequency and severity of which are inherently unpredictable,
affects both industry results and consequently prevailing market prices of our products.

We expect premium rates and other terms and conditions of trade to vary in the future. If demand for our
products falls or the supply of competing capacity rises, our prospects for potential growth, due in part to
our disciplined approach to underwriting, may be adversely affected. In particular, we might lose existing
customers or decline business, which we might not regain when industry conditions improve.

In recent years, hedge funds and investment banks have been increasingly active in the reinsurance market
and markets for related risks. Further, we believe new entrants or existing competitors may attempt to
replicate all or part of our business model and provide further competition in the markets in which we
participate. While this trend has slowed during the ongoing period of relative economic weakness, we
generally expect increased competition from a wider range of entrants over time. It is possible that such
new or alternative capital could cause reductions in prices of our products. Moreover, explicitly or implicitly
government-backed entities increasingly represent competition for the coverages that we provide directly, or
for the business of our customers, reducing the potential amount of third party private protection our clients
might need or desire. To the extent that industry pricing of our products does not meet our hurdle rate, we
would generally expect to reduce our future underwriting activities thus resulting in reduced premiums and a
reduction in expected earnings.

Recent or future legislation may decrease the demand for our property catastrophe reinsurance products
and adversely affect our business and results of operations.

In 2007, the State of Florida enacted legislation to expand the FHCF’s provision of below-market rate
reinsurance to up to $28.0 billion per season (the “2007 Florida Bill”). In May of 2009, the Florida legislature
enacted Bill No. CS/HB 1495 (the “2009 Bill”), which will gradually phase out $12.0 billion in optional
reinsurance coverage under the FHCF over the succeeding five years The 2009 Bill similarly allows the
state-sponsored property insurer, Citizens, to raise its rates up to 10% starting in 2010 and every year
thereafter, until such time that it has sufficient funds to pay its claims and expenses. For 2012, Citizens'
rates will increase a statewide average of 6.2%. The rate increases and cut back on coverage by FHCF and
Citizens are expected to support, over time, a relatively increased role of the private insurers in Florida, a
market in which we have established substantial market share.

In May 2011, the Florida legislature passed Florida Senate bill 408 (“SB 408”), relating principally to
property insurance. Among other things, SB 408 requires an increase in minimum capital and surplus for
newly licensed Florida domestic insurers from $5 million to $15 million; institutes a 3-year claims filing
deadline for new and reopened claims from the date of a hurricane or windstorm; allows an insurer to offer
coverage where replacement cost value is paid, but initial payment is limited to actual cash value; allows
admitted insurers to seek rate increases up to 15% to adjust for third party reinsurance costs; and institutes
a range of reforms relating to various matters that have increased the costs of insuring sinkholes in Florida.
While we believe SB 408 should contribute over time to stabilization of the Florida market, legislation
intended to further reform and stabilize Citizens was not passed in the 2011 legislative session.

On February 16, 2012, the Florida Senate Banking and Insurance Committee approved, with one dissenting
vote, legislation to reform the FHCF and solidify its financial fund. If enacted, this bill would take effect in
2013 and reduce the FHCF limit which admitted carriers are mandated to buy from the FHCF from an
industry aggregate of $17 billion to $12 billion by 2015; would reduce the 90% purchase option (the
percentage of the FHCF mandatory coverage layer a company purchases) which is selected by most
insurers to 75% by 2015; and would increase industry wide "retention", or deductible, from $7.3 to $8 billion.
At this time, neither the full Florida Senate nor the Florida House have taken further action to adopt this
legislation this year.

The 2007 Florida Bill and other regulatory actions over this period may have contributed to instability in the
Florida primary insurance market, where many insurers have reported substantial and continuing losses
from 2009 through 2011, an unusually low period for catastrophe losses in the state. Because of our
position as one of the largest providers of catastrophe-exposed coverage, both on a global basis and in
respect of the Florida market, the 2007 Florida Bill and the weakened financial position of Florida insurers
may have a disproportionate adverse impact on us compared to other reinsurance market participants. In
addition, it is possible that other regulatory or legislative changes in, or impacting, Florida could affect our
ability to sell certain of our products and could therefore have a material adverse effect on our operations.

It is also possible that other states, particularly those with Atlantic or Gulf Coast exposures, may enact new
or expanded legislation based on the Florida precedent, or may otherwise enact legislation, which would
further diminish aggregate private market demand for our products. Alternatively, legislation adversely
impacting the private markets could be enacted on a regional or at the federal level. For example, in the
past, federal bills have been proposed in Congress (and, in prior congressional sessions, passed by the
House of Representatives) which would, if enacted, create a federal reinsurance backstop or guarantee
mechanism for catastrophic risks, including those we currently insure and reinsure in the private markets. In
2009, the COGA was introduced in the Senate to federally guarantee bond issuances by certain
government entities, potentially including the FHCF, the Texas Windstorm Insurance Association, the
California Earthquake Authority, and others. Similar legislation was introduced in the House of
Representatives. While the COGA legislation was not enacted, any similar legislation, if proposed and
enacted, would, we believe, likely contribute to growth of these state entities or to their inception or
alteration in a manner adverse to us. If enacted, bills of this nature would likely further erode the role of
private market catastrophe reinsurers and could adversely impact our financial results, perhaps materially.
Moreover, we believe that numerous modeled potential catastrophes could exceed the actual or politically
acceptable bonded capacity of Citizens and of the FHCF, which could lead either to a severe dislocation or
the necessity of federal intervention in the Florida market, either of which would adversely impact the
private insurance and reinsurance industry.

Over the past few years the U.S. Congress has considered legislation which, if passed, would deny U.S.
insurers and reinsurers the deduction for reinsurance placed with non-U.S. affiliates. In February 2012, the
Obama administration included a formal proposal for such a provision in its budget proposal. As described
in the administration's 2012 budget request, the proposal would deny an insurance company a deduction
for premiums and other amounts paid to affiliated foreign companies with respect to reinsurance of property
and casualty risks to the extent that the foreign reinsurer (or its parent company) is not subject to U.S.
income tax with respect to the premiums received; and would exclude from the insurance company's
income (in the same proportion in which the premium deduction was denied) any return premiums, ceding
commissions, reinsurance recovered, or other amounts received with respect to reinsurance policies for
which a premium deduction is wholly or partially denied. We believe that the passage of such legislation
could adversely affect the reinsurance market broadly and potentially impact our own current or future
operations in particular.

Internationally, in the wake of the large natural catastrophes in 2011 and early 2012 a number of proposals
have been introduced to alter the financing of natural catastrophes in several of the markets in which we
operate. For example, the Thailand government has announced it is studying proposals for a natural
catastrophe fund, under which the government would provide coverage for natural disasters in excess of an
industry retention and below a certain limit, after which private reinsurers would continue to participate. The
government of the Philippines has announced that it is considering similar proposals. A range of proposals
from varying stakeholders have been reported to have been made to alter the current regimes for insuring
flood risk in the U.K., flood risk in Australia and earthquake risk in New Zealand. If these proposals are
enacted and reduce market opportunities for our clients or for the reinsurance industry, we could be
adversely impacted.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations,
Current Outlook, Legislative and Regulatory Update" for further information.

Other political, regulatory and industry initiatives could adversely affect our business.

The insurance and reinsurance regulatory framework is subject to heavy scrutiny by the U.S. and individual
state governments as well as an increasing number of international authorities. Government regulators are
generally concerned with the protection of policyholders to the exclusion of other constituencies, including
shareholders. Governmental authorities in both the U.S. and worldwide seem increasingly interested in the
potential risks posed by the reinsurance industry as a whole, and to commercial and financial systems in
general. While we do not believe these inquiries have identified meaningful new risks posed by the
reinsurance industry, and we cannot predict the exact nature, timing or scope of possible governmental
initiatives, we believe it is likely there will be increased regulatory intervention in our industry in the future.
For example, the U.S. federal government has increased its scrutiny of the insurance regulatory framework
in recent years (including as specifically addressed in the Dodd-Frank Act), and some state legislators have
considered or enacted laws that will alter and likely increase state regulation of insurance and reinsurance
companies and holding companies. Moreover, the NAIC, which is an association of the insurance
commissioners of all 50 states and the District of Columbia and state insurance regulators, regularly
reexamine existing laws and regulations.

For example, we could be adversely affected by proposals or enacted legislation to:

• provide insurance and reinsurance capacity in markets and to consumers that we target, such as the

legislation enacted in Florida in 2007 or the proposed federal legislation described above;

• expand the scope of coverage under existing policies for perils such as hurricanes or earthquakes or

for a pandemic disease outbreak;

• increasingly mandate the terms of insurance and reinsurance policies;

• expand the proposed scope of the FIO or establish a new federal insurance regulator;

• revise laws, regulations, or contracts under which we operate;

• disproportionately benefit the companies of one country over those of another; or

• repeal or diminish the insurance company antitrust exemption from the McCarran Ferguson Act.

We are incorporated in Bermuda and are therefore subject to changes in Bermuda law and regulation that
may have an adverse impact on our operations, including imposition of tax liability or increased regulatory
supervision or change in regulation. In addition, we are subject to changes in the political environment in
Bermuda, which could make it difficult to operate in, or attract talent to, Bermuda. The Bermuda insurance
and reinsurance regulatory framework recently has become subject to increased scrutiny in many
jurisdictions, including in the U.S. and in various states within the U.S. We are unable to predict the future
impact on our operations of changes in the laws and regulations to which we are or may become subject.
Moreover, our exposure to potential regulatory initiatives could be heightened by the fact that our principal
operating companies are domiciled in, and operate exclusively from, Bermuda. For example, Bermuda, a
small jurisdiction, may be disadvantaged in participating in global or cross border regulatory matters as
compared with larger jurisdictions such as the U.S. or the leading European Union countries. In addition,
Bermuda, which is currently an overseas territory of the U.K., may consider changes to its relationship with
the U.K. in the future. These changes could adversely affect Bermuda or the international reinsurance
market focused there, either of which could adversely impact us commercially.

We operate in a highly competitive environment.

The reinsurance industry is highly competitive. We compete, and will continue to compete, with major U.S.
and non-U.S. insurers and property catastrophe reinsurers, including other Bermuda-based reinsurers.
Many of our competitors have greater financial, marketing and management resources than we do.
Historically, periods of increased capacity levels in our industry generally have led to increased competition,
and decreased prices for our products.

We believe that our principal competitors in the property catastrophe reinsurance market include other
companies active in the Bermuda market, including ACE Limited, Allied World Assurance Company, AG,
Alterra Capital Holdings Limited, Arch Capital Group Ltd., Aspen Insurance Holdings Limited, Axis Capital
Holdings Limited, Endurance Specialty Holdings Ltd., Everest Re Group, Ltd., Flagstone Reinsurance
Holdings, S.A., Montpelier Re Holdings Ltd., PartnerRe Ltd., Platinum Underwriters Holdings, Ltd., Validus
Holdings, Ltd., White Mountains Insurance Group, Ltd. and XL Group plc, as well as a growing number of
private, unrated reinsurers offering predominately collateralized reinsurance. We also compete with certain
Lloyd’s syndicates active in the London market, as well as with a number of other industry participants, such
as Berkshire Hathaway Inc., Chartis, Hannover Rückversicherung AG, Ironshore Inc., Münchener
Rückversicherungs-Gesellschaft Aktiengesellschaft in München and Swiss Re Ltd. As our business evolves
over time, we expect our competitors to change as well. For example, following hurricane Katrina in August
2005, a significant number of new reinsurance companies were formed in Bermuda which have resulted in
new competition, which may well continue in subsequent periods. Also, hedge funds and investment banks
have shown an interest in entering the reinsurance market, either through the formation of reinsurance
companies (which include new Bermuda-based entrants SAC Re and Third Point Reinsurance Ltd.) or
through the use of other financial products, such as catastrophe bonds, other insurance-linked securities
and collateralized reinsurance investment funds. In addition, we may not be aware of other companies that
may be planning to enter the reinsurance market or of existing companies that may be planning to raise
additional capital. We cannot predict what effect any of these developments may have on our businesses.

Consolidation in the (re) insurance industry could adversely impact us.

We believe that several (re)insurance industry participants are seeking to consolidate. These consolidated
entities may try to use their enhanced market power to negotiate price reductions for our products and
services and/or obtain a larger market share through increased line sizes. If competitive pressures reduce
our prices, we would expect to write less business. As the insurance industry consolidates, competition for
customers will become more intense and the importance of acquiring and properly servicing each customer
will become greater. We could incur greater expenses relating to customer acquisition and retention, further
reducing our operating margins. In addition, insurance companies that merge may be able to spread their
risks across a consolidated, larger capital base so that they require less reinsurance. The number of
companies offering retrocessional reinsurance may decline. Reinsurance intermediaries could also continue
to consolidate, potentially adversely impacting our ability to access business and distribute our products.
We could also experience more robust competition from larger, better capitalized competitors. Any of the
foregoing could adversely affect our business or our results of operation.

The Organization for Economic Cooperation and Development (“OECD”) and the European Union may
pursue measures that might increase our taxes and reduce our net income.

The OECD has published reports and launched a global dialogue among member and non-member
countries on measures to limit harmful tax competition. These measures are largely directed at
counteracting the effects of jurisdictions perceived by the OECD to be tax havens or to offer preferential tax
regimes. In the OECD’s report dated April 18, 2002 and updated as of June 2004 and November 2005 via a
“Global Forum,” Bermuda was not listed as an uncooperative tax haven jurisdiction because it had
previously committed to eliminate harmful tax practices and to embrace international tax standards for
transparency, exchange of information and the elimination of any aspects of the regimes for financial and
other services that attract business with no substantial domestic activity. We are not able to predict what
changes will arise from the commitment or whether such changes will subject us to additional taxes.

Regulatory regimes and changes to accounting rules may adversely impact financial results irrespective of
business operations.

Accounting standards and regulatory changes may require modifications to our accounting principles, both
prospectively and for prior periods and such changes could have an adverse impact on our financial results.
In particular, the SEC continues to discuss the potential to either converge or transition to an international
set of accounting standards that would be applied to financial statements filed with the SEC. Such changes,
if ultimately adopted, could have a significant impact on our financial reporting, impacting key matters such
as our loss reserving policies and premium and expense recognition. For example, the Financial Accounting
Standards Board and the International Accounting Standards Board are considering adopting respective
accounting standards that would require all reinsurance and insurance contracts to be accounted for under
a new measurement basis, which standards are considered to be more closely related to fair value than the
current measurement basis. We are currently evaluating how the above initiatives will impact us, including
with respect to our loss reserving policy and the effect it might have on recognizing premium revenue and
policy acquisition costs. Required modification of our existing principles, either with respect to these issues
or other issues in the future, could have an impact on our results of operations, including changing the
timing of the recognition of underwriting income, increasing the volatility of our reported earnings and
changing our overall financial statement presentation and increasing our expenses in order to implement
and comply with any new requirements.

Heightened scrutiny of issues and practices in the insurance industry may adversely affect our business.

Certain government authorities, including state officials in Florida, New York and Connecticut, have from
time to time scrutinized and investigated a number of issues and practices within the insurance industry. It is
possible such scrutiny could expand to include us in the future, and it is also possible that these
investigations or related regulatory developments will mandate or otherwise give rise to changes in industry
practices in a fashion that increases our costs or requires us to alter how we conduct our business.

We cannot predict the ultimate effect that these investigations, and any changes in industry practice,
including future legislation or regulations that may become applicable to us, will have on the insurance
industry, the regulatory framework, or our business.

As noted above, because we frequently assume the credit risk of the counterparties with whom we do
business throughout our insurance and reinsurance operations, our results of operations could be adversely
affected if the credit quality of these counterparties is severely impacted by investigations in the insurance
industry or by changes to industry practices.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

GLOSSARY OF SELECTED INSURANCE AND REINSURANCE TERMS

Accident year

Year of occurrence of a loss. Claim payments and reserves for claims and
claim expenses are allocated to the year in which the loss occurred for
losses occurring contracts and in the year the loss was reported for claims
made contracts.

Acquisition expenses

The aggregate expenses incurred by a company acquiring new business,
including commissions, underwriting expenses, premium taxes and
administrative expenses.

Additional case reserves

Additional case reserves represent management’s estimate of reserves for
claims and claim expenses that are allocated to specific contracts, less
paid and reported losses by the client.

Attachment point

The dollar amount of loss (per occurrence or in the aggregate, as the case
may be) above which excess of loss reinsurance becomes operative.

Bordereaux

Bound

Broker

Capacity

A report providing premium or loss data with respect to identified specific
risks. This report is periodically furnished to a reinsurer by the ceding
insurers or reinsurers.

A (re)insurance policy is considered bound, and the (re)insurer
responsible for the risks of the policy, when both parties agree to the terms
and conditions set forth in the policy.

An intermediary who negotiates contracts of insurance or reinsurance,
receiving a commission for placement and other services rendered,
between (1) a policy holder and a primary insurer, on behalf of the insured
party, (2) a primary insurer and reinsurer, on behalf of the primary insurer,
or (3) a reinsurer and a retrocessionaire, on behalf of the reinsurer.

The percentage of surplus, or the dollar amount of exposure, that an
insurer or reinsurer is willing or able to place at risk. Capacity may apply to
a single risk, a program, a line of business or an entire book of business.
Capacity may be constrained by legal restrictions, corporate restrictions or
indirect restrictions.

Case reserves

Loss reserves, established with respect to specific, individual reported
claims.

Casualty insurance or
reinsurance

Insurance or reinsurance that is primarily concerned with the losses
caused by injuries to third persons and their property (in other words,
persons other than the policyholder) and the legal liability imposed on the
insured resulting there from. Also referred to as liability insurance.

Catastrophe

A severe loss, typically involving multiple claimants. Common perils
include earthquakes, hurricanes, hailstorms, severe winter weather,
floods, fires, tornadoes, explosions and other natural or man-made
disasters. Catastrophe losses may also arise from acts of war, acts of
terrorism and political instability.

Catastrophe excess of loss
reinsurance

A form of excess of loss reinsurance that, subject to a specified limit,
indemnifies the ceding company for the amount of loss in excess of a
specified retention with respect to an accumulation of losses resulting from
a “catastrophe.”

Catastrophe-linked securities;
cat-linked securities

Cat-linked securities are generally privately placed fixed income securities
where all or a portion of the repayment of the principal is linked to
catastrophic events. This includes securities where the repayment is
linked to the occurrence and/or size of, for example, one or more
hurricanes or earthquakes, or other industry losses associated with these
catastrophic events.

Cede; cedant; ceding
company

When a party reinsures its liability with another, it “cedes” business and is
referred to as the “cedant” or “ceding company.”

Claim

Request by an insured or reinsured for indemnification by an insurance
company or a reinsurance company for losses incurred from an insured
peril or event.

Claims made contracts

Contracts that cover claims for losses occurring during a specified period
that are reported during the term of the contract.

Claims and claim expense
ratio, net

The ratio of net claims and claim expenses to net premiums earned
determined in accordance with either statutory accounting principles or
GAAP.

Claim reserves

Combined ratio

Liabilities established by insurers and reinsurers to reflect the estimated
costs of claim payments and the related expenses that the insurer or
reinsurer will ultimately be required to pay in respect of insurance or
reinsurance policies it has issued. Claims reserves consist of case
reserves, established with respect to individual reported claims, additional
case reserves and “IBNR” reserves. For reinsurers, loss expense reserves
are generally not significant because substantially all of the loss expenses
associated with particular claims are incurred by the primary insurer and
reported to reinsurers as losses.

The combined ratio is the sum of the net claims and claim expense ratio
and the underwriting expense ratio. A combined ratio below 100%
generally indicates profitable underwriting prior to the consideration of
investment income. A combined ratio over 100% generally indicates
unprofitable underwriting prior to the consideration of investment income.

Decadal

Refers to events occurring over a 10-year period, such as an oscillation
whose period is roughly 10 years.

Excess and surplus lines
reinsurance

Any type of coverage that cannot be placed with an insurer admitted to do
business in a certain jurisdiction. Risks placed in excess and surplus lines
markets are often substandard as respects adverse loss experience,
unusual, or unable to be placed in conventional markets due to a shortage
of capacity.

Excess of loss

Reinsurance or insurance that indemnifies the reinsured or insured
against all or a specified portion of losses on underlying insurance policies
in excess of a specified amount, which is called a “level” or “retention.”
Also known as non-proportional reinsurance. Excess of loss reinsurance is
written in layers. A reinsurer or group of reinsurers accepts a layer of
coverage up to a specified amount. The total coverage purchased by the
cedant is referred to as a “program” and will typically be placed with
predetermined reinsurers in pre-negotiated layers. Any liability exceeding
the outer limit of the program reverts to the ceding company, which also
bears the credit risk of a reinsurer’s insolvency.

Exclusions

Those risk, perils, or classes of insurance with respect to which the
reinsurer will not pay loss or provide reinsurance, notwithstanding the
other terms and conditions of reinsurance.

Expense override

An amount paid to a ceding company in addition to the acquisition cost to
compensate for overhead expenses.

Frequency

The number of claims occurring during a given coverage period.

Funds at Lloyd’s

Funds of an approved form that are lodged and held in trust at Lloyd’s as
security for a member’s underwriting activities. They comprise the
members’ deposit, personal reserve fund and special reserve fund and
may be drawn down in the event that the member’s syndicate level
premium trust funds are insufficient to cover his liabilities. The amount of
the deposit is related to the member’s premium income limit and also the
nature of the underwriting account.

Generally Accepted
Accounting Principles in the
United States ("GAAP")

Accounting principles as set forth in opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants and/or
statements of the Financial Accounting Standards Board and/or their
respective successors and which are applicable in the circumstances as of
the date in question.

Gross premiums written

Total premiums for insurance written and assumed reinsurance during a
given period.

Incurred but not reported
(“IBNR”)

Reserves for estimated losses that have been incurred by insureds and
reinsureds but not yet reported to the insurer or reinsurer, including
unknown future developments on losses that are known to the insurer or
reinsurer.

Insurance-linked securities

Financial instruments whose values are driven by (re)insurance loss
events. For the Company, insurance-linked securities are generally linked
to property losses due to natural catastrophes.

International Financial
Reporting Standards ("IFRS")

Accounting principles, standards and interpretations as set forth in
opinions of the International Accounting Standards Board which are
applicable in the circumstances as of the date in question.

Layer

Line

The interval between the retention or attachment point and the maximum
limit of indemnity for which a reinsurer is responsible.

The amount of excess of loss reinsurance protection provided to an
insurer or another reinsurer, often referred to as limit.

Line of business

The general classification of insurance written by insurers and reinsurers,
e.g. fire, allied lines, homeowners and surety, among others.

Lloyd’s

Depending on the context this term may refer to (a) the society of
individual and corporate underwriting members that insure and reinsure
risks as members of one or more syndicates (i.e. Lloyd’s is not an
insurance company); (b) the underwriting room in the Lloyd’s building in
which managing agents underwrite insurance and reinsurance on behalf
of their syndicate members. In this sense Lloyd’s should be understood as
a market place; or (c) the Corporation of Lloyd’s which regulates and
provides support services to the Lloyd’s market.

Loss; losses

An occurrence that is the basis for submission and/or payment of a claim.
Whether losses are covered, limited or excluded from coverage is
dependent on the terms of the policy.

Loss ratio

Net claims incurred expressed as a percentage of net earned premiums.

Loss reserve

For an individual loss, an estimate of the amount the insurer expects to
pay for the reported claim. For total losses, estimates of expected
payments for reported and unreported claims. These may include amounts
for claims expenses.

Managing agent

An underwriting agent which has permission from Lloyd’s to manage a
syndicate and carry on underwriting and other functions for a member.

Net claims and claim
expenses

The expenses of settling claims, net of recoveries, including legal and
other fees and the portion of general expenses allocated to claim
settlement costs (also known as claim adjustment expenses or loss
adjustment expenses) plus losses incurred with respect to net claims.

Net premiums earned

The portion of net premiums written during or prior to a given period that
was actually recognized as income during such period.

Net premiums written

Gross premiums written for a given period less premiums ceded to
reinsurers and retrocessionaires during such period.

Non-proportional reinsurance See “Excess of loss.”

Perils

Profit commission

This term refers to the causes of possible loss in the property field, such
as fire, windstorm, collision, hail, etc. In the casualty field, the term
“hazard” is more frequently used.

A provision found in some reinsurance agreements that provides for profit
sharing. Parties agree to a formula for calculating profit, an allowance for
the reinsurer's expenses, and the cedant's share of such profit after
expenses.

Property insurance or
reinsurance

Insurance or reinsurance that provides coverage to a person with an
insurable interest in tangible property for that person’s property loss,
damage or loss of use.

Property per risk

Reinsurance on a treaty basis of individual property risks insured by a
ceding company.

Proportional reinsurance

A generic term describing all forms of reinsurance in which the reinsurer
shares a proportional part of the original premiums and losses of the
reinsured. (Also known as pro-rata reinsurance, quota share reinsurance
or participating reinsurance.) In proportional reinsurance the reinsurer
generally pays the ceding company a ceding commission. The ceding
commission generally is based on the ceding company’s cost of acquiring
the business being reinsured (including commissions, premium taxes,
assessments and miscellaneous administrative expense) and also may
include a profit factor. See also “Quota Share Reinsurance”.

Quota share reinsurance

A form of proportional reinsurance in which the reinsurer assumes an
agreed percentage of each insurance policy being reinsured and shares
all premiums and losses according with the reinsured. See also
“Proportional Reinsurance”.

Reinstatement premium

The premium charged for the restoration of the reinsurance limit of a
catastrophe contract to its full amount after payment by the reinsurer of
losses as a result of an occurrence.

Reinsurance

An arrangement in which an insurance company, the reinsurer, agrees to
indemnify another insurance or reinsurance company, the ceding
company, against all or a portion of the insurance or reinsurance risks
underwritten by the ceding company under one or more policies.
Reinsurance can provide a ceding company with several benefits,
including a reduction in net liability on insurances and catastrophe
protection from large or multiple losses. Reinsurance also provides a
ceding company with additional underwriting capacity by permitting it to
accept larger risks and write more business than would be possible
without an equivalent increase in capital and surplus, and facilitates the
maintenance of acceptable financial ratios by the ceding company.
Reinsurance does not legally discharge the primary insurer from its liability
with respect to its obligations to the insured.

Reinsurance to Close

Also referred to as a RITC, it is a contract to transfer the responsibility for
discharging all the liabilities that attach to one year of account of a
syndicate into a later year of account of the same or different syndicate in
return for a premium.

Retention

Retrocessional reinsurance;
Retrocessionaire

The amount or portion of risk that an insurer retains for its own account.
Losses in excess of the retention level are paid by the reinsurer. In
proportional treaties, the retention may be a percentage of the original
policy’s limit. In excess of loss business, the retention is a dollar amount of
loss, a loss ratio or a percentage.

A transaction whereby a reinsurer cedes to another reinsurer, the
retrocessionaire, all or part of the reinsurance that the first reinsurer has
assumed. Retrocessional reinsurance does not legally discharge the
ceding reinsurer from its liability with respect to its obligations to the
reinsured. Reinsurance companies cede risks to retrocessionaires for
reasons similar to those that cause primary insurers to purchase
reinsurance: to reduce net liability on insurances, to protect against
catastrophic losses, to stabilize financial ratios and to obtain additional
underwriting capacity.

Risks

A term used to denote the physical units of property at risk or the object of
insurance protection that are not perils or hazards. Also defined as chance
of loss or uncertainty of loss.

Risks attaching contracts

Contracts that cover claims that arise on underlying insurance policies that
incept during the term of the reinsurance contract.

Solvency II

Specialty lines

Statutory accounting
principles

A modernized set of regulatory requirements for (re)insurance firms that
operate in the European Union, currently expected to take effect in the
near term (with full implementation by January 1, 2014).

Lines of insurance and reinsurance that provide coverage for risks that are
often unusual or difficult to place and do not fit the underwriting criteria of
standard commercial products carriers.

Recording transactions and preparing financial statements in accordance
with the rules and procedures prescribed or permitted by Bermuda, U.S.
state insurance regulatory authorities including the NAIC and/or in
accordance with Lloyd’s specific principles, all of which generally reflect a
liquidating, rather than going concern, concept of accounting.

Stop loss

A form of reinsurance under which the reinsurer pays some or all of a
cedant’s aggregate retained losses in excess of a predetermined dollar
amount or in excess of a percentage of premium.

Submission

Syndicate

Treaty

Underwriting

An unprocessed application for (i) insurance coverage forwarded to a
primary insurer by a prospective policyholder or by a broker on behalf of
such prospective policyholder, (ii) reinsurance coverage forwarded to a
reinsurer by a prospective ceding insurer or by a broker or intermediary on
behalf of such prospective ceding insurer or (iii) retrocessional coverage
forwarded to a retrocessionaire by a prospective ceding reinsurer or by a
broker or intermediary on behalf of such prospective ceding reinsurer.

A member or group of members underwriting (re)insurance business at
Lloyd’s through the agency of a managing agent or substitute agent to
which a syndicate number is assigned.

A reinsurance agreement covering a book or class of business that is
automatically accepted on a bulk basis by a reinsurer. A treaty contains
common contract terms along with a specific risk definition, data on limit
and retention, and provisions for premium and duration.

The insurer’s or reinsurer’s process of reviewing applications submitted for
insurance coverage, deciding whether to accept all or part of the coverage
requested and determining the applicable premiums.

Underwriting capacity

The maximum amount that an insurance company can underwrite. The
limit is generally determined by a company’s retained earnings and
investment capital. Reinsurance serves to increase a company’s
underwriting capacity by reducing its exposure from particular risks.

Underwriting expense ratio

The ratio of the sum of the acquisition expenses and operational expenses
to net premiums earned, determined in accordance with GAAP.

Underwriting expenses

The aggregate of policy acquisition costs, including commissions, and the
portion of administrative, general and other expenses attributable to
underwriting operations.

Unearned premium

The portion of premiums written representing the unexpired portions of the
policies or contracts that the insurer or reinsurer has on its books as of a
certain date.

ITEM 2. PROPERTIES

We lease office space in Bermuda, which houses our executive offices and operations for our Reinsurance,
Lloyd’s and Insurance segments. In addition, certain U.S. based subsidiaries, including but not limited to,
Renaissance Trading and REAL, lease office space in a number of U.S. states. Both our Reinsurance and
Lloyd’s segments also lease office space in Dublin, Ireland and London, U.K. While we believe that for the
foreseeable future our current office space is sufficient for us to conduct our operations, it is likely that we
will expand into additional facilities and perhaps new locations to accommodate future growth. To date, the
cost of acquiring and maintaining our office space has not been material to us as a whole.

ITEM 3. LEGAL PROCEEDINGS

We and our subsidiaries are subject to lawsuits and regulatory actions in the normal course of business that
do not arise from or directly relate to claims on reinsurance treaties or contracts or direct surplus lines
insurance policies. This category of business litigation may involve allegations of underwriting or claims-
handling errors or misconduct, employment claims, regulatory actions or disputes arising from our business
ventures. Our operating subsidiaries are subject to claims litigation involving disputed interpretations of
policy coverages. Generally, our direct surplus lines insurance operations are subject to greater frequency
and diversity of claims and claims-related litigation than our reinsurance operations and, in some
jurisdictions, may be subject to direct actions by allegedly injured persons or entities seeking damages from
policyholders. These lawsuits, involving claims on policies issued by our subsidiaries which are typical to
the insurance industry in general and in the normal course of business, are considered in its loss and loss
expense reserves which are discussed in its loss reserves discussion. In addition, we may from time to
time engage in litigation or arbitration related to claims for payment in respect of ceded reinsurance. Any
such litigation or arbitration contains an element of uncertainty, and we believe the inherent uncertainty in
such matters may have increased recently and will likely continue to increase. Currently, we believe that no
individual litigation or arbitration to which we are presently a party is likely to have a material adverse effect
on our financial condition, business or operations.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS
AND ISSUER REPURCHASES OF EQUITY SECURITIES

PRICE RANGE OF COMMON SHARES

Our common shares began publicly trading on June 27, 1995 on the New York Stock Exchange under the
symbol “RNR.” The following table sets forth, for the periods indicated, the high and low prices per share of
our common shares as reported in composite New York Stock Exchange trading:

2011
First Quarter
Second Quarter
Third Quarter
Fourth Quarter

2010
First Quarter
Second Quarter
Third Quarter
Fourth Quarter

Price Range
of Common Shares

High

Low

70.58
73.93
72.30
75.16

57.36
59.28
60.30
64.50

60.64
67.58
59.50
60.34

50.81
52.19
54.69
58.93

On February 15, 2012, the last reported sale price for our common shares was $72.46 per share and there
were 230 holders of record of our common shares.

PERFORMANCE GRAPH

The following graph compares the cumulative return on our common shares including reinvestment of our
dividends on our common shares to such return for the S&P 500 Composite Stock Price Index (“S&P 500”)
and S&P’s Property-Casualty Industry Group Stock Price Index (“S&P P/C”), for the five-year period
commencing January 1, 2007 and ending December 31, 2011, assuming $100 was invested on January 1,
2007. Each measurement point on the graph below represents the cumulative shareholder return as
measured by the last sale price at the end of each calendar year during the period from January 1, 2007
through December 31, 2011. As depicted in the graph below, during this period, the cumulative return was
(1) 35.0% on our common shares; (2) negative 25.0% for the S&P P&C; and (3) negative 1.2% for the S&P
500.

DIVIDEND POLICY

Historically, we have paid dividends on our common shares every quarter, and have increased our dividend
during each of the sixteen years since our initial public offering. The Board of Directors declared regular
quarterly dividends of $0.26 per share during 2011 with dividend record dates of March 15, June 15,
September 15 and December 15, 2011. The Board of Directors of RenaissanceRe declared regular
quarterly dividends of $0.25 per share during 2010 with dividend record dates of
March 15, June 15, September 15 and December 15, 2010. On February 22, 2012, the Board of Directors
approved an increased dividend of $0.27 per common share, payable on March 30, 2012, to shareholders
of record on March 15, 2012. The declaration and payment of dividends are subject to the discretion of the
Board and depend on, among other things, our financial condition, general business conditions, legal,
contractual and regulatory restrictions regarding the payment of dividends by us and our subsidiaries and
other factors which the Board may in the future consider to be relevant.

ISSUER REPURCHASES OF EQUITY SECURITIES

The Company’s share repurchase program may be effected from time to time, depending on market
conditions and other factors, through open market purchases and privately negotiated transactions. On
February 22, 2012, the Company approved an increase in its authorized share repurchase program to an
aggregate amount of $500.0 million. Unless terminated earlier by resolution of the Company’s Board of
Directors, the program will expire when the Company has repurchased the full value of the shares
authorized. The table below details the repurchases that were made under the program during the three
months ended December 31, 2011, and also includes other shares purchased which represents
withholdings from employees surrendered in respect of withholding tax obligations on the vesting of
restricted stock, or in lieu of cash payments for the exercise price of employee stock options.

Total shares purchased

Other shares purchased

Shares purchased under
repurchase program

Shares
purchased

Average
price per
share

Shares
purchased

Average
price per
share

Shares
purchased

Average
price per
share

Dollar
amount
still
available
under
repurchase
program

(in millions)

Beginning dollar amount

available to be
repurchased

October 1 – 31, 2011

November 1 – 30, 2011

December 1 – 31, 2011

Total

—

6,049

238,458

244,507

—

68.53

71.91

71.83

—

6,049

4,327

10,376

—

68.53

74.19

70.89

—

234,131

500.0

—

71.87

(16.8)

483.2

In the future, the Company may adopt additional trading plans or authorize purchase activities under the
remaining authorization, which the Board may increase in the future. See “Note 11. Shareholders’ Equity in
our Notes to Consolidated Financial Statements” for additional information regarding our stock repurchase
program.

Subsequent to December 31, 2011 and through the period ended February 15, 2012, the Company
repurchased approximately 51 thousand of its common shares in open market transactions at an aggregate
cost of $3.6 million at an average share price of $71.81.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following tables set forth our selected consolidated financial data and other financial information at the
end of and for each of the years in the five-year period ended December 31, 2011. Comparative figures for
2007 have not been reclassified for discontinued operations. See “Note 3. Discontinued Operations in our
Notes to Consolidated Financial Statements” for additional information regarding discontinued operations.
The selected consolidated financial data should be read in conjunction with our consolidated financial
statements and related notes thereto and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” included in this filing and all other information appearing elsewhere or
incorporated into this filing by reference.

Year ended December 31,

2011

2010

2009

2008

2007

(in thousands, except share and per share data
and percentages)
Statement of Operations Data:
Gross premiums written
Net premiums written
Net premiums earned
Net investment income
Net realized and unrealized gains on

investments

Net other-than-temporary impairments
Net claims and claim expenses incurred
Acquisition expenses
Operational expenses
Underwriting (loss) income
(Loss) income from continuing operations
(Loss) income from discontinued operations
Net (loss) income
Net (loss) income (attributable) available to
RenaissanceRe common shareholders
(Loss) income from continuing operations

(attributable) available to RenaissanceRe
common shareholders per common share –
diluted

Net (loss) income (attributable) available to

RenaissanceRe common shareholders per
common share – diluted
Dividends per common share
Weighted average common shares outstanding

– diluted

Return on average common equity
Combined ratio

At December 31,
Balance Sheet Data:
Total investments
Total assets
Reserve for claims and claim expenses
Unearned premiums
Debt
Capital leases
Preferred shares
Total shareholders’ equity attributable to

RenaissanceRe

Common shares outstanding
Book value per common share
Accumulated dividends
Book value per common share plus

accumulated dividends

$ 1,434,976
1,012,773
951,049
118,000

$ 1,165,295
848,965
864,921
203,955

$ 1,228,881
838,333
882,204
318,179

$ 1,242,287
935,500
984,448
13,879

$ 1,809,637
1,435,335
1,424,369
402,463

70,668

(552)
861,179
97,376
169,666
(177,172)
(74,502)
(15,890)
(90,392)

144,444

(829)
129,345
94,961
166,042
474,573
798,482
62,670
861,152

93,679

(22,450)
(70,698)
104,150
153,552
695,200
1,045,959
6,700
1,052,659

11,462

(214,897)
481,498
141,616
94,414
266,920
50,307
33,846
84,153

26,806

(25,513)
479,274
254,930
110,464
579,701
758,400

n/a

776,832

(92,235)

702,613

838,858

(13,280)

569,575

(1.53)

11.18

13.29

(0.75)

n/a

(1.84)

1.04

12.31

1.00

13.40

0.96

(0.21)

0.92

7.93

0.88

50,747

55,641

61,210

63,411

71,825

(3.0)%
118.6 %

21.7%
45.1%

30.2%
21.2%

(0.5)%
72.9 %

20.9%
59.3%

2011

2010

2009

2008

2007

$ 6,209,252
7,744,912
1,992,354
347,655
353,620
25,366
550,000

$ 6,100,212
8,138,278
1,257,843
286,183
549,155
25,706
550,000

$ 6,015,259
7,926,212
1,344,433
317,592
300,000
26,014
650,000

$ 5,833,816
8,155,609
1,758,776
360,684
450,000
26,292
650,000

$ 6,634,348
8,286,355
2,028,496
563,336
451,951
2,533
650,000

3,605,193

3,936,325

3,840,786

3,032,743

3,477,503

51,543
59.27
10.92

70.19

54,110
62.58
9.88

72.46

61,745
51.68
8.88

60.56

61,503
38.74
7.92

46.66

68,920
41.03
7.00

48.03

Change in book value per common share plus

change in accumulated dividends

(3.6)%

23.0%

35.9%

(3.3)%

21.9%

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following is a discussion and analysis of our results of operations for the year ended December 31,
2011, compared with the year ended December 31, 2010 and the year ended December 31, 2010,
compared with the year ended December 31, 2009. The following also includes a discussion of our liquidity
and capital resources at December 31, 2011. This discussion and analysis should be read in conjunction
with the audited consolidated financial statements and related notes included in this filing. This filing
contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially
from the results described or implied by these forward-looking statements. See “Note on Forward-Looking
Statements.”

OVERVIEW

Since a substantial portion of the reinsurance and insurance we write provides protection from damages
relating to natural and man-made catastrophes, our results depend to a large extent on the frequency and
severity of such catastrophic events, and the coverages we offer to customers affected by these events.
We are exposed to significant losses from these catastrophic events and other exposures that we cover.
Accordingly, we expect a significant degree of volatility in our financial results and our financial results may
vary significantly from quarter-to-quarter or from year-to-year, based on the level of insured catastrophic
losses occurring around the world.

Our revenues are principally derived from three sources: 1) net premiums earned from the reinsurance and
insurance policies we sell; 2) net investment income and realized and unrealized gains from the investment
of our capital funds and the investment of the cash we receive on the policies which we sell; and 3) other
income received from our joint ventures, advisory services, weather and energy risk management
operations and various other items.

Our expenses primarily consist of: 1) net claims and claim expenses incurred on the policies of reinsurance
and insurance we sell; 2) acquisition costs which typically represent a percentage of the premiums we write;
3) operating expenses which primarily consist of personnel expenses, rent and other operating expenses;
4) corporate expenses which include certain executive, legal and consulting expenses, costs for research
and development, and other miscellaneous costs, including those associated with operating as a publicly
traded company; 5) redeemable noncontrolling interest - DaVinciRe, which represents the interest of third
parties with respect to the net income (loss) of DaVinciRe; and 6) interest and dividend costs related to our
debt and preference shares. We are also subject to taxes in certain jurisdictions in which we operate;
however, since the majority of our income is currently earned in Bermuda, a non-taxable jurisdiction, the tax
impact to our operations has historically been minimal.

The operating results, also known as the underwriting results, of an insurance or reinsurance company are
discussed frequently by reference to its net claims and claim expense ratio, underwriting expense ratio, and
combined ratio. The net claims and claim expense ratio is calculated by dividing net claims and claim
expenses incurred by net premiums earned. The underwriting expense ratio is calculated by dividing
underwriting expenses (acquisition expenses and operational expenses) by net premiums earned. The
combined ratio is the sum of the net claims and claim expense ratio and the underwriting expense ratio.

A combined ratio below 100% generally indicates profitable underwriting prior to the consideration of
investment income. A combined ratio over 100% generally indicates unprofitable underwriting prior to the
consideration of investment income. We also discuss our net claims and claim expense ratio on an
accident year basis. This ratio is calculated by taking net claims and claim expenses, excluding
development on net claims and claim expenses from events that took place in prior fiscal years, divided by
net premiums earned.

Segments

Our reportable segments include: (1) Reinsurance, (2) Lloyd’s and (3) Insurance.

Reinsurance

Our Reinsurance segment has two main units:

(1) Property catastrophe reinsurance, written for our own account, and for DaVinci, is our traditional core

business. We believe we are one of the world’s leading providers of this coverage, based on
catastrophe gross premiums written. This coverage protects against large natural catastrophes, such
as earthquakes, hurricanes and tsunamis, as well as claims arising from other natural and man-made
catastrophes such as winter storms, freezes, floods, fires, wind storms, tornadoes, explosions and
acts of terrorism. We offer this coverage to insurance companies and other reinsurers primarily on an
excess of loss basis. This means that we begin paying when our customers’ claims from a
catastrophe exceed a certain retained amount.

(2) Specialty reinsurance, written for our own account, and for DaVinci, covering certain targeted classes
of business where we believe we have a sound basis for underwriting and pricing the risk that we
assume. Our portfolio includes various classes of business, such as catastrophe exposed workers’
compensation, surety, terrorism, energy, aviation, crop, political risk, trade credit, financial, mortgage
guarantee, catastrophe-exposed personal lines property, casualty clash, certain other casualty lines
and other specialty lines of reinsurance that we collectively refer to as specialty reinsurance. We
believe that we are seen as a market leader in certain of these classes of business. We are seeking
to expand our specialty reinsurance operations over time, although we cannot assure you that we will
do so, particularly in light of current and forecasted market conditions.

Lloyd’s

Our Lloyd’s segment includes insurance and reinsurance business written for our own account through
Syndicate 1458. Syndicate 1458 commenced business by writing certain lines of insurance and
reinsurance business incepting on or after June 1, 2009. The syndicate was established to enhance our
underwriting platform by providing access to Lloyd’s extensive distribution network and worldwide licenses.
RenaissanceRe CCL, an indirect wholly owned subsidiary of the Company, is the sole corporate member of
Syndicate 1458. The results of Syndicate 1458 were not significant to our overall consolidated results of
operations and financial position during 2009; however, we expect its absolute and relative contributions to
our consolidated results of operations to continue to grow over time.

Insurance

Our Insurance segment includes the insurance policies previously written in connection with our Bermuda-
based insurance operations which were not sold to QBE. Our Insurance segment is managed by our
Global Chief Underwriting Officer. The Bermuda-based insurance business is written by Glencoe, a
Bermuda domiciled excess and surplus lines insurance company that is currently eligible to do business on
an excess and surplus lines basis in 49 U.S. states, the District of Columbia, Puerto Rico and the U.S.
Virgin Islands. We may from time to time evaluate potential new business opportunities for our Insurance
segment.

Other

Our Other category primarily includes the results of: (1) our share of strategic investments in certain
markets we believe offer attractive risk-adjusted returns or where we believe our investment adds value,
where, rather than assuming exclusive management responsibilities ourselves, we partner with other
market participants; (2) our weather and energy risk management operations primarily through

Renaissance Trading and REAL, (3) our investment unit which manages and invests the funds generated
by our consolidated operations, (4) corporate expenses, capital services costs and noncontrolling interests;
and (5) the results of our discontinued operations.

New Business

From time to time we consider diversification into new ventures, either through organic growth, the
formation of new joint ventures, or the acquisition of or the investment in other companies or books of
business of other companies. This potential diversification includes opportunities to write targeted,
additional classes of risk-exposed business, both directly for our own account and through possible new
joint venture opportunities. We also regularly evaluate potential strategic opportunities that we believe
might utilize our skills, capabilities, proprietary technology and relationships to support possible expansion
into further risk-related coverages, services and products. Generally, we focus on underwriting or trading
risks where reasonably sufficient data may be available, and where our analytical abilities may provide us a
competitive advantage, in order for us to seek to model estimated probabilities of losses and returns in
accordance with our approach in respect of our then current portfolio of risks.

We regularly review potential strategic transactions that might improve our portfolio of business, enhance or
focus our strategies, expand our distribution or capabilities, or to seek other benefits. In evaluating potential
new ventures or investments, we generally seek an attractive estimated return on equity, the ability to
develop or capitalize on a competitive advantage, and opportunities which we believe will not detract from
our core operations. While we regularly review potential strategic transactions and periodically engage in
discussions regarding possible transactions, there can be no assurance that we will complete any such
transactions or that any such transaction would be successful or materially enhance our results of
operations or financial condition. We believe that our ability to potentially attract investment and operational
opportunities is supported by our strong reputation and financial resources, and by the capabilities and track
record of our ventures unit.

Risk Management

We seek to develop and effectively utilize sophisticated computer models and other analytical tools to
assess and manage the risks that we underwrite and attempt to optimize our portfolio of reinsurance and
insurance contracts and other financial risks. Our policies, procedures, tools and resources to monitor and
assess our operational risks companywide, as well as our global enterprise-wide risk management
practices, are overseen by our Chief Risk Officer, who reports directly to our Chief Financial Officer.

With respect to our Reinsurance operations, since 1993 we have developed and continuously seek to
improve our proprietary, computer-based pricing and exposure management system, REMS©. We believe
that REMS©, as updated from time to time, is a more robust underwriting and risk management system
than is currently commercially available elsewhere in the reinsurance industry and offers us a significant
competitive advantage. REMS© was originally developed to analyze catastrophe risks, though we
continuously seek ways to enhance the program in order to analyze other classes of risk.

Discontinued Operations

During the fourth quarter of 2010, we made the strategic decision to divest substantially all of our U.S.-
based insurance operations in order to focus on the business encompassed within our Reinsurance and
Lloyd’s segments and our other businesses. Except as explicitly described as held for sale or as
discontinued operations, and unless otherwise noted, all discussions and amounts presented herein relate
to our continuing operations. Prior years presented have been reclassified to conform to this new
presentation.

On November 18, 2010, we entered into a Stock Purchase Agreement with QBE to sell substantially all of
our U.S.-based insurance operations, including our U.S. property and casualty business underwritten
through managing general agents, our crop insurance business underwritten through Agro National Inc.
(“Agro National”), our commercial property insurance operations and our claims operations. We have
classified the assets and liabilities associated with this transaction as held for sale. The financial results for
these operations have been presented as discontinued operations in our Consolidated Statements of
Operations.

Consideration for the transaction was book value at December 31, 2010, for the aforementioned
businesses, payable in cash at closing and subject to adjustment for certain tax and other items. The
transaction closed on March 4, 2011 and we received net consideration of $269.5 million.

Pursuant to the Stock Purchase Agreement, the Company is subject to a post-closing review following
December 31, 2011 of the net reserve for claims and claim expenses for loss events occurring on or prior to
December 31, 2010 (the “Reserve Collar”). Subsequent to the post-closing review, the Company is liable to
pay, or otherwise reimburse QBE amounts up to $10.0 million for net adverse development on prior
accident years net claims and claim expenses. Conversely, if prior accident years net claims and claim
expenses experience net favorable development, QBE is liable to pay, or otherwise reimburse the Company
amounts up to $10.0 million.

The Company has recognized a $10.0 million liability and corresponding expense related to the Reserve
Collar due to purported net adverse development on prior accident years net claims and claim expenses.
The $10.0 million represents the maximum amount payable under the Reserve Collar. The Company will
continue to evaluate any favorable or adverse developments relating to the Reserve Collar pursuant to the
terms of the Stock Purchase Agreement with QBE.

See “Note 3. Discontinued Operations in our Notes to Consolidated Financial Statements” for additional
information.

SUMMARY OF CRITICAL ACCOUNTING ESTIMATES

Claims and Claim Expense Reserves

General Description

The following table summarizes our claims and claim expense reserves by line of business and split
between case reserves, additional case reserves and IBNR:

At December 31, 2011

(in thousands)
Catastrophe
Specialty
Total Reinsurance
Lloyd’s
Insurance
Total

At December 31, 2010
(in thousands)
Catastrophe
Specialty
Total Reinsurance
Lloyd's
Insurance
Total

Case
Reserves

Additional
Case Reserves

IBNR

Total

681,771
120,189
801,960
17,909
32,944
852,813

173,157
102,521
275,678
172
40,943
316,793

271,990
49,840
321,830
14,459
3,515
339,804

281,202
60,196
341,398
6,874
3,317
351,589

388,147
301,589
689,736
55,127
54,874
799,737

$ 1,341,908
471,618
1,813,526
87,495
91,333
$ 1,992,354

163,021
350,573
513,594
12,985
62,882
589,461

617,380
513,290
1,130,670
20,031
107,142
$ 1,257,843

Activity in the liability for unpaid claims and claim expenses is summarized as follows:

Year ended December 31,
Net reserves as of January 1
Net incurred related to:

Current year
Prior years

Total net incurred
Net paid related to:

Current year
Prior years
Total net paid
Total net reserves as of December 31
Reinsurance recoverable as of December 31
Total gross reserves as of December 31

2011
$ 1,156,132

2010
$ 1,260,334

2009
$ 1,565,230

993,168
(131,989)
861,179

431,476
(302,131)
129,345

195,518
(266,216)
(70,698)

299,299
129,687
428,986
1,588,325
404,029
$ 1,992,354

50,793
182,754
233,547
1,156,132
101,711
$ 1,257,843

42,712
191,486
234,198
1,260,334
84,099
$ 1,344,433

relatively recent occurrence of these events, meaningful uncertainty remains regarding total covered losses
for the insurance industry and, accordingly, several of the key assumptions underlying our loss estimates.
In addition, our actual net losses from these events may increase if our reinsurers or other obligors fail to
meet their obligations.

Prior Year Development of Reserve for Net Claims and Claim Expenses

Our estimates of claims and claim expense reserves are not precise in that, among other matters, they are
based on predictions of future developments and estimates of future trends and other variable factors.
Some, but not all, of our reserves are further subject to the uncertainty inherent in actuarial methodologies
and estimates. Because a reserve estimate is simply an insurer’s estimate at a point in time of its ultimate
liability, and because there are numerous factors which affect reserves and claims payments that cannot be
determined with certainty in advance, our ultimate payments will vary, perhaps materially, from our
estimates of reserves. If we determine in a subsequent period that adjustments to our previously
established reserves are appropriate, such adjustments are recorded in the period in which they are
identified. As detailed in the table below, changes to prior year estimated claims reserves decreased our
net loss by $132.0 million during the year ended December 31, 2011, (2010 - increased our net income by
$302.1 million, 2009 - increased our net income by $266.2 million), excluding the consideration of changes
in reinstatement premium, profit commissions, redeemable noncontrolling interest - DaVinciRe, equity in net
claims and claim expenses of Top Layer Re and income tax.

Year ended December 31,
Reinsurance
Lloyd's
Insurance
Total

2011
(136,898)
478
4,431
(131,989)

2010
(286,019)
(197)
(15,915)
(302,131)

2009
(249,507)
—
(16,709)
(266,216)

For the year ended December 31, 2011, the prior year favorable development of $132.0 million included
favorable development of $136.9 million attributable to the Company's Reinsurance segment, and adverse
development of $0.5 million and $4.4 million attributable to the Company's Lloyd's and Insurance segments,
respectively. Within the Company's Reinsurance segment, the catastrophe and specialty units experienced
$59.1 million and $77.8 million, respectively, of favorable development on prior years claims and claim
expense reserves.

For the year ended December 31, 2010, the prior year favorable development of $302.1 million included
favorable development of $286.0 million, $0.2 million and $15.9 million attributable to the Company's
Reinsurance, Lloyd's and Insurance segments, respectively. Within the Company's Reinsurance segment,
the catastrophe and specialty units experienced $157.5 million and $128.6 million, respectively, of favorable
development on prior years claims and claim expense reserves.

For the year ended December 31, 2009, the prior year favorable development of $266.2 million included
favorable development of $249.5 million and $16.7 million attributable to the Company's Reinsurance and
Insurance segments, respectively. Within the Company's Reinsurance segment, the Company's
catastrophe and specialty units experienced $184.4 million and $65.1 million, respectively, of favorable
development on prior years claims and claim expense reserves.

Our reserving techniques, assumptions and processes differ between our property catastrophe reinsurance,
specialty reinsurance and insurance businesses within our Reinsurance and Lloyd’s segments. Following is
a discussion of the risks we insure and reinsure, the reserving techniques, assumptions and processes we
follow to estimate our claims and claim expense reserves, and our current estimates versus our initial
estimates of our claims reserves, for each of these units.

Reinsurance Segment

Property Catastrophe Reinsurance

Within our catastrophe unit, we principally write property catastrophe excess of loss reinsurance contracts
to insure insurance and reinsurance companies against natural and man-made catastrophes. Under these
contracts, we indemnify an insurer or reinsurer when its aggregate paid claims and claim expenses from a
single occurrence of a covered peril exceed the attachment point specified in the contract, up to an amount
per loss specified in the contract. Our most significant exposure is to losses from earthquakes and
hurricanes and other windstorms, although we are also exposed to claims arising from other catastrophes,
such as tsunamis, freezes, floods, fires, tornadoes, explosions and acts of terrorism. Our predominant
exposure under such coverage is to property damage. However, other risks, including business interruption
and other non-property losses, may also be covered under our property catastrophe reinsurance contracts
when arising from a covered peril. Our coverages are offered on either a worldwide basis or are limited to
selected geographic areas.

Coverage can also vary from “all property” perils to limited coverage on selected perils, such as “earthquake
only” coverage. We also enter into retrocessional contracts that provide property catastrophe coverage to
other reinsurers or retrocedants. This coverage is generally in the form of excess of loss retrocessional
contracts and may cover all perils and exposures on a worldwide basis or be limited in scope to selected
geographic areas, perils and/or exposures. The exposures we assume from retrocessional business can
change within a contract term as the underwriters of a retrocedant may alter their book of business after the
retrocessional coverage has been bound. We also offer dual trigger reinsurance contracts which require us
to pay claims based on claims incurred by insurers and reinsurers in addition to the estimate of insured
industry losses as reported by referenced statistical reporting agencies.

Our property catastrophe reinsurance business is generally characterized by loss events of low frequency
and high severity. Initial reporting of paid and incurred claims in general, tends to be relatively prompt. We
consider this business “short-tail” as compared to the reporting of claims for “long-tail” products, which
tends to be slower. However, the timing of claims payment and reporting also varies depending on various
factors, including: whether the claims arise under reinsurance of primary insurance companies or
reinsurance of other reinsurance companies; the nature of the events (e.g., hurricanes, earthquakes or
terrorism); the geographic area involved; post-event inflation which may cause the cost to repair damaged
property to increase significantly from current estimates, or for property claims to remain open for a longer
period of time, due to limitations on the supply of building materials, labor and other resources; complex
policy coverage and other legal issues; and the quality of each client’s claims management and reserving
practices. Management’s judgments regarding these factors are reflected in our claims reserve estimates.

Reserving for most of our property catastrophe reinsurance business does not involve the use of traditional
actuarial techniques. Rather, claims and claim expense reserves are estimated by management after a
catastrophe occurs by completing an in-depth analysis of the individual contracts which may potentially be
impacted by the catastrophic event. The in-depth analysis generally involves: 1) estimating the size of
insured industry losses from the catastrophic event; 2) reviewing our portfolio of reinsurance contracts to
identify those contracts which are exposed to the catastrophic event; 3) reviewing information reported by
customers and brokers; 4) discussing the event with our customers and brokers; and 5) estimating the
ultimate expected cost to settle all claims and administrative costs arising from the catastrophic event on a
contract-by-contract basis and in aggregate for the event. Once an event has occurred, during the then
current reporting period we record our best estimate of the ultimate expected cost to settle all claims arising
from the event. Our estimate of claims and claim expense reserves is then determined by deducting
cumulative paid losses from our estimate of the ultimate expected loss for an event and our estimate of
IBNR is determined by deducting cumulative paid losses, case reserves and additional case reserves from
our estimate of the ultimate expected loss for an event. Once we receive a notice of loss or payment
request under a catastrophe reinsurance contract, we are generally able to process and pay such claims
promptly.

Because the events from which claims arise under policies written by our property catastrophe reinsurance
business are typically prominent, public occurrences such as hurricanes and earthquakes, we are often
able to use independent reports as part of our loss reserve estimation process. We also review catastrophe
bulletins published by various statistical reporting agencies to assist us in determining the size of the
industry loss, although these reports may not be available for some time after an event. In addition to the
loss information and estimates communicated by cedants and brokers, we also use industry information
which we gather and retain in our REMS© modeling system. The information stored in our REMS©
modeling system enables us to analyze each of our policies in relation to a loss and compare our estimate
of the loss with those reported by our policyholders. The REMS© modeling system also allows us to
compare and analyze individual losses reported by policyholders affected by the same loss event. Although
the REMS© modeling system assists with the analysis of the underlying loss and provides us with the
information and ability to perform increased analysis, the estimation of claims resulting from catastrophic
events is inherently difficult because of the variability and uncertainty associated with property catastrophe
claims and the unique characteristics of each loss.

For smaller events including localized severe weather events such as windstorms, hail, ice, snow, flooding,
freezing and tornadoes, which are not necessarily prominent, public occurrences, we initially place greater
reliance on catastrophe bulletins published by statistical reporting agencies to assist us in determining what
events occurred during the reporting period than we do for large events. This includes reviewing
catastrophe bulletins published by Property Claim Services for U.S. catastrophes. We set our initial
estimates of reserves for claims and claim expenses for these smaller events based on a combination of
our historical market share for these types of losses and the estimate of the total insured industry property
losses as reported by statistical reporting agencies, although we generally make significant adjustments
based on our current exposure to the geographic region involved as well as the size of the loss and the peril
involved. This approach supplements our approach for estimating losses for larger catastrophes, which as
discussed above, includes discussions with brokers and ceding companies, reviewing individual contracts
impacted by the event, and modeling the loss in our REMS© system. Approximately one year from the date
of loss for these small events, we estimate IBNR for these events by using an actuarial technique. The
actuarial technique used to estimate IBNR is the paid Bornhuetter-Ferguson actuarial method. The paid
Bornhuetter-Ferguson actuarial method loss development factors are selected based on a review of our
historical experience and these factors are reviewed at least annually. There were no changes to the paid
loss development factors over the last three years.

In general, our property catastrophe reinsurance reserves for our more recent reinsured catastrophic events
are subject to greater uncertainty and, therefore, greater potential variability, and are likely to experience
material changes from one period to the next. This is due to the uncertainty as to the size of the industry
losses from the event, uncertainty as to which contracts have been exposed to the catastrophic event,
uncertainty due to complex legal and coverage issues that can arise out of large or complex catastrophic
events such as the events of September 11, 2001 and hurricane Katrina, and uncertainty as to the
magnitude of claims incurred by our customers. As our property catastrophe reinsurance claims age, more
information becomes available and we believe our estimates become more certain, although there is no
assurance this trend will continue in the future. As seen in the Actual vs. Initial Estimated Property
Catastrophe Reinsurance Claims and Claim Expense Reserve Analysis table below, 62.0% of our inception
to date claims and claim expenses in our catastrophe unit were incurred in the 2004, 2005 and 2011
accident years. Due to the size and complexity of the losses in these accident years, there still remains
considerable uncertainty as to the ultimate settlement costs associated with these accident years.

Prior Year Development of Reserve for Net Claims and Claim Expenses

Within our property catastrophe reinsurance business, we seek to review substantially all of our claims and
claim expense reserves quarterly. Our quarterly review procedures include identifying events that have
occurred up to the latest balance sheet date, determining our best estimate of the ultimate expected cost to
settle all claims and administrative costs associated with those new events which have arisen during the
reporting period, reviewing the ultimate expected cost to settle claims and administrative costs associated
with those events which occurred during previous periods, and considering new estimation techniques,
such as additional actuarial methods or other statistical techniques, that can assist us in developing a best
estimate. This process is judgmental in that it involves reviewing changes in paid and reported losses each
period and adjusting our estimates of the ultimate expected losses for each event if there are developments
that are different from our previous expectations. If we determine that adjustments to an earlier estimate
are appropriate, such adjustments are recorded in the period in which they are identified. As noted above,
the level of our claims and claim expenses associated with certain catastrophes can be very large. As a
result, small percentage changes in the estimated ultimate claims and large catastrophe events can
significantly impact our reserves for claims and claim expenses in subsequent periods.

The following table details the development of our liability for unpaid claims and claim expenses for the
catastrophe reinsurance unit for the year ended December 31, 2011:

Year ended December 31, 2011

(in thousands)

Catastrophe claims and claim expenses

Large catastrophe events

Tropical Cyclone Tasha (2010)

Hurricanes Katrina, Rita and Wilma (2005)

Chilean Earthquake (2010)

World Trade Center (2001)

Hurricanes Charley, Francis, Ivan and Jeanne (2004)

U.K. Floods (2007)

Windstorm Kyrill (2007)

New Zealand Earthquake (2010)

Total large catastrophe events

Small catastrophe events

U.S. PCS 21 Wildland Fire (2007)

U.S. PCS 33 Great Midwest Storm (2010)

U.S. PCS 31 Wind and Thunderstorm (2010)

U.S. PCS 96 Wind and Thunderstorm (2010)

Other

Total small catastrophe events

Catastrophe
Reinsurance
Unit

13,922

10,008

8,455

4,701

4,076

3,635

2,494

(15,179)

32,112

4,554

3,125

3,039

2,288

14,019

27,025

59,137

Total favorable development of prior accident years claims and claim expenses

The favorable development on prior year reserves in 2011 within the Company’s catastrophe reinsurance
unit of $59.1 million was due to $27.0 million related to reductions in the estimated ultimate losses of
smaller catastrophe events, $32.1 million related to net reductions arising from the estimated ultimate
losses of large catastrophe events, including $13.9 million, $10.0 million, $8.5 million and $4.7 million
related to tropical cyclone Tasha, the 2005 hurricanes, the Chilean earthquake and the World Trade Center,
and partially offset by $15.2 million of adverse development related to the September 2010 New Zealand
earthquake.

The following table details the development of our liability for unpaid claims and claim expenses for the
catastrophe reinsurance unit for the year ended December 31, 2010:

Year ended December 31, 2010

(in thousands)

Catastrophe claims and claim expenses

Large catastrophe events

Mature, large catastrophe events

European Windstorm Erwin (2005)

World Trade Center (2001)

Hurricanes Martin and Floyd (1999)

European Floods (2002)

U.S. PCS 88 Wind and Thunderstorm (2003)

Hurricane Isabel (2003)

U.S. PCS 97 Wildland Fire (2003)

Windstorm Anatol (1999)

Northridge Earthquake (1993)

Total mature, large catastrophe events

Buncefield Oil Depot (2005)

Hurricanes Katrina, Rita and Wilma (2005)

Hurricanes Gustav and Ike (2008)

Hurricanes Charley, Francis, Ivan and Jeanne (2004)

European Windstorm Klaus (2009)

Total large catastrophe events

Small catastrophe events

U.S. PCS 78 Wind and Thunderstorm (2009)

U.S. PCS 66 Wind and Thunderstorm (2009)

U.S. Winter Storm (2009)

Hurricane Bill (2009)

U.S. PCS 82 Wind and Thunderstorm (2009)

Austrian Floods (2009)

Other

Total small catastrophe events

Catastrophe
Reinsurance
Unit

10,593

9,914

4,822

4,361

2,873

1,995

1,231

971

1,094

37,854

27,418

25,482

10,878

8,149

8,000

117,781

3,215

3,149

3,000

2,500

2,429

2,356

23,028

39,677

Total favorable development of prior accident years claims and claim expenses

157,458

The favorable development of prior accident years claims and claim expenses within the Company's
catastrophe reinsurance unit in 2010 of $157.5 million was due in part to reductions of $37.9 million to the
estimated ultimate claims of mature, large catastrophe events, such as the 2001 World Trade Center,
European windstorm Erwin and the large European windstorms of 1999, for which the claims are principally
paid and the amount of additional reported claims had slowed considerably and therefore the ultimate
claims were reduced. In addition, the 2005 Buncefield Oil Depot claim was reduced by $27.4 million in
2010, principally due to the underlying insured subrogating its liability and subsequently reimbursing the
Company for claims the Company had previously paid to the insured. The ultimate claims associated with
the 2005 hurricanes, Katrina, Rita and Wilma, and the 2004 hurricanes, Charley, Frances, Ivan and Jeanne,
were reduced by $25.5 million and $8.1 million, respectively, as reported claims came in better than
expected in 2010. As discussed below, the Company adopted a new actuarial technique in 2009 to reserve
for these hurricanes and the level of reported claims in 2010 was less than the actuarial technique would
have indicated, resulting in formulaic decreases to the ultimate claims for these large hurricanes. The

ultimate claims associated with the 2008 hurricanes, Gustav and Ike, were reduced by $10.9 million and the
2009 European windstorm Klaus were reduced by $8.0 million in 2010, due to better than expected
reported claims activity. The remainder of the favorable development of prior accident years claims and
claim expenses was due to a reduction in ultimate claims on a large number of relatively small
catastrophes, all principally the result of reported claims coming in less than expected, resulting in formulaic
decreases to the ultimate claims for these events.

The following table details the development of our liability for unpaid claims and claim expenses for the
catastrophe reinsurance unit for the year ended December 31, 2009:

Year ended December 31, 2009

(in thousands)

Catastrophe claims and claim expenses

Large catastrophe events

Hurricanes Gustav and Ike (2008)

Hurricanes Katrina, Rita and Wilma (2005)

Windstorm Kyrill (2007)

U.K. Floods (2007)

U.S. PCS 21 California Wildland Fire (2007)

Hurricanes Charley, Francis, Ivan and Jeanne (2004)

Total large catastrophe events

Small catastrophe events

Windstorm Emma (2008)

U.S. PCS 27 Wind and Thunderstorm (2008)

Hurricane Dean (2007)

U.S. PCS 42 Wind and Thunderstorm (2008)

U.S. PCS 43 Wind and Thunderstorm (2008)

Other

Total small catastrophe events

Catastrophe
Reinsurance
Unit

44,664

25,456

16,719

14,589

14,085

11,302

126,815

8,910

4,237

3,889

3,862

3,171

33,511

57,580

Total favorable development of prior accident years claims and claim expenses

184,395

The favorable development of prior accident years claims and claim expenses within the Company's
property catastrophe unit of $184.4 million in 2009 includes a $44.7 million reduction in the ultimate claims
associated with the 2008 hurricanes, Gustav and Ike. Given the magnitude and the then recent occurrence
of the 2008 hurricanes, Gustav and Ike, during the third quarter of 2008, combined with delays in receiving
claims data, potential uncertainties related to reinsurance recoveries and other uncertainties inherent in
claims estimation, meaningful uncertainty remained regarding the ultimate claims related to these
hurricanes at December 31, 2008. Accordingly, as the Company received additional information during
2009, the level of reported claims was less than expected and, as such, the ultimate claims associated with
these hurricanes was reduced.

In 2009, the Company reviewed its processes and methodology for estimating the ultimate expected cost to
settle all claims arising from certain mature, large U.S. hurricanes. During this process, the Company
evaluated several actuarial methodologies including using paid claim development factors, reported claim
development factors and ratios of IBNR to case reserves. In this review, among other things, the Company
looked at its historical claims experience on these mature large U.S. hurricanes, the amount of case
reserves associated with these mature, large U.S. hurricanes and available industry claims information on
the same or similar events. The Company determined that the use of the reported claim development
factor methodology for these mature, large U.S. hurricanes would provide the Company with the best
estimate of ultimate claim in respect of these events. Currently, the Company believes this approach is only
applicable for the 2004 and 2005 large hurricanes as it believes that (i) these events have a large enough
number of reported claims to be statistically sound, (ii) these events have available industry reported claims

information to supplement the Company's own historical reported claim information, and (iii) a sufficient
amount of time has passed from the date of claim that the use of an actuarial method could assist in
estimating the ultimate costs. The Company implemented this actuarial methodology in 2009 with respect
to its 2004 and 2005 hurricane claims. In implementing this actuarial technique, the Company adjusted its
ultimate claims at December 31, 2009 on the 2004 hurricanes from 96.6% reported to 98.1% reported and
from 93.6% reported to 95.8% reported for the 2005 hurricanes. The impact of these changes within the
Company's catastrophe reinsurance unit was a decrease in ultimate claims on the 2004 hurricanes by
$12.3 million and by $28.1 million for the Company's 2005 hurricane claims, prior to the impact of changes
in the Company's reinsurance recoveries. At December 31, 2010, the Company estimated its reported
claims were 99.3% and 98.1% reported for the 2004 and 2005 hurricanes, respectively.

The remainder of the reduction in ultimate claims in 2009 was due to the 2007 European windstorm Kyrill of
$16.7 million; the 2007 California wildfires of $14.1 million; the 2007 flooding in the U.K. of $14.6 million;
and $57.6 million related to reductions in the ultimate net claims on a variety of smaller catastrophes such
as hail storms, winter freezes, floods, fires and tornadoes which occurred during the 2006 through 2008
accident years.

Actual Results vs. Initial Estimates

The table below summarizes our initial assumptions and changes in those assumptions for claims and claim
expense reserves within our catastrophe unit. As discussed above, the key assumption in estimating
reserves for our catastrophe unit is our estimate of ultimate claims and claim expenses. The table shows
our initial estimates of ultimate claims and claim expenses for each accident year and how these initial
estimates have developed over time. The initial estimate of accident year claims and claim expenses
represents our estimate of the ultimate settlement and administration costs for claims incurred from
catastrophic events occurring during a particular accident year, and as reported as of December 31 of that
year. The re-estimated ultimate claims and claim expenses as of December 31, 2009, 2010 and 2011,
represent our revised estimates as reported as of those dates. The cumulative favorable (adverse)
development shows how our most recent estimates as reported at December 31, 2011 differ from our initial
accident year estimates. Favorable development implies that our current estimates are lower than our initial
estimates while adverse development implies that our current estimates are higher than our original
estimates. Total reserves as of December 31, 2011 reflect the unpaid portion of our estimates of ultimate
claims and claim expenses. The table is presented on a gross basis and therefore does not include the
benefit of reinsurance recoveries. It also does not consider the impact of loss related premium or
redeemable noncontrolling interest – DaVinciRe.

Actual vs. Initial Estimated Property Catastrophe Reinsurance Claims and Claim Expense Reserve Analysis

(in thousands,
except percentages)

Re-estimated Claims and
Claim Expenses
as of December 31,

Initial
Estimate
of
Accident
Year
Claims
and Claim
Expenses

Accident
Year

Cumulative
Favorable
(Adverse)
Development

% Decrease
(Increase)
from
Initial
Ultimate

Claims and
Claim
Expense
Reserves
as of
December
31, 2011

% of
Claims
and Claim
Expenses
Unpaid as
of
December
31, 2011

2009

2010

2011

1994

1995

1996

1997

1998

1999

2000

2001

2002
2003

2004

2005

2006

2007

2008

2009

2010

2011

100,816

138,107

137,135

72,561

67,671

43,050

129,171

267,981

54,600

257,285

155,573
126,312

61,393

45,213

9,046

154,670

208,367

17,716

219,875

71,534
75,958

61,348

45,214
9,046

151,755

199,097

17,794

212,678

65,486
68,892

762,392
1,473,974

830,453

821,350

1,348,146

1,283,225

121,754

245,892

599,481

90,800

385,207
1,243,138
$ 6,197,658

61,387

151,956

506,721

90,800

—

60,413

150,809

480,907

53,991

385,207

137,498
61,345

45,209

9,040

151,951

198,257
17,803

205,078
65,436
69,057

815,773

1,272,485
60,313

138,329

481,878
47,189

355,564

(36,682)
11,216

22,462

34,010

(22,780)
69,724

36,797

52,207

90,137
57,255

(53,381)

201,489
61,441

107,563

117,603
43,611

29,643

—

$ 3,991,342

$ 4,204,347

$ 5,375,343

822,315

—

1,243,138

(36.4)%

15.5 %

33.2 %

79.0 %

(17.6)%

26.0 %

67.4 %

20.3 %

57.9 %
45.3 %

(7.0)%

13.7 %

50.5 %

43.7 %

19.6 %

48.0 %

7.7 %

— %

16.6 %

644

18
4

476

173

46
13,031

596
1,674

3,153

21,864

3,110

39,997

88,853

12,966

246,332

908,924
$ 1,341,908

0.5%

0.1%
—%
—%
0.3%

0.1%

0.3%

6.4%

0.9%
2.4%

0.4%

1.7%

5.2%
28.9%
18.4%
27.5%
69.3%
73.1%
25.0%

As quantified in the table above, since the inception of the Company in 1993, while we have experienced
adverse development from time to time, on a cumulative basis we have experienced $822.3 million of net
favorable development on the run-off of our gross reserves within our catastrophe unit. This represents
16.6% of our initial estimated gross claims and claim expenses for accident years 2010 and prior of $5.0
billion and is calculated based on our estimates of claims and claim expense reserves as of December 31,
2011, compared to our initial estimates of ultimate claims and claim expenses, as of the end of each
accident year. As described above, given the complexity in reserving for claims and claims expenses
associated with catastrophe losses for property catastrophe excess of loss reinsurance contracts, we have
experienced development, both favorable and unfavorable, in any given accident year. For example, our
2005 accident year developed favorably by $201.5 million, which is 13.7% better than our initial estimates of
claims and claim expenses for the 2005 accident year as estimated as of December 31, 2005, while our
2004 accident year developed unfavorably by $53.4 million, or negative 7.0%. In addition, our 2007 and
2008 accident years have developed favorably by $107.6 million and $117.6 million, respectively, or 43.7%
and 19.6%, respectively. On a net basis our cumulative favorable or unfavorable development is generally
reduced by offsetting changes in our reinsurance recoverables, as well as changes to loss related
premiums such as reinstatement premiums, and redeemable noncontrolling interest for changes in claims
and claim expenses that impact DaVinciRe, all of which generally move in the opposite direction to changes
in our ultimate claims and claim expenses.

The percentage of claims unpaid at December 31, 2011 for each accident year reflects both the speed at
which claims and claim expenses for each accident year have been paid and our estimate of claims and
claim expenses for that accident year. As seen above, claims and claim expenses for the 2004 accident
year have to date been paid quickly compared to prior accident years. This is due to the fact that
hurricanes Charley, Frances, Ivan and Jeanne which occurred in 2004 have been relatively rapid claims
paying events. This is driven in part by the mix of our business in Florida, which primarily includes property
catastrophe excess of loss reinsurance for personal lines property coverage, rather than commercial
property coverage or retrocessional coverage, and the speed of the settlement and payment of claims by

our underlying cedants. In contrast, our 2001 accident year, which includes losses from the events of
September 11, 2001, includes a higher mix of commercial business and retrocessional coverage where the
underlying claims of our cedants tend to be settled and paid more slowly. In addition, claims from our
underlying cedants for the 2001 and 2005 accident years are subject to more complex coverage and legal
matters due to the complexity of the catastrophic events taking place in those years.

Sensitivity Analysis

The table below shows the impact on our ultimate claims and claim expenses, net income and
shareholders’ equity as of and for the year ended December 31, 2011 of reasonably likely changes to our
estimates of ultimate losses for claims and claim expenses incurred from catastrophic events within our
property catastrophe reinsurance business unit. The reasonably likely changes are based on an historical
analysis of the period-to-period variability of our ultimate costs to settle claims from catastrophic events,
giving due consideration to changes in our reserving practices over time. In general, our claim reserves for
our more recent catastrophic events are subject to greater uncertainty and, therefore, greater variability and
are likely to experience material changes from one period to the next. This is due to the uncertainty as to
the size of the industry losses from the event, uncertainty as to which contracts have been exposed to the
catastrophic event, and uncertainty as to the magnitude of claims incurred by our clients. As our claims
age, more information becomes available and we believe our estimates become more certain, although
there is no assurance this trend will continue in the future. As a result, the sensitivity analysis below is
based on the age of each accident year, our current estimated ultimate claims and claim expenses for the
catastrophic events occurring in each accident year, and the reasonably likely variability of our current
estimates of claims and claim expenses by accident year. The impact on net income and shareholders’
equity assumes no increase or decrease in reinsurance recoveries, loss related premium or redeemable
noncontrolling interest – DaVinciRe.

Property Catastrophe Reinsurance Claims and Claim Expense Reserve Sensitivity Analysis

(in thousands, except
percentages)
Higher
Recorded
Lower

Ultimate Claims
and
Claim
Expenses at
December 31,
2011
$ 6,032,155
5,375,343
$ 4,718,531

$ Impact of
Change on
Ultimate
Claims
and Claim
Expenses
at
December 31,
2011
656,812
—
(656,812)

% Impact of
Change
on Reserve for
Claims
and Claim
Expenses
at
December 31,
2011

33.0 %
— %
(33.0)%

% Impact of
Change on Net
Loss for
the Year Ended
December 31,
2011
(726.6)%
— %
726.6 %

% Impact of
Change on
Shareholders’
Equity at
December 31,
2011

(18.2)%
— %
18.2 %

We believe the changes we made to our estimated ultimate claims and claim expenses represent
reasonably likely outcomes based on our experience to date and our future expectations. While we believe
these are reasonably likely outcomes, we do not believe the reader should consider the above sensitivity
analysis an actuarial reserve range. In addition, the sensitivity analysis only reflects reasonably likely
changes in our underlying assumptions. It is possible that our estimated ultimate claims and claim expenses
could be significantly higher or lower than the sensitivity analysis described above. For example, we could
be liable for events for which we have not estimated claims and claim expenses or for exposures we do not
currently believe are covered under our policies. These changes could result in significantly larger changes
to our estimated ultimate claims and claim expenses, net income and shareholders’ equity than those noted
above. We also caution the reader that the above sensitivity analysis is not used by management in
developing our reserve estimates and is also not used by management in managing the business.

Specialty Reinsurance

Within our specialty reinsurance business unit we write a number of reinsurance lines such as catastrophe
exposed workers’ compensation, surety, terrorism, energy, aviation, crop, political risk, trade credit,
financial, catastrophe exposed personal lines property, casualty clash, property per risk, catastrophe
exposed personal lines property and other specialty lines of reinsurance, which we collectively refer to as
specialty reinsurance. We offer our specialty reinsurance products principally on an excess of loss basis,
as described above with respect to our property catastrophe reinsurance products, and we also provide
some proportional coverage. In a proportional reinsurance arrangement (also referred to as quota share
reinsurance or pro-rata reinsurance), the reinsurer shares a proportional part of the original premiums and
losses of the reinsured. We offer our specialty reinsurance products to insurance companies and other
reinsurance companies and provide coverage for specific geographic regions or on a worldwide basis. We
expanded our specialty reinsurance business in 2002 and have increased our presence in the specialty
reinsurance market since that time.

Our specialty reinsurance business can generally be characterized as providing coverage for low frequency
and high severity losses, similar to our property catastrophe reinsurance business. As with our property
catastrophe reinsurance business, our specialty reinsurance contracts frequently provide coverage for
relatively large limits or exposures. As a result of the foregoing, our specialty reinsurance business is
subject to significant claims volatility. In periods of low claims frequency or severity, our results will generally
be favorably impacted while in periods of high claims frequency or severity our results will generally be
negatively impacted.

Our processes and methodologies in respect of loss estimation for the coverages we offer through our
specialty reinsurance operation differ from those used for our property catastrophe-oriented coverages. For
example, our specialty reinsurance coverages are more likely to be impacted by factors such as long-term
inflation and changes in the social and legal environment, which we believe gives rise to greater uncertainty
in our claims reserves. Moreover, in reserving for our specialty reinsurance coverages we do not have the
benefit of a significant amount of our own historical experience in certain of these lines and may have little
or no related corporate reserving history in new lines. We believe this makes our specialty reinsurance
reserving subject to greater uncertainty than our catastrophe unit.

When initially developing our reserving techniques for our specialty reinsurance coverages, we considered
estimating reserves utilizing several actuarial techniques such as paid and reported loss development
methods. We elected to use the Bornhuetter-Ferguson actuarial method because this method is
appropriate for lines of business, such as our specialty reinsurance business, where there is a lack of
historical claims experience. This method allows for greater weight to be applied to expected results in
periods where little or no actual experience is available, and, hence, is less susceptible to the potential
pitfall of being excessively swayed by one year or one quarter of actual paid and/or reported loss data. This
method uses initial expected loss ratio expectations to the extent that losses are not paid or reported, and it
assumes that past experience is not fully representative of the future. As our reserves for claims and claim
expenses age, and actual claims experience becomes available, this method places less weight on
expected experience and places more weight on actual experience. This experience, which represents the
difference between expected reported claims and actual reported claims is reflected in the respective
reporting period as a change in estimate. We reevaluate our actuarial reserving techniques on a periodic
basis.

The utilization of the Bornhuetter-Ferguson actuarial method requires us to estimate an expected ultimate
claims and claim expense ratio and select an expected loss reporting pattern. We select our estimates of
the expected ultimate claims and claim expense ratios and expected loss reporting patterns by reviewing
industry standards and adjusting these standards based upon the terms of the coverages we offer. The
estimated expected claims and claim expense ratio may be modified to the extent that reported losses at a
given point in time differ from what would be expected based on the selected loss reporting pattern. Our
estimate of IBNR is the product of the premium we have earned, the initial expected ultimate claims and
claim expense ratio and the percentage of estimated unreported losses. In addition, certain of our specialty
reinsurance coverages may be impacted by natural and man-made catastrophes. We estimate claim
reserves for these losses after the event giving rise to these losses occur, following a process that is similar
to our catastrophe unit described above.

Prior Year Development of Reserve for Net Claims and Claim Expenses

Within our specialty reinsurance business, we seek to review substantially all of our claims and claim
expense reserves quarterly. Typically, our quarterly review procedures include reviewing paid and reported
claims in the most recent reporting period, reviewing the development of paid and reported claims from prior
periods, and reviewing our overall experience by underwriting year and in the aggregate. We monitor our
expected ultimate claims and claim expense ratios and expected loss reporting assumptions on a quarterly
basis and compare them to our actual experience. These actuarial assumptions are generally reviewed
annually, based on input from our actuaries, underwriters, claims personnel and finance professionals,
although adjustments may be made more frequently if needed. Assumption changes are made to adjust for
changes in the pricing and terms of coverage we provide, changes in industry standards, as well as our
actual experience, to the extent we have enough data to rely on our own experience. If we determine that
adjustments to an earlier estimate are appropriate, such adjustments are recorded in the period in which
they are identified.

The following table details the development of our liability for unpaid claims and claim expenses for the
specialty reinsurance unit for the year ended December 31, 2011 split between catastrophe claims and
claim expenses and attritional claims and claim expenses:

Year ended December 31, 2011

(in thousands)

Catastrophe claims and claim expenses

Hurricanes Katrina, Rita and Wilma (2005)

Chilean Earthquake (2010)

Tropical Cyclone Tasha (2010)

Total catastrophe claims and claim expenses

Attritional claims and claim expenses

Bornhuetter-Ferguson actuarial method - actual reported claims less than expected

claims

Actuarial assumption changes

Total attritional claims and claim expenses

Total favorable development of prior accident years claims and claim expenses

Specialty
Reinsurance
Unit

6,215

4,688

3,000

13,903

37,058

26,800

63,858

77,761

The favorable development on prior year reserves in 2011 within our specialty unit of $77.8 million includes:
$26.8 million associated with actuarial assumption changes, principally in our workers’ compensation quota
share and risk, property risk and energy risk lines of business, and primarily as a result of revised initial
expected claims ratios and claim development factors due to actual experience coming in better than
expected; $13.9 million due to reductions in case reserves and additional case reserves for certain large
catastrophe events; and the remainder of $37.1 million due to reported claims coming in better than
expected in 2011 on prior accident years events, as a result of the application of our formulaic actuarial
reserving methodology.

The following table details the development of our liability for unpaid claims and claim expenses for the
specialty reinsurance unit for the year ended December 31, 2010 split between catastrophe claims and
claim expenses and attritional claims and claim expenses:

Year ended December 31, 2010

(in thousands)

Catastrophe claims and claim expenses

Large catastrophe events

Hurricanes Katrina, Rita and Wilma (2005)

Buncefield Oil Depot (2005)

Total catastrophe claims and claim expenses

Attritional claims and claim expenses

Bornhuetter-Ferguson actuarial method - actual reported claims less than expected

claims

Actuarial assumption changes

Reductions in specific events

Total attritional claims and claim expenses

Total favorable development of prior accident years claims and claim expenses

Specialty
Reinsurance
Unit

5,350

2,073

7,423

71,261

31,400

18,477

121,138

128,561

The favorable development of prior accident years claims and claim expenses within the Company's
specialty reinsurance unit in 2010 of $128.6 million includes $31.4 million associated with actuarial
assumption changes, principally in the Company's casualty clash and surety lines of business, and partially
offset by an increase in reserves within the Company's workers compensation per risk line of business,
principally as a result of revised initial expected claims ratios and claim development factors due to actual
experience coming in better than expected; $18.5 million due to reductions in case reserves and additional
case reserves, which are reserves established at the contract level for specific events; $7.4 million due to
reductions in case reserves and additional case reserves for certain large catastrophe events; and the
remainder of $71.3 million due to reported claims coming in better than expected in 2010 on prior accident
years events, principally the 2005 through 2009 underwriting years, as a result of the application of the
Company's formulaic actuarial reserving methodology.

The following table details the development of our liability for unpaid claims and claim expenses for the
specialty reinsurance unit for the year ended December 31, 2009 split between catastrophe claims and
claim expenses and attritional claims and claim expenses:

Year ended December 31, 2009

(in thousands)

Catastrophe claims and claim expenses

Large catastrophe events

Hurricanes Katrina, Rita and Wilma (2005)

Total catastrophe claims and claim expenses

Attritional claims and claim expenses

Bornhuetter-Ferguson actuarial method - actual reported claims less than expected

claims

Madoff

Subprime

Total attritional claims and claim expenses

Total favorable development of prior accident years claims and claim expenses

Specialty
Reinsurance
Unit

10,000

92,115

(32,500)

(4,503)

55,112

65,112

The favorable development of prior accident years claims and claim expenses within the Company's
specialty reinsurance unit of $65.1 million in 2009 was principally attributable to lower than expected claims
emergence on the 2005 through 2008 underwriting years of $92.1 million, which was driven by the
application of the Company's formulaic actuarial reserving methodology for this business with the
reductions being due to actual paid and reported claim activity being more favorable to date than what was
originally anticipated when setting the initial IBNR reserves, $10.0 million due to a reduction on one claim
on a contract related to the 2005 hurricanes, and partially offset by a $32.5 million increase in the
Company's estimated ultimate net claims on the 2008 Madoff matter and a $4.5 million increase due to the
subprime claims, with both of these increases driven by higher than expected claims activity.

Actual Results vs. Initial Estimates

The Actual vs. Initial Estimated Ultimate Claims and Claim Expense Ratio table below summarizes our key
actuarial assumptions in reserving for our specialty reinsurance business. As noted above, the key
actuarial assumptions include the estimated ultimate claims and claim expense ratios and the estimated
loss reporting patterns. The table shows our initial estimates of the ultimate claims and claim expense ratio
by underwriting year. The table shows how our initial estimates of these ratios have developed over time,
with the re-estimated ratios reflecting a combination of the amount and timing of paid and reported losses
compared to our initial estimates. The initial estimate is based on the actuarial assumptions that were in
place at the end of that year. A decrease in the ultimate claims and claim expense ratio implies that our
current estimates are lower than our initial estimates while an increase in the ultimate claims and claim
expense ratio implies that our current estimates are higher than our initial estimates. The result would be a
corresponding favorable impact on shareholders’ equity and net income or a corresponding unfavorable
impact on shareholders’ equity and net income, respectively. The table also shows how our initial estimated
ultimate claims and claim expense ratios have changed from one underwriting year to the next. The table
below reflects a summary of the weighted average assumptions for all classes of business written within our
specialty reinsurance unit. The table is presented on a gross loss basis and therefore does not include the
benefit of reinsurance recoveries or loss related premium.

Actual vs. Initial Estimated Specialty Reinsurance Claims and Claim Expense Reserve Analysis –
Estimated Ultimate Claims and Claim Expense Ratio

Estimated Ultimate Claims and Claim Expenses Ratio

Underwriting Year
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

Initial Estimate
77.2%
76.8%
78.2%
78.2%
76.6%
62.9%
57.9%
68.6%
57.7%
56.8%

December 31, 2009
22.4%
29.8%
41.1%
38.7%
47.9%
64.7%
97.5%
57.4%
—%
—%

Re-estimate at

December 31, 2010
21.5%
28.1%
40.1%
31.6%
36.9%
55.5%
77.1%
50.9%
84.1%
—%

December 31, 2011
20.5%
26.2%
36.9%
29.1%
31.7%
55.6%
74.9%
38.0%
67.1%
73.0%

The table above shows our initial estimated ultimate claims and claim expense ratios for attritional losses
for each new underwriting year within our specialty reinsurance unit as of the end of each calendar year.
Until 2007, our initial estimated ultimate remained relatively constant between 76.6% in 2006 and 78.2% in
2004 and 2005. This reflects the fact that management had not made significant changes to its initial
estimates of expected ultimate claims and claim expense ratios from one underwriting year to the next. The
principal reason for the modest changes from one underwriting year to the next is that the mix of business
has changed. For example, the mix of business for the 2007 through 2011 underwriting years have a lower
initial expected ultimate claims and claim expense ratio than in prior years as it is more heavily weighted to
business that is expected to produce a lower level of losses. The decrease in the initial estimated ultimate

claims and claim expense ratio from 2006 and prior, to 2007 through 2011, also reflects assumption
changes made for certain classes of business where our experience, and the industry experience in
general, has been better than expected and, as a result, we decreased our initial estimated ultimate claims
and claim expense ratio for these classes of business. The decrease in the initial estimated ultimate claims
and claim expense ratio for 2010 and 2011, compared to 2009, is principally due to a shift in the mix of
business to lower expected loss ratio business, combined with shifts in our assumptions around modeled
expected loss ratios and expected reporting patterns. The estimated ultimate net claims and claim expense
ratio at December 31, 2011 of 73.0%, increased from the initial estimate of 56.8% primarily as a result of
several relatively large claims incurred in 2011 including those associated with the February 2011 New
Zealand and Tohoku earthquakes, and the Australian and Thailand floods.

As each underwriting year has developed, our re-estimated expected ultimate claims and claim expense
ratios have changed. In particular, our re-estimated ultimate claims and claim expense ratios decreased
significantly from the initial estimates for the 2002 through 2006 underwriting years. This was principally
due to our 2005 reserve review. During our 2005 reserve review, we further segmented the specialty
business with the aim of grouping risks into more homogeneous categories which respond to the evolution
of actual exposures. This became possible as the volume of this business increased over the three
preceding years. This further segmentation required the selection of loss reporting patterns to be applied to
these new groups. We also updated our assumptions for our original loss reporting patterns based on a
combination of new industry information and actual experience accumulated over the three preceding
years. The assumptions for the new loss reporting patterns were applied to all prior underwriting years. In
addition, we made explicit allowances for commuted contracts whereas previously these were considered in
the overall reserving assumptions. We also reviewed substantially all of our case reserves and additional
case reserves. The result of the foregoing was a decrease in our specialty reinsurance re-estimated
ultimate claims and claim expense reserves in 2005. Subsequent to this reserve review, the results of our
specialty book of business have been mixed. The 2006 underwriting year includes favorable development
as actual paid and reported losses during 2006 have overall been less than expected, which has resulted in
a reduction in our expected ultimate claims and claim expense ratio for this year. However, the 2008
underwriting year has performed worse than expected and our current estimates are higher than our initial
estimates. This is due in part to the losses in our casualty clash line of business in 2008, associated with
exposure to the deterioration of the credit and capital markets in 2008 as well as the Madoff matter
discovered in the fourth quarter of 2008. As noted above, our specialty reinsurance business is in general
characterized by events of low frequency and high severity which results in actual experience that can be
significantly better or worse than long-term trends or industry standards may imply.

As noted above, some of our specialty reinsurance contracts are exposed to net claims and claim expenses
from large natural and man-made catastrophes. Net claims and claim expenses from these large
catastrophes are reserved for after the events which gave rise to the claims in a manner which is consistent
with our property catastrophe reinsurance reserving practices as discussed above. The large catastrophes
occurring during the period from 2002 to 2011 impacting our specialty unit principally include hurricanes
Katrina, Rita and Wilma, which occurred in 2005. Our estimate of ultimate net claims and claim expenses
from hurricanes Katrina, Rita and Wilma, within our specialty reinsurance unit, net of reinsurance recoveries
and assumed and ceded loss related premium, totaled $51.6 million at December 31, 2011 (2010 - $57.8
million, 2009 - $63.1 million).

Sensitivity Analysis

The table below quantifies the impact on our reserves for claims and claim expenses, net income and
shareholders’ equity as of and for the year ended December 31, 2011 of reasonably likely changes to the
actuarial assumptions used to estimate our December 31, 2011 claims and claim expense reserves within
our specialty reinsurance business unit. The table quantifies reasonably likely changes in our initial
estimated ultimate claims and claim expense ratios and estimated loss reporting patterns. The changes to
the initial estimated ultimate claims and claim expense ratios represent percentage increases or decreases
to our current estimated ultimate claims and claim expense ratios. The change to the reporting patterns
represent claims reporting that is both faster and slower than our current estimated claims reporting
patterns. The impact on net income and shareholders’ equity assumes no increase or decrease in
reinsurance recoveries, loss related premium or redeemable noncontrolling interest – DaVinciRe.

Specialty Reinsurance Claims and Claim Expense Reserve Sensitivity Analysis

$ Impact of
Change
on Reserves
for
Claims and
Claim
Expenses at
December 31,
2011

% Impact of
Change
on Reserve
for
Claims and
Claim
Expenses at
December 31,
2011

% Impact of
Change on
Net Loss
for the Year
Ended
December 31,
2011

% Impact of
Change on
Shareholders’
Equity at
December 31,
2011

158,074

7.9 %

(174.9)%

(4.4)%

75,464

3.8 %

(83.5)%

(2.1)%

2,596

0.1 %

(2.9)%

(0.1)%

66,088

3.3 %

(73.1)%

(1.8)%

—

— %

(58,295)

(2.9)%

64.5 %

1.6 %

(25,897)

(1.3)%

28.7 %

0.7 %

(75,464)

(3.8)%

83.5 %

2.1 %

(119,185)

(6.0)%

131.9 %

3.3 %

Estimated
Loss
Reporting
Pattern
Slower
reporting

Expected
reporting

Faster
reporting

Slower
reporting

Expected
reporting
Faster
reporting

Slower
reporting

Expected
reporting

Faster
reporting

(in thousands,except percentages)
Increase expected claims and
claim expense ratio by 25%

Increase expected claims and
claim expense ratio by 25%

Expected claims and claim

expense ratio

Expected claims and claim

expense ratio

Expected claims and claim

expense ratio

Decrease expected claims and
claim expense ratio by 25%

We believe that ultimate claims and claim expense ratios 25.0 percentage points above or below our
estimated assumptions constitute reasonably likely outcomes based on our experience to date and our
future expectations. In addition, we believe that the adjustments that we made to speed up or slow down
our estimated loss reporting patterns are reasonably likely changes. While we believe these are reasonably
likely changes, we do not believe the reader should consider the above sensitivity analysis an actuarial
reserve range. In addition, we caution the reader that the above sensitivity analysis only reflects reasonably
likely changes. It is possible that our initial estimated claims and claim expense ratios and loss reporting
patterns could be significantly different from the sensitivity analysis described above. For example, we
could be liable for events which we have not estimated reserves for or for exposures we do not currently
think are covered under our contracts. These changes could result in significantly larger changes to
reserves for claims and claim expenses, net income and shareholders’ equity than those noted above. We
also caution the reader that the above sensitivity analysis is not used by management in developing our
reserve estimates and is also not used by management in managing the business.

Lloyd’s Segment

Within our Lloyd’s segment, we write property catastrophe excess of loss reinsurance contracts to insure
insurance and reinsurance companies against natural and man-made catastrophes, a number of specialty
reinsurance lines and insurance policies and quota share reinsurance that involves understanding the
characteristics of the underlying insurance policy.

We use the Bornhuetter-Ferguson actuarial method to estimate claims and claim expenses within our
Lloyd’s segment for our specialty reinsurance and insurance lines of business. The comments discussed
above relating to our reserving techniques and processes for our specialty reinsurance unit apply to the
specialty reinsurance and insurance lines of business within our Lloyd’s segment. In addition, certain of our
coverages may be impacted by natural and man-made catastrophes. We estimate claim reserves for these
losses after the event giving rise to these losses occurs, following a process that is similar to our
catastrophe unit as noted above.

Prior Year Development of Reserve for Net Claims and Claim Expenses

The following table details the development of our liability for unpaid claims and claim expenses for our
Lloyd's segment for the years ended December 31, 2011, 2010 and 2009:

Year ended December 31,
(in thousands)
Lloyd's

2011

2010

2009

478

(197)

—

We commenced our Lloyd's operations in mid-2009 and the reserve development in this segment since that
time has not been significant.

Actual Results vs. Initial Estimates

The table below summarizes our initial assumptions and changes in those assumptions for claims and claim
expense reserves within our Lloyd’s segment associated with catastrophe losses. Similar to our
catastrophe unit above, the key assumption in estimating reserves for catastrophe losses in our Lloyd’s
segment is our estimate of the ultimate claims and claim expenses. The table shows our initial estimates of
ultimate claims and claim expenses for each accident year and how these initial estimates have developed
over time. The initial estimate of accident year claims and claim expenses represents our estimate of the
ultimate settlement and administration costs for claims incurred from catastrophic events occurring during a
particular accident year, and as reported as of December 31 of that year. The re-estimated ultimate claims
and claim expenses as of December 31, 2010 and 2011, represent our revised estimates as reported as of
those dates. The cumulative favorable (adverse) development shows how our most recent estimates as
reported at December 31, 2011 differ from our initial accident year estimates. Favorable development
implies that our current estimates are lower than our initial estimates while adverse development implies
that our current estimates are higher than our original estimates. Total reserves as of December 31, 2011
reflect the unpaid portion of our estimates of ultimate claims and claim expenses. The table is presented on
a gross basis and therefore does not include the benefit of reinsurance recoveries or loss related premium
such as reinstatement premium.

Actual vs. Initial Estimated Lloyd’s Segment Property Catastrophe Reinsurance Claims and Claim Expense
Reserve Analysis

(in thousands, except percentages)

Initial
Estimate
of Accident
Year
Claims and
Claim
Expenses

Re-estimated Claims and
Claim Expenses
as of December 31,

2009

2010

2011

Cumulative
Favorable
(Adverse)
Development

% Decrease
(Increase)
from Initial
Ultimate

Claims
and Claim
Expense
Reserves
at
December
31,
2011

% of
Claims
and Claim
Expenses
Unpaid at
December
31,
2011

5,277

30,121

35,398

—

5,277

5,986

—

30,121

5,277

$ 36,107

(709)

—

(709)

(13.4)%

5,986

100.0 %

— %

23,555

(13.4)%

29,541

78.2 %

81.8 %

Accident Year

2010

2011

Our Lloyd's segment commenced writing business in mid-2009 and experienced its first catastrophe loss in
2010, namely the September 2010 New Zealand earthquake. During 2011, our Lloyd's segment was
primarily impacted by the February 2011 New Zealand earthquake, the Tohoku earthquake, the large U.S.
tornadoes, hurricane Irene and the Thailand flooding.

Actual vs. Initial Estimated Lloyd’s Segment Specialty Reinsurance Claims and Claim Expense Reserve
Analysis – Estimated Ultimate Claims and Claim Expense Ratio

The Actual vs. Initial Estimated Ultimate Claims and Claim Expense Ratio table below summarizes our key
actuarial assumptions in reserving for our specialty reinsurance and insurance lines of business in our
Lloyd’s segment. As noted above, the key actuarial assumptions include the estimated ultimate claims and
claim expense ratios and the estimated loss reporting patterns. The table shows our initial estimates of the
ultimate claims and claim expense ratio by underwriting year. The initial estimate is based on the actuarial
assumptions that were in place at the end of that year. A decrease in the ultimate claims and claim expense
ratio implies that our current estimates are lower than our initial estimates while an increase in the ultimate
claims and claim expense ratio implies that our current estimates are higher than our initial estimates. The
result would be a corresponding favorable impact on shareholders’ equity and net income or a
corresponding unfavorable impact on shareholders’ equity and net income, respectively. The table below
reflects a summary of the weighted average assumptions for all classes of specialty reinsurance business in
our Lloyd’s segment. The table is presented on a gross loss basis and therefore does not include the
benefit of reinsurance recoveries or loss related premium such as reinstatement premium.

Estimated Ultimate Claims and Claim Expenses Ratio

Re-estimate at

Underwriting Year
2010
2011

Initial Estimate
63.3%
66.0%

December 31, 2009
—%
—%

December 31, 2010
62.7%
—%

December 31, 2011
56.5%
83.0%

The table above shows our initial estimated ultimate claims and claim expense ratios for attritional losses
for each new underwriting year within specialty insurance and reinsurance in our Lloyd’s segment as of the
end of each calendar year.

Sensitivity Analysis

The table below shows the impact on our ultimate claims and claim expenses, net income and
shareholders’ equity as of and for the year ended December 31, 2011 of reasonably likely changes to our
estimates of ultimate losses for claims and claim expenses incurred from catastrophic events associated
with property catastrophe reinsurance business within our Lloyd’s segment. The reasonably likely changes
are based on a historical analysis of the period-to-period variability of our ultimate costs to settle claims
from catastrophic events, giving due consideration to changes in our reserving practices over time. In
general, our claim reserves for our more recent catastrophic events are subject to greater uncertainty and,
therefore, greater variability and are likely to experience material changes from one period to the next. This
is due to the uncertainty as to the size of the industry losses from the event, uncertainty as to which
contracts have been exposed to the catastrophic event, and uncertainty as to the magnitude of claims
incurred by our clients. As our claims age, more information becomes available and we believe our
estimates become more certain, although there is no assurance this trend will continue in the future. As a
result, the sensitivity analysis below is based on the age of each accident year, our current estimated
ultimate claims and claim expenses for the catastrophic events occurring in each accident year, and the
reasonably likely variability of our current estimates of claims and claim expenses by accident year.

Lloyd’s Segment Property Catastrophe Reinsurance Claims and Claim Expense Reserve Sensitivity
Analysis

$ Impact of
Change
on Ultimate
Claims
and Claim
Expenses
at
December 31,
2011

% Impact of
Change
on Reserve for
Claims
and Claim
Expenses
at
December 31,
2011

Ultimate
Claims and
Claim
Expenses at
December 31,
2011

% Impact of
Change
on Net Loss for
the Year Ended
December 31,
2011

% Impact of
Change
on
Shareholders’
Equity at
December 31,
2011

48,905
36,107
23,309

12,798
—
(12,798)

0.6 %
— %
(0.6)%

(14.2)%
— %
14.2 %

(0.4)%
— %
0.4 %

(in thousands, except
percentages)
Higher
Recorded
Lower

We believe the changes we made to our estimated ultimate claims and claim expenses represent
reasonably likely outcomes based on our experience to date and our future expectations. While we believe
these are reasonably likely outcomes, we do not believe the reader should consider the above sensitivity
analysis an actuarial reserve range. In addition, the sensitivity analysis only reflects reasonably likely
changes in our underlying assumptions. It is possible that our estimated ultimate claims and claim
expenses could be significantly higher or lower than the sensitivity analysis described above. For example,
we could be liable for events for which we have not estimated claims and claim expenses or for exposures
we do not currently believe are covered under our policies. These changes could result in significantly
larger changes to our estimated ultimate claims and claim expenses, net income and shareholders’ equity
than those noted above. We also caution the reader that the above sensitivity analysis is not used by
management in developing our reserve estimates and is also not used by management in managing the
business.

Lloyd’s Segment Specialty Claims and Claim Expense Reserve Sensitivity Analysis

$ Impact of
Change
on Reserves
for
Claims and
Claim
Expenses at
December 31,
2011

% Impact of
Change
on Reserves
for
Claims and
Claim
Expenses at
December 31,
2011

% Impact of
Change on
Net Loss
for the Year
Ended
December 31,
2011

% Impact of
Change on
Shareholders’
Equity at
December 31,
2011

21,944

1.1 %

(24.3)%

(0.6)%

11,134

0.6 %

(12.3)%

(0.3)%

(4,852)

(0.2)%

5.4 %

0.1 %

8,648

4.0 %

(9.6)%

(0.2)%

—

— %

(12,788)

(0.6)%

14.1 %

0.4 %

(4,647)

(0.2)%

5.1 %

0.1 %

(11,134)

(0.6)%

12.3 %

0.3 %

(20,725)

(1.0)%

22.9 %

0.6 %

Estimated
Loss
Reporting
Pattern
Slower
reporting

Expected
reporting

Faster
reporting

Slower
reporting

Expected
reporting

Faster
reporting

Slower
reporting

Expected
reporting

Faster
reporting

(in thousands,except percentages)
Increase expected claims and
claim expense ratio by 25%

Increase expected claims and
claim expense ratio by 25%

Expected claims and claim

expense ratio

Expected claims and claim

expense ratio

Expected claims and claim

expense ratio

Decrease expected claims and
claim expense ratio by 25%

Insurance Segment

We define our Insurance segment to include underwriting that involves understanding the characteristics of
the underlying insurance policy. Our principal contracts currently include insurance policies and quota
share reinsurance with respect to risks including: 1) commercial property, which principally includes
catastrophe-exposed commercial property products; 2) commercial multi-line, which includes commercial
property and liability coverage, such as general liability, automobile liability and physical damage, building
and contents, professional liability and various specialty products; and 3) personal lines property, which
principally includes homeowners personal lines property coverage and catastrophe exposed personal lines
property coverage.

We use the Bornhuetter-Ferguson actuarial method to estimate claims and claim expenses within our
Insurance segment for our property and casualty insurance and quota share reinsurance business. The
comments discussed above relating to our reserving techniques and processes for our specialty
reinsurance unit within our Reinsurance segment also apply to our Insurance segment. In addition, certain
of our coverages may be impacted by natural and man-made catastrophes. We estimate claim reserves for
these losses after the event giving rise to these losses occurs, following a process that is similar to our
catastrophe unit.

Development of Prior Year Liability for Unpaid Claims and Claim Expenses

The following table details the development of our liability for unpaid claims and claim expenses for our
Insurance segment for the years ended December 31, 2011, 2010 and 2009 split between large
catastrophe events and attritional claims and claim expenses:

Year ended December 31,
(in thousands)
Large catastrophe events
Attritional claims and claim expenses
Actuarial assumption changes

Total

2011

2010

2009

4,243
1,389
(10,063)
(4,431)

300
15,615
—
15,915

1,603
15,106
—
16,709

The adverse development on prior accident years of $4.4 million in 2011 within the Company's Insurance
segment was principally due to the construction defect book of business, which experienced higher than
expected reported losses, and was subsequently subject to a comprehensive actuarial review during the
fourth quarter of 2011, which review resulted in an increase of $10.1 million to the estimated ultimate claims
and claim expenses related to this book of business due to changes in the actuarial assumptions. The total
gross reserve for claims and claim expenses for the construction defect book of business at December 31,
2011 is $58.8 million. Partially offsetting the adverse development on prior accident years within the
construction defect book of business, noted above, was favorable development of $4.2 million related to
large catastrophe events, of which $4.6 million related to the 2005 hurricanes, and $1.4 million related to
the application of our formulaic actuarial reserving methodology with the reductions being due to actual paid
and reported claim activity being more favorable to date than what was originally anticipated when setting
the initial reserves.

The favorable development of $15.9 million in 2010 on prior accident year claims and claim expenses within
the Company's Insurance segment was principally driven by the application of the Company's formulaic
actuarial reserving methodology for this business with the reductions being due to actual paid and reported
claim activity being more favorable to date than what was originally anticipated when setting the initial
reserves. There were no significant changes made to the actuarial assumptions in 2010 or to the ultimate
claims associated with the large catastrophe events.

The favorable development within the Company's Insurance segment of $16.7 million in 2009 was
principally driven by the application of the Company's formulaic actuarial reserving methodology for this
business with the reductions being due to actual paid and reported claim activity being more favorable to
date than what was originally anticipated when setting the initial reserves. During 2009, there were no
significant changes made to the actuarial assumptions used as part of the Company's formulaic actuarial
reserving methodology noted above. The Company's Insurance segment experienced a $2.1 million
decrease in the net ultimate claims and claim expenses associated with the 2004 and 2005 large hurricanes
during 2009, including the adoption the actuarial technique noted above for these hurricanes. The total
decrease in net ultimate claims and claim expenses associated with large catastrophes in 2009 was $1.6
million.

Actual Results vs. Initial Estimates

The Actual vs. Initial Estimated Ultimate Claims and Claim Expense Ratio table below summarizes our key
actuarial assumptions in reserving for our Insurance segment. As noted above, the key actuarial
assumptions include the estimated ultimate claims and claim expense ratios and the estimated loss
reporting patterns. The table shows our initial estimates of the ultimate claims and claim expense ratios by
accident year. The table shows how our initial estimates of these ratios have developed over time with the
re-estimated ratios reflecting a combination of the amount and timing of paid and reported losses compared
to our initial estimates. The initial estimate is based on the actuarial assumptions that were in place at the
end of that year. A decrease in the ultimate claims and claim expense ratio implies that our current
estimates are lower than our initial estimates while an increase in the ultimate claims and claim expense
ratio implies that our current estimates are higher than our initial estimates. The result would be a
corresponding favorable impact on shareholders’ equity and net income or a corresponding unfavorable
impact on shareholders’ equity and net income, respectively. The table also shows how our initial estimated
ultimate claims and claim expense ratios have changed from one accident year to the next. The table
below reflects a summary of the weighted average assumptions for all classes of business written within our
Insurance segment. The table is presented on a gross loss basis and therefore does not include the benefit
of reinsurance recoveries or loss related premium.

Actual vs. Initial Estimated Insurance Segment Claims and Claim Expense Reserve Analysis – Estimated
Ultimate Claims and Claim Expense Ratio

Estimated Ultimate Claims and Claim Expenses Ratio

Underwriting Year
2003
2004
2005
2006
2007
2008
2009
2010
2011

Initial Estimate
55.3%
50.2%
45.0%
47.4%
45.7%
46.0%
53.0%
57.9%
—%

December 31, 2009
30.6%
46.6%
47.5%
39.9%
27.0%
70.6%
89.8%
—%
—%

Re-estimate at

December 31, 2010
30.6%
45.1%
46.5%
36.6%
24.3%
68.0%
66.7%
129.5%
—%

December 31, 2011
32.6%
45.6%
46.5%
40.6%
24.7%
64.4%
61.5%
68.9%
—%

The table above shows our initial estimated ultimate claims and claim expense ratios for attritional losses
for each new underwriting year within our Insurance segment as of the end of each calendar year. Our
initial estimated ultimate remained relatively constant between 2005 and 2008. This reflects the fact that
management has not made significant changes to its estimated initial expected ultimate claims and claim
expense ratio from one period to the next during that period. The principal reason for the changes from one
year to the next, for example, the 2009 through 2010 underwriting years, is that the mix of business has
changed. As each underwriting year has developed, our re-estimated ultimate claims and claim expense
ratios have generally been reduced until recently. This reflects the impact of actual experience in our
Insurance business where actual paid and reported losses to date for attritional losses are less than
originally expected. For the years 2008 through 2010, our re-estimated ultimate claims and claim expense
ratios increased from the initial estimate due to reported losses exceeding our initial estimate within our
Insurance segment’s commercial property line of business, combined with a relatively low level of net
premiums earned during those periods for our commercial property line of business. As described above,
under the Bornhuetter-Ferguson actuarial method less weight is placed on initial estimates and more weight
is placed on actual experience as our claims and claim expense reserves age.

As noted above, some of our Insurance contracts are exposed to claims and claim expenses from large
natural and man-made catastrophes. Claims and claim expenses from these large catastrophes are
reserved for after the event which gave rise to the claims in a manner which is consistent with our property
catastrophe reinsurance reserving practices as discussed above. The large catastrophes occurring during
the period from 2004 to 2008 principally include hurricanes Charley, Frances, Ivan and Jeanne in 2004,
hurricanes Katrina, Rita and Wilma in 2005, and hurricanes Gustav and Ike in 2008. Our ultimate claims
and claim expenses from these events within our Insurance segment are shown in the table below.

(in thousands)

Re-estimated Claims and Claim
Expenses at

Initial
Estimate
of
Accident
Year
Claims
and Claim
Expenses

December
31, 2009

December
31, 2010

December
31, 2011

Cumulative
Favorable
(Adverse)
Development

%
Decrease
(Increase)
from
Initial
Estimate

Claims
and
Claim
Expense
Reserves
at
December
31,
2011

% of
Claims
and Claim
Expenses
Unpaid at
December
31,
2011

$ 210,323

$ 250,493

$ 249,949

$ 249,456

(39,133)

(18.6)%

605

0.2%

311,312

295,765

297,596

293,477

17,835

5.7 %

1,990

0.7%

19,258

19,410

19,849

18,500

758

3.9 %

$ 540,893

$ 565,668

$ 567,394

$ 561,433

(20,540)

(3.8)%

5,970

8,565

32.3%

1.5%

Events
(Accident Year)

Charley,

Frances, Ivan
and Jeanne
(2004)

Katrina, Rita
and Wilma
(2005)

Gustav and Ike

(2008)

Sensitivity Analysis

The table below quantifies the impact on our reserves for claims and claim expenses, net income and
shareholders’ equity as of and for the year ended December 31, 2011 of reasonably likely changes to the
actuarial assumptions used to estimate our December 31, 2011 claims and claim expense reserves within
our Insurance segment. The table quantifies reasonably likely changes in our initial estimated ultimate
claims and claim expense ratios and estimated loss reporting patterns. The changes to the initial estimated
ultimate claims and claim expense ratios represent percentage increases or decreases to our current
estimated ultimate claims and claim expense ratios. The change to the reporting patterns represent claims
reporting that is both faster and slower than our current estimated reporting patterns. The impact on net
income and shareholders’ equity assumes no increase or decrease in reinsurance recoveries or loss related
premium and is before tax.

Insurance Claims and Claim Expense Reserve Sensitivity Analysis

$ Impact of
Change
on Reserves
for
Claims and
Claim
Expenses at
December 31,
2011

% Impact of
Change
on Reserves
for
Claims and
Claim
Expenses at
December 31,
2011

% Impact of
Change on
Net Loss
for the Year
Ended
December 31,
2011

% Impact of
Change on
Shareholders’
Equity at
December 31,
2011

36,491

1.8 %

(40.4)%

(1.0)%

13,718

0.7 %

(15.2)%

(0.4)%

(967)

— %

1.1 %

— %

18,218

0.9 %

(20.2)%

(0.5)%

—

— %

(11,749)

(0.6)%

13.0 %

0.3 %

(55)

— %

0.1 %

— %

(13,718)

(0.7)%

15.2 %

0.4 %

(22,530)

(1.1)%

24.9 %

0.6 %

Estimated
Loss
Reporting
Pattern
Slower
reporting

Expected
reporting

Faster
reporting

Slower
reporting

Expected
reporting
Faster
reporting

Slower
reporting

Expected
reporting

Faster
reporting

(in thousands,except percentages)
Increase expected claims and
claim expense ratio by 25%

Increase expected claims and
claim expense ratio by 25%

Expected claims and claim

expense ratio

Expected claims and claim

expense ratio

Expected claims and claim

expense ratio

Decrease expected claims and
claim expense ratio by 25%

We believe that ultimate claims and claim expense ratios 25.0 percentage points above or below our
estimated assumptions constitute reasonably likely outcomes based on our experience to date and our
future expectations. In addition, we believe that the adjustments that we made to speed up or slow down
our estimated loss reporting patterns are reasonably likely changes. While we believe these are reasonably
likely changes, we do not believe the reader should consider the above sensitivity analysis an actuarial
reserve range. In addition, we caution the reader that the above sensitivity analysis only reflects reasonably
likely changes. It is possible that our initial estimated claims and claim expense ratios and loss reporting
patterns could be significantly different from the sensitivity analysis described above. For example, we
could be liable for events which we have not estimated reserves for or for exposures we do not currently
think are covered under our contracts. These changes could result in significantly larger changes to our
reserves for claims and claim expenses, net income and shareholders’ equity than those noted above. We
also caution the reader that the above sensitivity analysis is not used by management in developing our
reserve estimates and is also not used by management in managing the business.

Reinsurance Recoverable

We enter into reinsurance agreements in order to help reduce our exposure to large losses and to help
manage our risk portfolio. Amounts recoverable from reinsurers are estimated in a manner consistent with
the claims and claim expense reserves associated with the related assumed reinsurance. For multi-year
retrospectively rated contracts, we accrue amounts (either assets or liabilities) that are due to or from
assuming companies based on estimated contract experience. If we determine that adjustments to earlier
estimates are appropriate, such adjustments are recorded in the period in which they are determined.

The estimate of reinsurance recoverable can be more subjective than estimating the underlying claims and
claim expense reserves as discussed under the heading “Claims and Claim Expense Reserves” above. In
particular, reinsurance recoverable may be affected by deemed inuring reinsurance, industry losses
reported by various statistical reporting services, and other factors. Reinsurance recoverable on dual
trigger reinsurance contracts require us to estimate our ultimate losses applicable to these contracts as well
as estimate the ultimate amount of insured losses for the industry as a whole that will be reported by the
applicable statistical reporting agency, as per the contract terms. In addition, the level of our additional case

reserves and IBNR reserves has a significant impact on reinsurance recoverable. These factors can impact
the amount and timing of the reinsurance recoverable to be recorded.

The majority of the balance we have accrued as recoverable will not be due for collection until some point in
the future. The amounts recoverable ultimately collected are open to uncertainty due to the ultimate ability
and willingness of reinsurers to pay our claims, for reasons including insolvency and elective run-off,
contractual dispute and various other reasons. In addition, because the majority of the balances
recoverable will not be collected for some time, economic conditions as well as the financial and operational
performance of a particular reinsurer may change, and these changes may affect the reinsurer’s willingness
and ability to meet their contractual obligations to us. To reflect these uncertainties, we estimate and record
a valuation allowance for potential uncollectible reinsurance recoverable which reduces reinsurance
recoverable and net earnings.

We estimate our valuation allowance by applying specific percentages against each recovery based on our
counterparty’s credit rating. The percentages applied are based on historical industry default statistics
developed by major rating agencies and are then adjusted by us based on industry knowledge and our
judgment and estimates. We also apply case-specific valuation allowances against certain recoveries that
we deem unlikely to be collected in full. We then evaluate the overall adequacy of the valuation allowance
based on other qualitative and judgmental factors. The valuation allowance recorded against reinsurance
recoverable was $7.3 million at December 31, 2011 (2010 - $3.5 million). The reinsurers with the three
largest balances accounted for 27.3%, 14.9% and 12.4%, respectively, of our reinsurance recoverable
balance at December 31, 2011 (2010 - 31.7%, 13.7% and 12.7%, respectively). The three largest
company-specific components of the valuation allowance represented 34.2%, 27.3% and 12.0%,
respectively, of our total valuation allowance at December 31, 2011 (2010 - 57.0%, 24.9% and 3.7%,
respectively).

Fair Value Measurements and Impairments

Fair Value

The use of fair value to measure certain assets and liabilities with resulting unrealized gains or losses is
pervasive within our financial statements, and is a critical accounting policy and estimate for us. Fair value
is defined under accounting guidance currently applicable to us to be the price that would be received upon
the sale of an asset or paid to transfer a liability in an orderly transaction between open market participants
at the measurement date. We recognize the change in unrealized gains and losses arising from changes in
fair value in our consolidated statements of operations, with the exception of changes in unrealized gains
and losses on our fixed maturity investments available for sale, which are recognized as a component of
accumulated other comprehensive income in shareholders’ equity.

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic Fair Value
Measurements and Disclosures prescribes a fair value hierarchy that prioritizes the inputs to the respective
valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

• Fair values determined by Level 1 inputs utilize unadjusted quoted prices obtained from active

markets for identical assets or liabilities for which we have access to. The fair value is determined by
multiplying the quoted price by the quantity held by us;

• Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1

that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted
prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are
observable for the asset or liability, such as interest rates and yield curves that are observable at
commonly quoted intervals, broker quotes and certain pricing indices; and

• Level 3 inputs are based on unobservable inputs for the asset or liability, and include situations where
there is little, if any, market activity for the asset or liability. In these cases, significant management
assumptions can be used to establish management’s best estimate of the assumptions used by other
market participants in determining the fair value of the asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value
hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its
entirety falls has been determined based on the lowest level input that is significant to the fair value
measurement of the asset or liability. Our assessment of the significance of a particular input to the fair
value measurement in its entirety requires judgment, and we consider factors specific to the asset or
liability.

In order to determine if a market is active or inactive for a security, we consider a number of factors,
including, but not limited to, the spread between what a seller is asking for a security and what a buyer is
bidding for the same security, the volume of trading activity for the security in question, the price of the
security compared to its par value (for fixed maturity investments), and other factors that may be indicative
of market activity.

There have been no material changes in our valuation techniques, nor have there been any transfers
between Level 1 and Level 2, during the period represented by these consolidated financial statements.
The Company transferred $6.6 million of so called “side pocket” investments which are not redeemable at
the option of the shareholder to Level 3, from Level 2, at the end of the period.

Below is a summary of the assets and liabilities that are measured at fair value on a recurring basis and
also represents the carrying amount of such assets and liabilities on our consolidated balance sheet:

At December 31, 2011

(in thousands)
Fixed maturity investments

Short term investments

Equity investments trading

Other investments

Other assets and (liabilities) (1)

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

$ 4,433,517

885,152

$ 3,520,604

27,761

905,477

50,560

748,984

16,071

—

905,477

50,560

—

(6,162)

—

352,458

(6,293)

—

396,526

28,526

$ 6,154,609

929,550

$ 4,772,246

452,813

Percentage of total fair value assets and

liabilities

100.0%

15.1%

77.5%

7.4%

(1) Other assets of $1.0 million, $5.8 million and $71.9 million are included in Level 1, Level 2 and Level 3,
respectively. Other liabilities of $7.2 million, $12.1 million and $43.4 million are included in Level 1,
Level 2 and Level 3, respectively.

As at December 31, 2011, we classified $496.2 million and $43.4 million of assets and liabilities,
respectively, at fair value on a recurring basis using Level 3 inputs. This represented 6.4% and 1.2% of our
total assets and liabilities, respectively. Level 3 fair value measurements are based on valuation techniques
that use at least one significant input that is unobservable. These measurements are made under
circumstances in which there is little, if any, market activity for the asset or liability. We use valuation
models or other pricing techniques that require a variety of inputs including contractual terms, market prices
and rates, yield curves, credit curves, measures of volatility, prepayment rates and correlations of such
inputs, some of which may be unobservable, to value these Level 3 assets and liabilities. Our assessment
of the significance of a particular input to the fair value measurement in its entirety requires judgment. In
making the assessment, we considered factors specific to the asset or liability. In certain cases, the inputs
used to measure fair value of an asset or a liability may fall into different levels of the fair value hierarchy. In
such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety is
classified is determined based on the lowest level input that is significant to the fair value measurement of
the asset or liability.

See “Note 6. Fair Value Measurements in our Notes to Consolidated Financial Statements” for additional
information about fair value measurements.

Impairments

The amount and timing of asset impairment is subject to significant estimation techniques and asset
impairment is a critical accounting estimate for us. The more significant impairment reviews we complete
are for our fixed maturity investments available for sale, equity method investments and goodwill and other
intangible assets as described in more detail below.

Fixed Maturity Investments Available For Sale

Pursuant to authoritative GAAP guidance effective April 1, 2009, our quarterly process for assessing
whether declines in the fair value of our fixed maturity investments available for sale represent impairments
that are other-than-temporary includes reviewing each fixed maturity investment available for sale that is
impaired and determining: (i) if we have the intent to sell the debt security or (ii) if it is more likely than not
that we will be required to sell the debt security before its anticipated recovery; and (iii) whether a credit loss
exists, that is, where we expect that the present value of the cash flows expected to be collected from the
security are less than the amortized cost basis of the security.

In assessing our intent to sell securities, our procedures may include actions such as discussing planned
sales with our third party investment managers, reviewing sales that have occurred shortly after the balance
sheet date, and consideration of other qualitative factors that may be indicative of our intent to sell or hold
the relevant securities. The Company recognized a total of $0.0 million of other-than-temporary impairments
due to our intent to sell these securities during the year ended December 31, 2011 (2010 - $0.0 million).

In assessing whether it is more likely than not that we will be required to sell a security before its anticipated
recovery, we consider various factors including our future cash flow forecasts and requirements, legal and
regulatory requirements, the level of our cash, cash equivalents, short term investments, fixed maturity
investments trading and fixed maturity investments available for sale in an unrealized gain position, and
other relevant factors. For the year ended December 31, 2011 we recognized $0.0 million of other-than-
temporary impairments due to required sales (2010 – $0.0 million).

In evaluating credit losses, we consider a variety of factors in the assessment of a security including: (i) the
time period during which there has been a significant decline below cost; (ii) the extent of the decline below
cost and par; (iii) the potential for the security to recover in value; (iv) an analysis of the financial condition
of the issuer; (v) the rating of the issuer; (vi) the implied rating of the issuer based on an analysis of option
adjusted spreads; (vii) the absolute level of the option adjusted spread for the issuer; and (viii) an analysis
of the collateral structure and credit support of the security, if applicable.

Once we determine that it is possible that a credit loss may exist for a security, we perform a detailed review
of the cash flows expected to be collected from the issuer. We estimate expected cash flows by applying
estimated default probabilities and recovery rates to the contractual cash flows of the issuer, with such
default and recovery rates reflecting long-term historical averages adjusted to reflect current credit,
economic and market conditions, giving due consideration to collateral and credit support, if applicable, and
discounting the expected cash flows at the purchase yield on the security. In instances in which a
determination is made that an impairment exists but we do not intend to sell the security and it is not more
likely than not that we will be required to sell the security before the anticipated recovery of its remaining
amortized cost basis, the impairment is separated into: (i) the amount of the total other-than-temporary
impairment related to the credit loss; and (ii) the amount of the total other-than-temporary impairment
related to all other factors. The amount of the other-than-temporary impairment related to the credit loss is
recognized in earnings. The amount of the other-than-temporary impairment related to all other factors is
recognized in other comprehensive income. For the year ended December 31, 2011, we recognized $0.6
million and $0.1 million of credit related other-than-temporary impairments which were recognized in
earnings and other than-temporary impairments related to other factors which were recognized in other
comprehensive income, respectively (2010 – $0.8 million and $2 thousand, respectively). At December 31,
2011, our gross unrealized losses on fixed maturity investments available for sale totaled $0.8 million.

Investments in Other Ventures, Under Equity Method

Investments in which we have significant influence over the operating and financial policies of the investee
are classified as investments in other ventures, under equity method, and are accounted for under the
equity method of accounting. Under this method, we record our proportionate share of income or loss from
such investments in our results for the period. Any decline in the value of investments in other ventures,
under equity method, including goodwill and other intangible assets arising upon acquisition of the investee,
considered by management to be other-than-temporary, is impaired and is reflected in our consolidated
statements of operations in the period in which it is determined. As of December 31, 2011, we had $70.7
million (2010 - $85.6 million) in investments in other ventures, under equity method on our consolidated
balance sheets, including $9.0 million of goodwill and $24.5 million of other intangible assets (2010 – $8.5
million and $29.7 million).

In determining whether an equity method investment is impaired, we look at a variety of factors including
the operating and financial performance of the investee, the investee’s future business plans and
projections, recent transactions and market valuations of publicly traded companies where available,
discussions with the investee’s management, and our intent and ability to hold the investment until it
recovers in value. In doing this, we make assumptions and estimates in assessing whether an impairment
has occurred and if, in the future, our assumptions and estimates made in assessing the fair value of these
investments change, this could result in a material decrease in the carrying value of these investments.
This would cause us to write-down the carrying value of these investments and could have a material
adverse effect on our results of operations in the period the impairment charge is taken. During the year
ended December 31, 2011, we recorded $0.0 million (2010 - $0.8 million, 2009 - $0.0 million) other-than-
temporary impairment charges related to investments in other ventures, under the equity method.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets acquired are initially recorded at fair value. Subsequent to initial
recognition, finite lived other intangible assets are amortized over their estimated useful life, subject to
impairment, and goodwill and indefinite lived other intangible assets are carried at the lower of cost or fair
value. If goodwill or other intangible assets are impaired, they are written down to their estimated fair
values with a corresponding expense reflected in our consolidated statements of operations.

We test goodwill and other intangible assets for impairment in the fourth quarter of each year, or more
frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable.
For purposes of the annual impairment evaluation, goodwill is assigned to the applicable reporting unit of
the acquired entities giving rise to the goodwill and other intangible assets and is tested based on the cash
flows they produce. There are generally many assumptions and estimates underlying the fair value
calculation. Principally, we identify the reporting unit or business entity that the goodwill or other intangible
asset is attributed to, and review historical and forecasted operating and financial performance and other
underlying factors affecting such analysis, including market conditions. Other assumptions used could
produce significantly different results which may result in a change in the value of goodwill or our other
intangible assets and related charge in our consolidated statements of operations. An impairment charge
could be recognized in the event of a significant decline in the implied fair value of those operations where
the goodwill or other intangible assets are applicable. As at December 31, 2011, excluding the amounts
recorded in investments in other ventures, under equity method, as noted above, our consolidated balance
sheets include $5.9 million of goodwill (2010 - $8.2 million) and $3.0 million of other intangible assets (2010
- $6.5 million). Impairment charges were $5.2 million during the year ended December 31, 2011 (2010 -
$0.0 million, 2009 - $0.0 million).

Income Taxes

Income taxes have been provided in accordance with the provisions of FASB ASC Topic Income Taxes.
Deferred tax assets and liabilities result from temporary differences between the amounts recorded in our
consolidated financial statements and the tax basis of the Company's assets and liabilities. Such temporary
differences are primarily due to net operating loss carryforwards, deferred interest expense, tax sharing
obligations and GAAP versus tax basis accounting differences related to accrued expenses and
investments. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. A valuation allowance against deferred tax assets is
recorded if it is more likely than not that all, or some portion, of the benefits related to deferred tax assets
will not be realized.

At December 31, 2011, our net deferred tax asset (prior to our valuation allowance) and valuation allowance
were $34.6 million (2010 - $2.9 million) and $35.0 million (2010 - $3.5 million), respectively (see “Note 14.
Taxation in our Notes to Consolidated Financial Statements” for additional information). At each balance
sheet date, we assess the need to establish a valuation allowance that reduces the net deferred tax asset
when it is more likely than not that all, or some portion, of the deferred tax assets will not be realized. The
valuation allowance is based on all available information including projections of future GAAP taxable
income from each tax-paying component in each tax jurisdiction. Losses incurred within our U.S. tax-
paying subsidiaries in the fourth quarter of 2011 were significant enough to result in a cumulative GAAP
taxable loss for the three year period ended December 31, 2011. Effective December 31, 2011, our
valuation allowance was reassessed and we now believe that it is more likely than not that we will not be
able to recover our U.S. net deferred tax asset. At December 31, 2011, our U.S. tax-paying subsidiaries
had a net deferred tax asset of $26.4 million, for which a full valuation allowance was established during the
fourth quarter of 2011. The remaining valuation allowance as of December 31, 2011 relates exclusively to
our operations in Ireland and the U.K. Our Ireland and U.K. operations have produced GAAP taxable
losses and we currently do not believe it is more likely than not that we will be able to recover our net
deferred tax assets from these operations.

The Company has unrecognized tax benefits of $3.3 million as of December 31, 2011 (2010 - $0.0 million).
Due to the unrecognized tax benefits being attributable to a temporary difference and the Company's U.S.
net operating loss carryforward position, unrecognized tax benefits, if recognized, would have no affect on
the Company's effective tax rate or on tax payments made to government authorities. Interest and
penalties related to unrecognized tax benefits, would be recognized in income tax expense. At
December 31, 2011, interest and penalties accrued on unrecognized tax benefits was $0.0 million. Income
tax returns filed for tax years 2008 through 2010, 2007 through 2010 and 2010, are open for examination by
the Internal Revenue Service, Irish tax authorities and U.K. tax authorities, respectively. The Company
does not expect the resolution of these open years to have a significant impact on its consolidated
statements of operations and financial condition.

SUMMARY OF RESULTS OF OPERATIONS FOR 2011, 2010 AND 2009

Year ended December 31,

2011

2010

2009

(in thousands, except per share amounts and percentages)
Highlights
Gross premiums written

Net premiums written

Net premiums earned

Net claims and claim expenses incurred

Underwriting (loss) income

Net investment income

Net realized and unrealized gains on investments

Net other-than-temporary impairments

(Loss) income from continuing operations

(Loss) income from discontinued operations

Net (loss) income

Net (loss) income (attributable) available to
RenaissanceRe common shareholders

Total assets

$1,434,976

$1,165,295

$1,228,881

1,012,773

951,049

861,179

(177,172)

118,000

70,668

(552)

(74,502)

(15,890)

(90,392)

848,965

864,921

129,345

474,573

203,955

144,444

838,333

882,204

(70,698)

695,200

318,179

93,679

(829)

(22,450)

798,482

62,670

861,152

1,045,959

6,700

1,052,659

(92,235)

702,613

838,858

$7,744,912

$8,138,278

$7,926,212

Total shareholders’ equity attributable to RenaissanceRe

$3,605,193

$3,936,325

$3,840,786

Per share data
(Loss) income from continuing operations (attributable)

available to RenaissanceRe common shareholders per
common share – diluted

(Loss) income from discontinued operations per common

share – diluted

Net (loss) income (attributable) available to

RenaissanceRe common shareholders per common
share – diluted

Dividends per common share

Book value per common share

Accumulated dividends per common share

Book value per common share plus accumulated

dividends

Change in book value per common share plus change in

accumulated dividends

Key ratios
Net claims and claim expense ratio – current accident year

Net claims and claim expense ratio – prior accident years

Net claims and claim expense ratio – calendar year

Underwriting expense ratio

Combined ratio

(1.53)

11.18

13.29

(0.31)

1.13

0.11

(1.84)

1.04

59.27

10.92

70.19

12.31

1.00

62.58

9.88

72.46

13.40

0.96

51.68

8.88

60.56

(3.6)%

23.0 %

35.9 %

104.4 %

(13.8)%

90.6 %

28.0 %

118.6 %

49.9 %

(34.9)%

15.0 %

30.1 %

45.1 %

22.2 %

(30.2)%

(8.0)%

29.2 %

21.2 %

Return on average common equity

(3.0)%

21.7 %

30.2 %

Net loss attributable to RenaissanceRe common shareholders was $92.2 million in 2011, compared to
$702.6 million of net income available to RenaissanceRe common shareholders in 2010, a decrease of
$794.8 million. In 2009, we generated income available to RenaissanceRe common shareholders of
$838.9 million. As a result of our net loss attributable to RenaissanceRe common shareholders in 2011, we
generated a negative return on average common equity of 3.0% and our book value per common share
decreased from $62.58 at December 31, 2010 to $59.27 at December 31, 2011, a 3.6% decrease, after
considering the change in accumulated dividends paid to our common shareholders. In 2010 and 2009, we
generated returns on average common equity of 21.7% and 30.2%, respectively, and increased our book
value per common share plus the change in accumulated dividends by 23.0% and 35.9%, respectively.

The most significant events affecting our financial performance during 2011, on a comparative basis to 2010
include:

• Significant Catastrophe Events and Corresponding Underwriting Losses - our underwriting loss of

$177.2 million in 2011 deteriorated $651.7 million from underwriting income of $474.6 million in 2010,
primarily due to $725.2 million of underwriting losses as a result of a number of large losses, namely
the February 2011 New Zealand and Tohoku earthquakes, the large U.S. tornadoes, the Australian
floods, losses arising from certain aggregate contracts, hurricane Irene and the Thailand floods
(collectively referred to as the “Large 2011 Losses”), and resulted in $559.5 million of net negative
impact, compared to $211.7 million of net negative impact from the large losses of 2010, an increase of
$347.9 million, as detailed below;

• Lower Favorable Development on Prior Years Claims and Claim Expenses - favorable development on
prior years claims and claim expenses decreased $170.1 million to $132.0 million in 2011, compared to
$302.1 million in 2010, and was comprised primarily of $136.9 million related to our Reinsurance
segment, as detailed below;

• Lower Investment Results - net investment income and net realized and unrealized gains on

investments deteriorated $86.0 million and $73.8 million, respectively, compared to 2010. The
decrease in our investment results was primarily due to lower total returns on the fixed maturity
investments portfolio, a decrease in the returns from our hedge fund and private equity investments due
to relatively weaker performance, and lower returns on certain non-investment grade allocations
included in other investments;

• Other (Loss) Income - our other (loss) income deteriorated $41.8 million to a loss of $0.7 million in

2011, compared to income of $41.1 million in 2010, primarily the result of $45.0 million of trading losses
within the Company's weather and energy risk management operations due to the unusually warm
weather experienced in the United Kingdom and certain parts of the the United States during the fourth
quarter of 2011, compared to trading income of $8.1 million in 2010, more than offsetting our ceded
reinsurance contracts accounted for at fair value which generated $37.4 million in income in 2011,
compared to $5.2 million in 2010, principally as a result of net recoverables from the Tohoku
earthquake;

• Equity in Losses of Other Ventures - our equity in losses of other ventures deteriorated to a loss of

$36.5 million in 2011, compared to a loss of $11.8 million in 2010. The decrease is primarily due to our
equity investment in Top Layer Re which incurred a loss of $37.5 million in 2011, compared to a loss of
$12.1 million in 2010, a deterioration of $25.4 million, principally due to current accident year claims and
claim expenses in Top Layer Re related to the February 2011 New Zealand earthquake and the Tohoku
earthquake;

• Loss from Discontinued Operations - our loss from discontinued operations is $15.9 million in 2011,
compared to income from discontinued operations of $62.7 million in 2010, and is primarily due to
certain tax related adjustments and the recognition of a $10.0 million expense related to a contractually
agreed obligation to pay, or otherwise reimburse, QBE for amounts up to $10.0 million in respect of net
adverse development on prior accident years net claims and claims expenses for reserves that were
sold to QBE. Income from discontinued operations in 2010 is primarily due to underwriting income of
$57.0 million which was principally attributable to strong underwriting results for the 2010 crop year; and
partially offset by

• Net Loss Attributable to Redeemable Noncontrolling Interest - DaVinciRe - our net loss attributable to
redeemable noncontrolling interest - DaVinciRe was $33.7 million in 2011, compared to net income
attributable to redeemable noncontrolling interest - DaVinciRe of $116.5 million in 2010, a change of
$150.2 million, and principally due to a significant reduction in underwriting income, due to the increase
in current accident year net claims and claim expenses, combined with lower investment results, as
noted above, which also impacted DaVinciRe and together resulted in a net loss for 2011, compared to
net income in 2010, and consequently decreased redeemable noncontrolling interest - DaVinciRe.

During 2010, the most significant events affecting our financial performance on a comparative basis to 2009
include:

• Lower Underwriting Income – our underwriting income decreased $220.6 million, primarily due to a

$200.0 million increase in net claims and claim expenses and a $17.3 million decrease in net premiums
earned. The $220.6 million decrease in underwriting income and 23.9 percentage point increase in the
combined ratio was driven by the comparably high level of insured catastrophes during 2010, compared
to 2009, specifically the comparative impact of the 2010 earthquakes, which resulted in $252.1 million
of underwriting losses and increased our combined ratio by 32.0 percentage points in 2010, as
described in more detail below. In addition, claims and claim expenses include $302.1 million of
favorable development on prior accident years due to reductions to our estimated ultimate losses in our
catastrophe unit, combined with lower than expected loss emergence in our specialty unit and
Insurance segment, as described in more detail below;

• Lower Investment Results – including a $114.2 million decrease in net investment income, partially

offset by a $50.8 million increase in net realized and unrealized gains on fixed maturity investments and
a $21.6 million decrease in net other-than-temporary impairments, which collectively decreased our net
income by $41.8 million in 2010, compared to 2009. The decrease in our investment results was
primarily due to lower total returns in the fixed maturity investments portfolio, lower returns in certain of
the Company’s non-investment grade allocations, which the Company includes in other investments,
and partially offset by higher returns in the Company’s hedge funds and private equity investments. The
$50.8 million increase in net realized and unrealized gains on fixed maturity investments is due in part
to the fact that during the fourth quarter of 2009, we started designating, upon acquisition, certain fixed
maturity investments as trading, rather than available for sale, and as a result, $24.8 million of net
unrealized gains on these securities are recorded in net realized and unrealized gains on fixed maturity
investments in our consolidated statements of operations in 2010 rather than in accumulated other
comprehensive income in shareholders’ equity. The reduction in net other-than-temporary impairments
was due in part to our adoption in the second quarter of 2009 of new guidance on the recognition and
presentation of other-than-temporary impairments, as well as improving market conditions for our
investments, and the designation upon acquisition, of a significant portion of our fixed maturity
investments as trading, rather than as available for sale; and partially offset by

• Lower Net Income Attributable to Redeemable Noncontrolling Interest – DaVinciRe – our net income

attributable to redeemable noncontrolling interest – DaVinciRe decreased $55.1 million principally due
to a reduction in DaVinciRe’s underwriting income, due to an increase in current accident year net
claims and claim expenses primarily due to the 2010 earthquakes, which also impacted DaVinciRe and
decreased its net income in 2010, and consequently decreased redeemable noncontrolling interest –
DaVinciRe, combined with an increase in our ownership of DaVinciRe to 41.2% in 2010, compared to
38.2% in 2009; and

• Increased Other Income – other income increased $39.3 million, to $41.1 million in 2010, compared to
2009, primarily the result of: a $15.8 million gain on the sale of our interest in ChannelRe in 2010; a
$10.1 million positive mark-to-market on the Platinum warrants, compared to $5.0 million in 2009, due
to the increase in the common share price of Platinum during 2010; a reduction in other losses
associated with our weather-related and loss mitigation activities of $11.1 million in 2010; a $37.8
million improvement in other income associated with the fair value of the assumed and ceded
reinsurance contracts accounted for at fair value or as deposits; and partially offset by a decrease of
$29.0 million in other income from our weather and energy risk management operations due to overall
less favorable trading conditions experienced in 2010, compared to 2009.

Net Negative Impact of Specific Events

Net negative impact includes the sum of estimates of net claims and claim expenses incurred, earned
reinstatement premiums assumed and ceded, lost profit commissions, redeemable noncontrolling interest -
DaVinci Re and equity in the net claims and claim expenses of Top Layer Re, and other income in respect
of ceded reinsurance contracts accounted for at fair value. Our estimates are based on a review of our
potential exposures, preliminary discussions with certain counterparties and catastrophe modeling
techniques. Given the magnitude and recent occurrence of the various catastrophe events described
herein, delays in receiving claims data, the contingent nature of business interruption and other exposures,
potential uncertainties relating to reinsurance recoveries and other uncertainties inherent in loss estimation,
meaningful uncertainty remains regarding losses from these events. In addition, a significant portion of the
net claims and claim expenses associated with the February 2011 New Zealand and Tohoku earthquakes
are concentrated with a few large clients and therefore the loss estimates for these events may vary
significantly based on the claims experience of those clients. Accordingly, our actual net negative impact
from these events will vary from these preliminary estimates, perhaps materially so. Changes in these
estimates will be recorded in the period in which they occur.

See the supplemental financial data below for additional information detailing the net negative impact of the
Large 2011 Losses, on our consolidated financial statements for 2011.

Year ended December
31, 2011

(in thousands, except
percentages)

Net claims and claim
expenses incurred

Assumed reinstatement
premiums earned

Ceded reinstatement
premiums earned

Lost profit commissions

Net negative impact on
underwriting result

Equity in net claims and
claim expenses of
Top Layer Re

Recoveries from ceded

reinsurance
contracts accounted
for at fair value

Redeemable

noncontrolling
interest - DaVinciRe

February
2011 New
Zealand
Earthquake

Tohoku
Earthquake

Large U.S.
Tornadoes

Australian
Floods

Aggregate
Contracts

Hurricane
Irene

Thailand
Floods

Total

Large 2011 Losses

$ (273,596)

$ (284,348)

$ (135,090)

(12,273)

(33,080)

(32,530)

(76,437)

$ (847,354)

49,878

60,914

23,273

1,694

1,524

5,874

17,144

160,301

(3,542)

(7,522)

(26,004)

(331)

—

(151)

—

(348)

—

(245)

(29,546)

(8,597)

(234,782)

(249,769)

(111,968)

(10,927)

(31,556)

(26,656)

(59,538)

(725,196)

(23,757)

(26,243)

—

45,000

—

(50,000)

—

45,000

55,748

53,669

32,941

1,182

4,944

7,698

14,474

170,656

Net negative impact

$ (202,791)

$ (177,343)

(79,027)

(9,745)

(26,612)

(18,958)

(45,064)

$ (559,540)

Percentage point
impact on
consolidated
combined ratio

Net negative impact on

Reinsurance
segment
underwriting result

Net negative impact on
Lloyd's segment
underwriting result

Net negative impact on
underwriting result

25.0

26.5

11.6

1.1

3.3

2.7

6.0

85.4

$ (228,756)

$ (237,480)

$ (109,043)

(10,927)

(31,556)

(24,156)

(53,538)

$ (695,456)

(6,026)

(12,289)

(2,925)

—

(2,500)

(6,000)

(29,740)

$ (234,782)

$ (249,769)

$ (111,968)

(10,927)

(31,556)

(26,656)

(59,538)

$ (725,196)

See the supplemental financial data below for additional information detailing the net negative impact due to
the large catastrophes of 2010, namely, the September 2010 New Zealand and Chilean earthquakes, on
our consolidated financial statements for 2010.

Year ended December 31, 2010

(in thousands, except percentages)
Net claims and claim expenses incurred

Net reinstatement premiums earned

Lost profit commissions

Net impact on underwriting result

Equity in losses of Top Layer Re

Redeemable noncontrolling interest – DaVinciRe

September
2010 New
Zealand
Earthquake

Chilean
Earthquake

Total

(135,292)

(129,770)

(265,062)

2,532

(9,730)

25,508

(5,372)

28,040

(15,102)

(142,490)

(109,634)

(252,124)

(23,940)

38,352

—

26,032

(23,940)

64,384

Net negative impact

(128,078)

(83,602)

(211,680)

Percentage point impact on consolidated combined ratio

16.7

14.7

32.0

Net negative impact on Reinsurance segment underwriting

result

Net negative impact on Lloyd’s segment underwriting

result

(137,283)

(109,634)

(246,917)

(5,207)

—

(5,207)

Net negative impact on underwriting result

(142,490)

(109,634)

(252,124)

Underwriting Results by Segment

Reinsurance Segment

Below is a summary of the underwriting results and ratios for our Reinsurance segment followed by an
analysis of our catastrophe unit and specialty reinsurance unit underwriting results and ratios:

Reinsurance segment overview

Year ended December 31,

(in thousands, except percentages)
Gross premiums written (1)

Net premiums written

Net premiums earned

Net claims and claim expenses incurred

Acquisition expenses

Operational expenses

Underwriting (loss) income

2011

2010

2009

$1,323,187

$1,123,619

$1,210,795

$ 913,499

$ 809,719

$ 839,023

$ 873,088

$ 838,790

$ 849,725

783,704

82,978

131,251

113,804

77,954

129,990

(87,639)

78,848

139,328

$ (124,845)

$ 517,042

$ 719,188

Net claims and claim expenses incurred – current accident

year

Net claims and claim expenses incurred – prior accident

years

$ 920,602

$ 399,823

$ 161,868

(136,898)

(286,019)

(249,507)

Net claims and claim expenses incurred – total

$ 783,704

$ 113,804

$ (87,639)

Net claims and claim expense ratio – current accident year

Net claims and claim expense ratio – prior accident years

Net claims and claim expense ratio – calendar year

Underwriting expense ratio

Combined ratio

105.4 %

(15.6)%

89.8 %

24.5 %

114.3 %

47.7 %

(34.1)%

13.6 %

24.8 %

38.4 %

19.0 %

(29.3)%

(10.3)%

25.7 %

15.4 %

(1) Includes gross premiums written of $0.0 million assumed from the Insurance segment for the year

ended December 31, 2011 (2010 - $9.5 million, 2009 - $12.7 million).

Reinsurance Segment Gross Premiums Written – Gross premiums written in our Reinsurance segment
increased by $199.6 million, or 17.8%, to $1,323.2 million in 2011, compared to $1,123.6 million in 2010,
primarily due to an increase in gross premiums written in the catastrophe unit which was positively impacted
by reinstatement premiums written on the Large 2011 Losses. Excluding the impact of $159.8 million and
$28.0 million of reinstatement premiums written in 2011 and 2010, respectively, gross premiums written
increased $67.8 million, or 6.2%, primarily due to improving market conditions in our core catastrophe
markets during the June and July 2011 renewals, and partially offset by the softer market conditions in our
core markets during the January 2011 renewals. In addition, our specialty reinsurance gross premiums
written increased $16.5 million, or 12.8%, to $145.9 million, compared to $129.4 million in 2010, primarily
due to the inception of some new contracts during 2011 which met our risk-adjusted return thresholds.

Gross premiums written in our Reinsurance segment decreased $87.2 million, or 7.2%, to $1,123.6 million
in 2010, compared to $1,210.8 million in 2009. Excluding the impact of $28.0 million of reinstatement
premiums written in 2010 as a result of the 2010 earthquakes, gross premiums written in the catastrophe
unit decreased $130.3 million in 2010, or 11.9%, compared to 2009, due to the continued softening of
market conditions in catastrophe exposed lines of business in the U.S., combined with the non-renewal of
several large programs that did not meet our underwriting requirements. Gross premiums written in the
specialty unit increased $15.0 million in 2010, or 13.2%, compared to 2009, principally due to the inception
of several new contracts providing financial and credit reinsurance, and the non-renewal and portfolio
transfer out of a quota share program in mid-2009 that did not meet our expectations and was included as
negative gross premiums written in 2009.

Our Reinsurance segment premiums are prone to significant volatility due to the timing of contract inception
and also due to the business being characterized by a relatively small number of relatively large
transactions. In addition, our property catastrophe reinsurance gross premiums written continue to be
characterized by a large percentage of U.S. and Caribbean premium as we have found business derived
from exposures in Europe and the rest of the world to be, in general, less attractive on a risk-adjusted basis
during recent periods. A significant amount of our U.S. and Caribbean premium provides coverage against
windstorms, mainly U.S. Atlantic hurricanes, as well as earthquakes and other natural and man-made
catastrophes. A summary of gross premiums written allocated by territory of coverage for our Reinsurance
segment is included in "Item 1. Business - Geographic Breakdown".

Ceded Premiums Written

Year ended December 31,
(in thousands)
Ceded premiums written – Reinsurance segment

2011

2010

2009

409,688

313,900

371,772

Due to the potential volatility of the property catastrophe reinsurance contracts which we sell, we purchase
reinsurance to reduce our exposure to large losses and to help manage our risk portfolio. We use our
REMS© modeling system to evaluate how each purchase interacts with our portfolio of reinsurance
contracts we write, and with the other ceded reinsurance contracts we purchase, to determine the
appropriateness of the pricing of each contract and whether or not it helps us to balance our portfolio of
risks.

Ceded premiums written increased by $95.8 million in 2011, compared to 2010, principally due to our
decision to purchase additional reinsurance protection, combined with $28.0 million of reinstatement
premiums related to recoveries on certain programs impacted by the February 2011 New Zealand and
Tohoku earthquakes.

Ceded premiums written decreased by $57.9 million in 2010, compared to 2009, principally due to the non-
renewal of Timicuan Reinsurance II Ltd., to which the Company ceded $32.0 million of assumed
catastrophe premiums in 2009, combined with the our decision to reduce our reinsurance protection given
the insufficiently priced coverage being available during 2010.

To the extent that appropriately priced coverage is available, we anticipate continued use of reinsurance to
reduce the impact of large losses on our financial results and to manage our portfolio of risk; however, the
buying of ceded reinsurance in our Reinsurance segment is based on market opportunities and is not based
on placing a specific reinsurance program each year. In addition, in future periods we may utilize the
growing market for insurance-linked securities to expand our ceded reinsurance buying if we find the pricing
and terms of such coverages attractive.

Reinsurance Segment Underwriting Results – Our Reinsurance segment incurred an underwriting loss of
$124.8 million in 2011, compared to $517.0 million of underwriting income in 2010, a decrease of $641.9
million. In 2011, our Reinsurance segment generated a net claims and claim expense ratio of 89.8%, an
underwriting expense ratio of 24.5% and a combined ratio of 114.3%, compared to 13.6%, 24.8% and
38.4%, respectively, in 2010.

The $641.9 million decrease in the Reinsurance segment's underwriting result and 75.9 percentage point
increase in the combined ratio was principally due to a $520.8 million increase in current accident year
losses and a $149.1 million decrease in favorable development on prior years reserves in 2011, compared
to 2010. The increase in current accident year losses was primarily due to the Large 2011 Losses, which
negatively impacted the Reinsurance segment's underwriting result and combined ratio by $695.5 million
and 91.3 percentage points, respectively, after considering the impact of net reinstatement premiums
earned and net lost profit commission related to these events, as detailed in the table below.

100

Year ended December
31, 2011

(in thousands, except
percentages)

Net claims and claim
expenses incurred

Assumed reinstatement
premiums earned

Ceded reinstatement
premiums earned

Lost profit commissions

Net negative impact on

Reinsurance
segment
underwriting result

Percentage point
impact on
Reinsurance
segment combined
ratio

Net negative impact on
catastrophe unit
underwriting result

Net negative impact on

specialty unit
underwriting result

Net negative impact on

Reinsurance
segment
underwriting result

February
2011 New
Zealand
Earthquake

Tohoku
Earthquake

Large U.S.
Tornadoes

Australian
Floods

Aggregate
Contracts

Hurricane
Irene

Thailand
Floods

Total

Large 2011 Losses

(267,570)

(273,334)

(131,965)

(12,273)

(33,080)

(30,030)

(70,437)

(818,689)

49,878

60,603

23,073

1,694

1,524

5,874

17,144

159,790

(3,542)

(7,522)

(24,418)

(331)

—

(151)

—

(348)

—

(245)

(27,960)

(8,597)

(228,756)

(237,480)

(109,043)

(10,927)

(31,556)

(24,156)

(53,538)

(695,456)

26.9

27.8

12.4

1.2

3.6

2.7

6.0

91.3

(222,256)

(229,980)

(109,043)

(4,927)

(31,556)

(24,156)

(47,538)

(669,456)

(6,500)

(7,500)

—

(6,000)

—

(6,000)

(26,000)

(228,756)

(237,480)

(109,043)

(10,927)

(31,556)

(24,156)

(53,538)

(695,456)

Our Reinsurance segment generated $517.0 million of underwriting income and had a combined ratio of
38.4% in 2010, compared to $719.2 million of underwriting income and a 15.4% combined ratio in 2009.
The $202.1 million decrease in underwriting income was primarily due to a $238.0 million increase in
current accident year net claims and claim expenses due to a comparably high level of insured
catastrophes occurring in 2010 compared to 2009, specifically the comparative impact of the September
2010 New Zealand and Chilean earthquakes noted below, which added $259.9 million in net claims and
claim expenses and 32.6 percentage points to the Reinsurance segment’s combined ratio in 2010, and
estimated ultimate claims and claims expenses related to tropical storm Tasha of $18.1million.

Year ended December 31, 2010

(in thousands, except percentages)
Net claims and claim expenses incurred

Net reinstatement premiums earned

Lost profit commissions

September
2010 New
Zealand
Earthquake

Chilean
Earthquake

Total

(130,085)

(129,770)

(259,855)

2,532

(9,730)

25,508

(5,372)

28,040

(15,102)

Net impact on Reinsurance segment underwriting result

(137,283)

(109,634)

(246,917)

Percentage point impact on Reinsurance segment

combined ratio

16.6

15.4

32.6

Our underwriting results over the last three years have been, and may well continue to be, impacted by
prior accident year reserve development. Our Reinsurance segment prior year reserves experienced
$136.9 million, $286.0 million and $249.5 million of net favorable development in 2011, 2010 and 2009,
respectively. The favorable development on prior year reserves in 2011 included $59.1 million related to our
catastrophe reinsurance unit and $77.8 million related to our specialty reinsurance unit. The favorable
development on prior year reserves in 2011 within the catastrophe reinsurance unit of $59.1 million was due
to $27.0 million related to reductions in the estimated ultimate losses of smaller catastrophe events, $32.1
million arising from net reductions to the estimated ultimate losses of large catastrophe events, including
$13.9 million, $10.0 million, $8.5 million and $4.7 million related to tropical cyclone Tasha, the 2005

101

hurricanes, the Chilean earthquake and the World Trade Center, and partially offset by $15.2 million of
adverse development related to the September 2010 New Zealand earthquake. The favorable
development within the specialty reinsurance unit included $37.1 million due to reported losses developing
more favorably than expected during 2011 on prior accident years events, $26.8 million associated with
actuarial assumption changes, principally in our workers’ compensation quota share and risk, property risk
and energy risk lines of business, and primarily as a result of revised initial expected claims ratios and claim
development factors due to actual experience coming in better than expected, and $13.9 million related to a
decrease in case reserves and additional case reserves, which are established at the contract level for
specific loss or large events.

The favorable development on prior year reserves in 2010 included $157.5 million related to our
catastrophe reinsurance unit and $128.6 million related to our specialty reinsurance unit. The favorable
development within the catastrophe reinsurance unit was due to reductions of $37.9 million to the estimated
ultimate losses of mature, large, mainly international catastrophe events, combined with reductions in net
ultimate losses associated with the 2005 Buncefield Oil Depot loss of $27.4 million, the 2005 hurricanes of
$25.5 million, the 2008 hurricanes of $10.9 million, European windstorm Klaus of $8.0 million and the 2004
hurricanes of $8.1 million, with the remainder due to a reduction in ultimate losses on a large number of
relatively small catastrophes. The favorable development within the specialty unit includes $31.4 million
associated with actuarial assumption changes made in the first quarter of 2010, principally in the casualty
clash and surety lines of business, and partially offset by an increase in reserves within the workers
compensation per risk line of business, principally as a result of revised initial expected loss ratios and loss
development factors due to actual experience coming in better than expected; $25.9 million due to a
decrease in case reserves and additional case reserves; and reported losses developing more favorably
than expected in 2010 on prior accident years events.

Losses from our property catastrophe reinsurance and specialty reinsurance policies can be infrequent, but
severe, as demonstrated by our 2011 results. During periods with low levels of property catastrophe loss
activity, such as 2009, we have the potential to produce a low level of losses and a related increase in
underwriting income. As described above, we believe there has been an increase in the frequency and
severity of hurricanes that have the potential to make landfall in the U.S., potentially as a result of decadal
ocean water temperature cyclical trends, a longer-term trend towards global warming, or both or other
factors.

Our underwriting expenses consist of acquisition expenses and operational expenses. Acquisition
expenses consist of the costs to acquire premiums and are principally comprised of broker commissions
and excise taxes. Acquisition expenses are driven by contract terms and are normally a set percentage of
premiums and, accordingly, these costs will normally move in line with the fluctuation in gross premiums
earned. Our acquisition expense ratio was 9.5%, 9.3% and 9.3% in 2011, 2010 and 2009, respectively, and
has remained relatively constant.

Operating expenses consist primarily of salaries and other general and administrative expenses. For 2011,
operating expenses increased $1.3 million, or 1.0%, to $131.3 million, compared to $130.0 million in 2010.
Operating expenses decreased $9.3 million, or 6.7%, to $130.0 million in 2010, compared to $139.3 million
in 2009. The decrease in operating expenses in the Reinsurance segment for 2010 is primarily due to a
change in our internal allocation of certain expenses as a result of increased percentage allocations to other
business units due to growth in those business units. Our operating expense ratio may increase over time,
as a result of factors including the absolute and comparative growth of our operating expenses, further
refinements to internal expense allocations, and market trends and dynamics.

We have entered into joint ventures and specialized quota share cessions of our book of business. In
accordance with the joint venture and quota share agreements, we are entitled to certain profit commissions
and fee income. We record these profit commissions and fees as a reduction in acquisition and operating
expenses and, accordingly, these fees have reduced our underwriting expense ratios. These fees totaled
$58.3 million, $56.5 million and $70.0 million in 2011, 2010 and 2009, respectively, and resulted in a
corresponding decrease to the Reinsurance segment underwriting expense ratio of 6.7%, 6.7% and 8.2%
for the years ended December 31, 2011, 2010 and 2009, respectively. In addition, we are entitled to certain
fee income and profit commissions from DaVinci. Because the results of DaVinci, and its parent DaVinciRe,
are consolidated in our results of operations, these fees and profit commissions are eliminated in our
consolidated financial statements and are principally reflected in redeemable noncontrolling interest –

102

DaVinciRe. The net impact of all fees and profit commissions related to these joint ventures and
specialized quota share cessions within our Reinsurance segment was $77.0 million, $91.6 million and
$124.0 million for the years ending December 31, 2011, 2010 and 2009, respectively.

Catastrophe

Below is a summary of the underwriting results and ratios for our catastrophe unit:

Catastrophe unit overview

Year ended December 31,

(in thousands, except percentages)
Property catastrophe gross premiums written

Renaissance

DaVinci

2011

2010

2009

$ 742,236

$ 630,080

$ 706,947

435,060

364,153

389,502

Total property catastrophe gross premiums written (1)

$1,177,296

$ 994,233

$1,096,449

Net premiums written

Net premiums earned
Net claims and claim expenses incurred

Acquisition expenses

Operational expenses

Underwriting (loss) income

$ 773,560

$ 685,393

$ 732,886

$ 737,545
770,350

$ 721,419
153,290

$ 705,598
(102,072)

62,882

100,932

63,889

104,535

55,198

103,040

$ (196,619)

$ 399,705

$ 649,432

Net claims and claim expenses incurred – current accident

year

$ 829,487

$ 310,748

82,323

Net claims and claim expenses incurred – prior

accident years

(59,137)

(157,458)

(184,395)

Net claims and claim expenses incurred – total

$ 770,350

$ 153,290

$ (102,072)

Net claims and claim expense ratio – current accident year

Net claims and claim expense ratio – prior accident years

Net claims and claim expense ratio – calendar year

Underwriting expense ratio

Combined ratio

112.5 %

(8.1)%

104.4 %

22.3 %

126.7 %

43.1 %

(21.9)%

21.2 %

23.4 %

44.6 %

11.7 %

(26.2)%

(14.5)%

22.5 %

8.0 %

(1) Includes gross premiums written of $0.0 million assumed from the Insurance segment for the year

ended December 31, 2011 (2010 - $9.5 million, 2009 - $12.7 million).

Catastrophe Reinsurance Gross Premiums Written – In 2011, our catastrophe reinsurance gross premiums
written increased by $183.1 million, or 18.4%, to $1,177.3 million, compared to $994.2 million in 2010. The
increase is due in part to reinstatement premiums written on Large 2011 Losses, and the improving market
conditions in our core markets during the June and July 2011 renewals, partially offset by the then softer
market conditions in our core markets during the January 2011 renewals. Excluding the impact of $159.8
million and $28.0 million of reinstatement premiums written in 2011 and 2010, respectively, our catastrophe
unit gross premiums written increased $51.3 million, or 5.3%, in 2011.

In 2010, our catastrophe reinsurance gross premiums written decreased by $102.2 million, or 9.3%, to
$994.2 million, compared to 2009. Excluding the impact of $28.0 million of reinstatement premiums written
in 2010 as a result of the 2010 earthquakes, gross premiums written in the catastrophe unit decreased
$130.3 million in 2010, or 11.9%, compared to 2009, due to the continued softening of market conditions in
catastrophe exposed lines of business in the U.S., combined with the non-renewal of several large
programs that did not meet our underwriting requirements.

103

Our property catastrophe reinsurance gross premiums written continue to be characterized by a large
percentage of U.S. and Caribbean premium, as we have found business derived from exposures in Europe
or the rest of the world to be, in general, less attractive on a risk-adjusted basis during recent periods. A
significant amount of our U.S. and Caribbean premium provides coverage against windstorms, mainly U.S.
Atlantic hurricanes, as well as earthquakes and other natural and man-made catastrophes.

Catastrophe Reinsurance Underwriting Results – Our catastrophe unit incurred an underwriting loss of
$196.6 million in 2011, compared to underwriting income of $399.7 million in 2010, a decrease of $596.3
million. The decrease in underwriting income was primarily due to a $518.7 million increase in current
accident year claims and claim expenses as a result of the Large 2011 Losses and a decrease of $98.3
million in favorable development on prior accident years claims and claim expenses, and partially offset by
a $16.1 million increase in net premiums earned due to the reinstatement premiums written and earned,
noted above.

In 2011, our catastrophe unit generated a net claims and claim expense ratio of 104.4%, an underwriting
expense ratio of 22.3% and a combined ratio of 126.7%, compared to 21.2%, 23.4% and 44.6%,
respectively, in 2010. The decrease in the underwriting expense ratio to 22.3% in 2011, from 23.4% in
2010, was driven in part by an increase in net premiums earned as a result of the reinstatement premiums
written and earned, which do not incur additional acquisition expenses, as well as a $3.6 million reduction in
operating expenses. The increase in current accident year losses was primarily due to the Large 2011
Losses, which negatively impacted the catastrophe unit's underwriting results and combined ratio by $669.5
million and 104.8 percentage points, respectively, after considering the impact of net reinstatement
premiums earned and lost profit commissions related to these events, as detailed in the table below.

Year ended December
31, 2011

(in thousands, except
percentages)

Net claims and claim
expenses incurred

Assumed

reinstatement
premiums earned

Ceded reinstatement
premiums earned

Lost profit

commissions

Net negative impact
on catastrophe
unit underwriting
result

Percentage point
impact on
catastrophe unit
combined ratio

February
2011 New
Zealand
Earthquake

Tohoku
Earthquake

Large U.S.
Tornadoes

Australian
Floods

Aggregate
Contracts

Hurricane
Irene

Thailand
Floods

Total

Large 2011 Losses

$ (261,070)

$ (265,834)

$ (131,965)

(6,273)

$ (33,080)

$ (30,030)

$ (64,437)

$ (792,689)

49,878

60,603

23,073

1,694

1,524

5,874

17,144

159,790

(3,542)

(24,418)

—

(7,522)

(331)

(151)

(348)

—

(27,960)

(245)

(8,597)

$ (222,256)

$ (229,980)

$ (109,043)

(4,927)

$ (31,556)

$ (24,156)

$ (47,538)

$ (669,456)

30.4

31.5

14.4

0.6

4.3

3.1

6.0

104.8

104

Our catastrophe unit generated $399.7 million of underwriting income in 2010, compared to $649.4 million
in 2009, a decrease of $249.7 million. The decrease in underwriting income was due primarily to a $255.4
million increase in net claims and claim expenses as a result of $252.4 million of net claims and claim
expenses related to the 2010 earthquakes and a $10.2 million increase in underwriting expenses, and
partially offset by a $15.8 million increase in net premiums earned. Net premiums earned in 2010 included
$28.0 million of reinstatement premiums earned as a result of the 2010 earthquakes. The September 2010
New Zealand and Chilean earthquakes added 36.8 percentage points to the catastrophe unit’s combined
ratio for 2010 as detailed in the table below:

Year ended December 31, 2010

(in thousands, except percentages)
Net claims and claim expenses incurred

Net reinstatement premiums earned

Lost profit commissions

September
2010 New
Zealand
Earthquake

Chilean
Earthquake

Total

(130,085)

(122,270)

(252,355)

2,532

(9,730)

25,508

(5,372)

28,040

(15,102)

Net impact on catastrophe unit underwriting result

(137,283)

(102,134)

(239,417)

Percentage point impact on catastrophe unit combined

ratio

19.3

16.7

36.8

In 2010, our catastrophe unit generated a net claims and claim expense ratio of 21.2%, an underwriting
expense ratio of 23.4% and a combined ratio of 44.6%, compared to negative 14.5%, 22.5% and 8.0%,
respectively, in 2009. The increase in our underwriting expense ratio by 0.9 percentage points was driven
by an $8.7 million increase in acquisition expenses, primarily as a result of lower profit commissions on
ceded premiums earned as a result of the 2010 earthquakes, as shown in the table above.

During 2011, we experienced $59.1 million of favorable development on prior year reserves, compared to
$157.5 million of favorable development on prior years reserves in 2010. The favorable development on
prior year reserves in 2011 within the catastrophe reinsurance unit of $59.1 million was due to $27.0 million
related to reductions in the estimated ultimate losses of smaller catastrophe events, $32.1 million arising
from net reductions to the estimated ultimate losses of large catastrophe events, including $13.9 million,
$10.0 million, $8.5 million and $4.7 million related to tropical cyclone Tasha, the 2005 hurricanes, the
Chilean earthquake and the World Trade Center, and partially offset by $15.2 million of adverse
development related to the September 2010 New Zealand earthquake. See “Item 7. Summary of Critical
Accounting Estimates, Claims and Claim Expense Reserves” for additional discussion of our reserving
techniques and prior year development of net claims and claim expenses.

During 2010, we experienced $157.5 million of favorable development on prior year reserves due in part to
reductions of $37.9 million to the estimated ultimate losses of mature, large, mainly international
catastrophe events, combined with reductions in net ultimate losses associated with the 2005 Buncefield Oil
Depot loss of $27.4 million, the 2005 hurricanes of $25.5 million, the 2008 hurricanes of $10.9 million,
European windstorm Klaus of $8.0 million and the 2004 hurricanes of $8.1 million, with the remainder due
to a reduction in ultimate losses on a large number of relatively small catastrophes.

105

Specialty

Below is a summary of the underwriting results and ratios for our specialty reinsurance unit:

Specialty unit overview
Year ended December 31,

(in thousands, except percentages)
Specialty gross premiums written

Renaissance

DaVinci

Total specialty gross premiums written

Net premiums written

Net premiums earned

Net claims and claim expenses incurred

Acquisition expenses

Operational expenses

Underwriting income

2011

2010

2009

$ 144,192

$ 126,848

$ 111,889

1,699

2,538

2,457

$ 145,891

$ 129,386

$ 114,346

$ 139,939

$ 124,326

$ 106,137

$ 135,543

$ 117,371

$ 144,127

13,354

20,096

30,319

(39,486)

14,065

25,455

14,433

23,650

36,288

71,774

$ 117,337

69,756

Net claims and claim expenses incurred – current accident

year

Net claims and claim expenses incurred – prior accident

years

91,115

89,075

79,545

(77,761)

(128,561)

(65,112)

Net claims and claim expenses incurred – total

13,354

$ (39,486)

14,433

Net claims and claim expense ratio – current accident year

Net claims and claim expense ratio – prior accident years

Net claims and claim expense ratio – calendar year

Underwriting expense ratio

Combined ratio

67.2 %

(57.3)%

9.9 %

37.1 %

47.0 %

75.9 %

(109.5)%

(33.6)%

33.6 %

— %

55.2 %

(45.2)%

10.0 %

41.6 %

51.6 %

Specialty Reinsurance Gross Premiums Written – In 2011, our specialty reinsurance gross premiums
written increased $16.5 million, or 12.8%, to $145.9 million, compared to $129.4 million in 2010, primarily
due to the inception of new contracts during 2011 which met our risk-adjusted return thresholds.

In 2010, gross premiums written in the specialty unit increased $15.0 million in 2010, or 13.2%, compared
to 2009, principally due to the inception of several new contracts providing financial and credit reinsurance,
and the non-renewal and portfolio transfer out of a quota share program in mid-2009 that was included as
negative gross premiums written in 2009. Our specialty reinsurance premiums are prone to significant
volatility as this business is characterized by a relatively small number of comparably large transactions.

Specialty Reinsurance Underwriting Results – Our specialty unit generated $71.8 million of underwriting
income in 2011, compared to $117.3 million in 2010, a decrease of $45.6 million, principally due to a $52.8
million increase in net claims and claim expenses. The $52.8 million increase in net claims and claim
expenses is primarily driven by a $50.8 million decrease in favorable development on prior accident year
net claims and claim expenses, as discussed below. Included in current accident year net claims and claim
expenses of $91.1 million are estimated losses associated with several large events including the Tohoku
earthquake of $7.5 million, the February 2011 New Zealand earthquake of $6.5 million, the Australian floods
of $6.0 million and the Thailand floods of $6.0 million. In 2011, our specialty unit generated a net claims
and claim expense ratio of 9.9%, an underwriting expense ratio of 37.1% and a combined ratio of 47.0%,
compared to negative 33.6%, 33.6% and 0.0%, respectively, in 2010. The 3.5 percentage point increase in
the underwriting expense ratio was principally driven by an increase in operational expenses due to higher
allocated operating expenses and a relative increase in contracts with higher acquisition expense ratios
during 2011.

106

Our specialty reinsurance unit generated $117.3 million of underwriting income in 2010, compared to $69.8
million in 2009, an increase of $47.6 million, primarily due to decreases of $53.9 million and $20.4 million in
net claims and claim expenses and underwriting expenses, respectively, and partially offset by a $26.8
million decrease in net premiums earned. Current accident year losses in 2010 of $89.1 million were up
$9.5 million from $79.5 million in 2009, and include $15.0 million of loss reserves established in 2010
associated with the Deepwater Horizon oil rig event. In 2010, our specialty reinsurance unit generated a net
claims and claim expense ratio of negative 33.6%, an underwriting expense ratio of 33.6% and a combined
ratio of 0.0%, compared to 10.0%, 41.6% and 51.6%, respectively, in 2009. The net claims and claim
expense ratio of negative 33.6% in 2010 is driven by the favorable development on prior accident years of
$128.6 million exceeding current accident year claims of $89.1 million. The 8.0 percentage point decrease
in the specialty unit’s underwriting expenses ratio in 2010, compared to 2009, is primarily due to the non-
renewal and portfolio transfer out of a catastrophe exposed personal lines property quota share contract,
which carried higher acquisition costs than the business we wrote in 2010.

The favorable development of $77.8 million within our specialty reinsurance unit in 2011 included $37.1
million due to reported losses developing more favorably than expected during 2011 on prior accident years
events, $26.8 million associated with actuarial assumption changes, principally in our workers’
compensation quota share and risk, property risk and energy risk lines of business, and primarily as a result
of revised initial expected claims ratios and claim development factors due to actual experience coming in
better than expected, and $13.9 million related to a decrease in case reserves and additional case
reserves, which are established at the contract level for specific loss or large events. See “Item 7.
Summary of Critical Accounting Estimates, Claims and Claim Expense Reserves” for additional discussion
of our reserving techniques and prior year development of net claims and claim expenses.

Our specialty reinsurance unit experienced $128.6 million of net favorable development in 2010 and
includes $31.4 million associated with actuarial assumption changes made in the first quarter of 2010,
principally in the casualty clash and surety lines of business, and partially offset by an increase in reserves
within the workers compensation per risk line of business, principally as a result of revised initial expected
loss ratios and loss development factors due to actual experience coming in better than expected; $25.9
million due to a decrease in case reserves and additional case reserves, which are reserves established at
the contract level for specific losses or large events; and reported losses coming in better than expected in
2010 on prior accident years events.

107

Lloyd’s Segment

Below is a summary of the underwriting results and ratios for our Lloyd’s segment:

Lloyd’s segment overview
Year ended December 31,

(in thousands, except percentages)
Lloyd’s gross premiums written

Specialty

Catastrophe

Insurance

Total Lloyd’s gross premiums written (1)

Net premiums written

Net premiums earned

Net claims and claim expenses incurred

Acquisition expenses

Operational expenses

Underwriting loss

Net claims and claim expenses incurred – current accident year

Net claims and claim expenses incurred – prior accident years

Net claims and claim expenses incurred – total

Net claims and claim expense ratio – current accident year

Net claims and claim expense ratio – prior accident years

Net claims and claim expense ratio – calendar year

Underwriting expense ratio

Combined ratio

2011

2010

83,641

27,943

—

111,584

98,617

76,386

73,259

14,031

36,732

34,065

14,724

17,420

66,209

61,189

50,204

25,676

10,784

24,837

(47,636)

$ (11,093)

72,781

478

73,259

25,873

(197)

25,676

95.3%

0.6%

95.9%

66.5%

51.5 %

(0.4)%

51.1 %

71.0 %

162.4%

122.1 %

(1) Includes gross premiums written of $0.0 million and $0.1 million assumed from the Insurance and

Reinsurance segments, respectively, for the year ended December 31, 2011 (2010 - $17.4 million and
$0.2 million, respectively).

In 2009, we established Syndicate 1458, a Lloyd’s syndicate, to start writing certain lines of insurance and
reinsurance business. The syndicate was established to enhance our underwriting platform by providing
access to Lloyd’s extensive distribution network and worldwide licenses. Our Lloyd’s segment reflects
results principally from our subsidiary, Syndicate 1458, our corporate capital vehicle, RenaissanceRe CCL,
prior to its inter-company cession of Syndicate 1458 business to Renaissance Reinsurance, and our
managing agency, RSML. The results of our Lloyd’s unit were not significant in 2009; however, we expect
its absolute and relative contributions to our consolidated results of operations to continue to grow over
time.

Lloyd’s Gross Premiums Written – Gross premiums written in our Lloyd's segment increased by $45.4
million, or 68.5% to $111.6 million in 2011, compared to $66.2 million in 2010. Excluding the impact of an
intercompany quota share agreement in the second quarter of 2010, gross premiums written in the Lloyd's
segment increased $63.0 million, or 129.7%, primarily due to Syndicate 1458 growing its book of business
across the majority of its lines of business, most notably its casualty lines of business.

Gross premiums written in the Lloyd’s segment in 2010 were $66.2 million, and include $34.1 million of
specialty premiums, $17.4 million of insurance premiums and $14.7 million of property catastrophe
premiums.

108

Lloyd’s Underwriting Results – Our Lloyd's segment incurred an underwriting loss of $47.6 million and a
combined ratio of 162.4% in 2011, compared to an underwriting loss of $11.1 million and a combined ratio
of 122.1% in 2010. Our Lloyd's segment was negatively impacted by the Large 2011 Losses which resulted
in $29.7 million of underwriting losses and increased the combined ratio by 39.3 percentage points.
Operational expenses increased $11.9 million, to $36.7 million in 2011, compared to 2010, and principally
include compensation and related operating expenses. The decrease in the underwriting expense ratio to
66.5% in 2011, from 71.0% in 2010, was primarily driven by the increase in net premiums earned.

Our Lloyd’s segment incurred an underwriting loss of $11.1 million and had a combined ratio of 122.1% in
2010. Net claims and claim expenses for 2010 are comprised of incurred but not reported loss activity in the
specialty and insurance lines of business and $5.2 million of net claims and claim expenses related to the
New Zealand earthquake. Operational expenses of $24.8 million principally include compensation, systems,
legal and related operating expenses.

Insurance segment

Below is a summary of the underwriting results and ratios for our Insurance segment:

Insurance segment overview
Year ended December 31,

(in thousands, except percentages)
Gross premiums written
Net premiums written
Net premiums earned
Net claims and claim expenses incurred
Acquisition expenses
Operational expenses
Underwriting loss

Net claims and claim expenses incurred – current accident

year

Net claims and claim expenses incurred – prior accident

years

Net claims and claim expenses incurred – total

2011

2010

2009

282
657
1,575
4,216
367
1,683
(4,691)

$
2,585
$ (21,943)
$ (24,073)
(10,135)
6,223
11,215
$ (31,376)

$
$
$

30,736
(690)
32,479
16,941
25,302
14,224
$ (23,988)

(215)

5,780

33,650

4,431
4,216

(15,915)
$ (10,135)

(16,709)
16,941

$
$
$

Net claims and claim expense ratio – current accident year
Net claims and claim expense ratio – prior accident years
Net claims and claim expense ratio – calendar year
Underwriting expense ratio
Combined ratio

(13.7)%
281.4 %
267.7 %
130.1 %
397.8 %

(24.0)%
66.1 %
42.1 %
(72.4)%
(30.3)%

103.6 %
(51.4)%
52.2 %
121.7 %
173.9 %

Insurance Segment Gross Premiums Written – Insurance policies and quota-share reinsurance contracts
written in connection with our Bermuda-based insurance operations not sold to QBE are included in
continuing operations and are reported in our Insurance segment. Although we are not actively
underwriting new business in the Insurance segment at this time, we may from time to time evaluate
potential new business opportunities for our Insurance segment. Gross premiums written in our Insurance
segment during 2011 are primarily attributable to premium adjustments on prior underwriting year contracts.

Gross premiums written in our Insurance segment decreased $28.2 million to $2.6 million in 2010,
compared to $30.7 million in 2009. The decrease in gross premiums written was primarily due to the non-
renewal of the majority of the remaining in-force book of business. Gross premiums written in the Insurance
segment can fluctuate significantly between quarters and between years based on several factors,
including, without limitation, the timing of the inception or cessation of quota share reinsurance contracts,
including whether or not the Company has portfolio transfers in, or portfolio transfers out, of quota share
reinsurance contracts of in-force books of business.

109

Insurance Segment Underwriting Results – Our Insurance segment incurred an underwriting loss of $4.7
million in 2011, primarily due to adverse development on prior accident years of $4.4 million. The adverse
development in 2011 was principally due to the construction defect book of business, which experienced
higher than expected reported losses, and was subsequently subject to a comprehensive actuarial review
during the fourth quarter of 2011, which review resulted in an increase of $10.1 million to the estimated
ultimate claims and claim expenses related to this book of business due to changes in the actuarial
assumptions. The total gross reserve for claims and claim expenses for the construction defect book of
business at December 31, 2011 is $58.8 million. Partially offsetting the adverse development on prior
accident years within the construction defect book of business, noted above, was favorable development of
$4.2 million related to large catastrophe events, of which $4.6 million related to the 2005 hurricanes and
$1.4 million related to the application of our formulaic actuarial reserving methodology with the reductions
being due to actual paid and reported claim activity being more favorable to date than what was originally
anticipated when setting the initial reserves.

Our Insurance segment incurred an underwriting loss of $31.4 million in 2010, compared to an underwriting
loss of $24.0 million in 2009. The $7.4 million increase in underwriting loss was principally due to a $56.6
million decrease in net premiums earned, and partially offset by a $27.1 million decrease in net claims and
claim expenses incurred and a $22.1 million decrease in underwriting expenses. The decrease in net
premiums earned and underwriting expenses is due to the decrease in gross premiums written, noted
above, combined with ceded premiums written being fully earned during the year as a result of the non-
renewal of the previously in-force book of business, noted above. The Insurance segment experienced
$15.9 million of favorable development on prior year reserves in 2010, compared to $16.7 million of
favorable development in 2009, primarily due to actual reported loss activity being more favorable to date
than what was originally anticipated when setting the initial reserves.

Net Investment Income

Year ended December 31,
(in thousands)
Fixed maturity investments
Short term investments
Equity investments trading
Other investments

Hedge funds and private equity investments
Other

Cash and cash equivalents

Investment expenses

Net investment income

2011

2010

2009

89,858
1,666
471

108,195
2,318
—

160,476
4,139
—

27,541
8,458
163
128,157
(10,157)
118,000

64,419
39,305
277
214,514
(10,559)
203,955

18,279
145,367
600
328,861
(10,682)
318,179

Net investment income was $118.0 million in 2011, compared to $204.0 million in 2010. The $86.0 million
decrease in net investment income was principally driven by a $36.9 million decrease in the returns from
our hedge fund and private equity investments due to lower returns in 2011, a $30.8 million decrease in the
returns on certain non-investment grade investments included in other investments, and an $18.3 million
decrease in net investment income related to fixed maturity investments, which was driven by a widening in
credit spreads during 2011, and included $26.7 million of losses on derivatives and futures used to hedge
the interest rate exposure of credit sensitive fixed maturity investments. Historically low interest rates as
compared to recent years have lowered the yields at which we invest our assets relative to historical levels.
We expect these developments, combined with the current composition of our investment portfolio and
other factors, to continue to put downward pressure on our net investment income for the near term. The
hedge fund, private equity and other investment portfolios are accounted for at fair value with the change in
fair value recorded in net investment income which included net unrealized gains of $12.7 million in 2011,
compared to $57.5 million in 2010.

110

Commencing in the first quarter of 2011, we established a portfolio of certain publicly traded equities which
are reflected in our consolidated balance sheet as equity investments trading. This portfolio of equity
investments is carried at fair value with dividend income included in net investment income, and realized
and unrealized gains included in net realized and unrealized (losses) gains on investments, in our
consolidated statements of operations. We expect to add to this portfolio during subsequent periods,
although we do not expect it to come to represent a material portion of our invested assets or our financial
results for the reasonably foreseeable period.

Net investment income was $204.0 million in 2010, compared to $318.2 million in 2009. The $114.2 million
decrease in net investment income was principally driven by a $106.1 million decrease from our other
investments, primarily due to lower average invested assets in senior secured bank loan funds in 2010,
compared to 2009, combined with a $52.3 million decrease in net investment income from our fixed maturity
investments due to lower yields during 2010, compared to 2009. Partially offsetting the decreases noted
above, was net investment income from our hedge funds and private equity investments which increased
$46.1 million due to higher total returns, principally from private equity investments. Our hedge funds,
private equity and other investments are accounted for at fair value with the change in fair value recorded in
net investment income which included net unrealized gains of $57.5 million in 2010, compared to $88.5
million in 2009.

Net Realized and Unrealized Gains on Investments and Net Other-Than-Temporary Impairments

Year ended December 31,

(in thousands)
Gross realized gains

Gross realized losses

Net realized gains on fixed maturity investments

Net unrealized gains (losses) on fixed maturity

investments trading

Net unrealized gains on equity investments trading

2011

2010

2009

79,358

138,814

143,173

(30,659)

48,699

19,404

2,565

(19,147)

119,667

(38,655)

104,518

24,777

(10,839)

—

Net realized and unrealized gains on investments

70,668

144,444

93,679

Total other-than-temporary impairments

(630)

(831)

(26,968)

Portion recognized in other comprehensive income, before

taxes

4,518

Net other-than-temporary impairments

(552)

(829)

(22,450)

Our investment portfolio is structured to preserve capital and provide us with a high level of liquidity. A large
majority of our investments are invested in the fixed income markets and, therefore, our realized holding
gains and losses on investments are highly correlated to fluctuations in interest rates. Therefore, as interest
rates decline, we will tend to have realized gains from the turnover of our investment portfolio, and as
interest rates rise, we will tend to have realized losses from the turnover of our investment portfolio.

As noted above, commencing in the first quarter of 2011, we established a portfolio of certain publicly
traded equities which are reflected in our consolidated balance sheet as equity investments trading. This
portfolio of equity investments is carried at fair value with dividend income included in net investment
income, and realized and unrealized gains included in net realized and unrealized gains (losses) on
investments, in our consolidated statements of operations. We expect to add to this portfolio during
subsequent periods, although we do not expect it to come to represent a material portion of our invested
assets or our financial results for the reasonably foreseeable period. Included in net realized and
unrealized gains on investment in 2011 is $2.6 million of net unrealized gains on equity investment trading
due to increases in the share prices of our equity positions.

Net realized and unrealized gains on investments were $70.7 million in 2011, compared to $144.4 million in
2010, a decrease of $73.8 million. The unrealized gains on our fixed maturity investments trading of $19.4
million during the 2011 decreased $5.4 million, compared to $24.8 million in 2010, primarily as a result of an
increase in credit spreads during 2011.

111

Net realized gains on fixed maturity investments were $119.7 million in 2010, compared to $104.5 million in
2009, an increase of $15.1 million, as a result of a $19.5 million decrease in gross realized losses and a
$4.4 million decrease in gross realized gains. Net other-than-temporary impairments recognized in
earnings were $0.8 million in 2010 compared to $22.5 million for 2009. Net other-than-temporary
impairments relate to our fixed maturity investments available for sale. Of the total other-than-temporary
impairment charges in 2010, $0.8 million was recognized in earnings and includes $0.8 million for credit
losses and $0.0 million for investments we intend to sell, and $2 thousand related to other factors recorded
as an unrealized loss in accumulated other comprehensive income. Under the new guidance which became
effective in the second quarter of 2009, we recognize other-than-temporary impairments in earnings for
impaired fixed maturity investments available for sale (i) for which we have the intent to sell the security or
(ii) it is more likely than not that we will be required to sell the security before its anticipated recovery and
(iii) for those securities which have a credit loss.

Equity in (Losses) Earnings of Other Ventures

Year ended December 31,
(in thousands)
Tower Hill Companies
Top Layer Re
Other

Total equity in (losses) earnings of other ventures

2011

2010

2009

2,923
(37,471)
(1,985)
(36,533)

1,151
(12,103)
(862)
(11,814)

(2,083)
12,619
440
10,976

Equity in (losses) earnings of other ventures primarily represents our pro-rata share of the net (loss) income
from our investments in the Tower Hill Companies and Top Layer Re. Equity in losses of other ventures
was $36.5 million in 2011, compared to of $11.8 million in 2010. The $24.7 million deterioration in equity in
losses of other ventures was primarily due to our equity in losses of Top Layer Re of $37.5 million during
2011, primarily as a result of Top Layer Re experiencing net claims and claim expenses related to the
February 2011 New Zealand and Tohoku earthquakes. During 2011, we sold our entire ownership interest
in NBIC Holdings, Inc. (“NBIC”), a holding company for a specialty underwriter of homeowners' insurance
products and services, for $12.0 million. Included in Other in the table above, is equity in losses of NBIC of
$2.8 million.

Equity in losses of other ventures was $11.8 million in 2010, compared to equity in earnings of other
ventures of $11.0 million in 2009. The $22.8 million decrease was primarily due to our equity in losses of
Top Layer Re of $12.1 million during 2010, compared to equity in earnings of $12.6 million in 2009, as a
result of Top Layer Re experiencing net claims and claim expenses related to the September 2010 New
Zealand earthquake.

The equity in earnings from the Tower Hill Companies is recorded one quarter in arrears.

Other (Loss) Income

Year ended December 31,
(in thousands)
Assumed and ceded reinsurance contracts accounted for

as derivatives and deposits

Gain on NBIC
Mark-to-market on Platinum warrant
Gain on sale of ChannelRe
Weather and energy risk management operations
Other

Total other (loss) income

2011

2010

2009

37,414
4,836
2,975
—
(45,030)
(880)
(685)

5,214
—
10,054
15,835
8,149
1,868
41,120

(32,635)
—
4,958
—
37,184
(7,709)
1,798

In 2011, we incurred an other loss of $0.7 million, compared to generating $41.1 million of other income in
2010. The $41.8 million decrease is primarily due to losses from our weather and energy risk management
operations of $45.0 million due to the unusually warm weather experienced in the United Kingdom and

112

certain parts of the United States during the fourth quarter of 2011, compared to income of $8.1 million in
2010, combined with two nonrecurring items: a decrease in the mark-to-market adjustment on the Platinum
warrant due to its sale during the first quarter of 2011, and the absence of a gain of $15.8 million which
occurred in the third quarter of 2010 on the sale of our entire ownership in ChannelRe Holdings Ltd.
("ChannelRe"), as noted below. Offsetting the items noted above, was other income of $37.4 million
generated by our assumed and ceded reinsurance contracts accounted for at fair value, compared to $5.2
million in 2010, principally as a result of net recoverables from the Tohoku earthquake and a gain on sale of
NBIC of $4.8 million, as noted above.

In 2010, we generated $41.1 million of other income, compared to $1.8 million in 2009. We sold our entire
ownership interest in ChannelRe, a financial guaranty reinsurance company, for $15.8 million in July 2010
and recorded other income of $15.8 million as a result of the sale. We no longer have an ownership
interest in ChannelRe and have no contractual obligations to provide capital or other financial support to
ChannelRe. Other income attributable to our weather and energy risk management operations of $8.1
million in 2010, decreased $29.0 million, from other income of $37.2 million in 2009, due to a combination of
less favorable net positions in respect of certain weather outcomes, lower business volume and less
liquidity in the markets in which we operate. Our assumed and ceded reinsurance contracts accounted for
as derivatives and deposits generated $5.2 million in other income in 2010, compared to an other loss of
$32.6 million in 2009, an improvement of $37.8 million, primarily due to less ceded reinsurance contracts
that were accounted for at fair value in 2010, compared to 2009.

Certain contracts we enter into in our weather and energy risk operations are based in part on proprietary
weather forecasts provided by our Weather Predict subsidiary. The weather and energy risk operations in
which we engage are both seasonal and volatile, and there is no assurance that our performance to date
will be indicative of future periods. We continue to allocate an increased amount of capital to our weather
and energy risk management operations, and have offered certain new financial products within this group.
We also continually seek new markets and relationships for our weather and energy risk products, including
by leveraging strategic affiliations and ceding risk where appropriate. Although there can be no assurances,
it is possible that our results from these activities will increase on an absolute or relative basis over time.
We have expanded our weather and energy risk management operations in the last several years to include
weather contingent energy products and by increasing the size and volume of transactions with respect to
our previously existing weather and energy risk management operations. The weather and energy risk
management operations results include net realized and unrealized gains and losses on agreements with
end users and net realized and unrealized gains and losses on hedging and trading activities. We are
currently in the process of enhancing our weather and energy risk management infrastructure and
operations to expand our participation in physical delivery and settlement of various of our energy products
with our customers. These activities present certain operational as well as financial risks, which we seek to
mitigate.

Corporate Expenses

Year ended December 31,
(in thousands)
Other corporate expenses
Internal review and external investigation related

expenses

Total corporate expenses

2011

2010

2009

19,939

22,130

21,683

(1,675)
18,264

(1,994)
20,136

(9,025)
12,658

Corporate expenses include certain executive, director, legal and consulting expenses, costs for research
and development, impairment charges related to goodwill and other intangible assets, and other
miscellaneous costs, including those associated with operating as a publicly traded company. Corporate
expenses were $18.3 million in 2011, compared to $20.1 million in 2010, with the decrease primarily due to
a decrease in legal and consulting expenses. Included in corporate expenses during 2011, was $5.2 million
of impairment charges related to goodwill and intangible assets and a corporate insurance recovery of $1.7
million.

Corporate expenses were $20.1 million in 2010, compared to $12.7 million in 2009, with the increase
primarily due to a reduction in the recognition of a corporate insurance recovery.

113

Interest Expense and Preferred Share Dividends

Year ended December 31,

(in thousands)
Interest expense

DaVinciRe revolving credit facility

RenaissanceRe revolving credit facility

$100 million 5.875% Senior Notes

$250 million 5.75% Senior Notes

Other

Total interest expense

Preferred share dividends

$100 million 7.30% Series B Preference Shares

$250 million 6.08% Series C Preference Shares

$300 million 6.60% Series D Preference Shares

Total preferred share dividends

2011

2010

2009

474

2,029

—

5,875

14,375

2,644

23,368

—

15,200

19,800

35,000

—

5,875

11,373

2,552

21,829

7,118

15,200

19,800

42,118

3,192

3,398

5,875

—

2,646

15,111

7,300

15,200

19,800

42,300

57,411

Total interest expense and preferred share dividends

58,368

63,947

Interest expense increased $1.5 million to $23.4 million in 2011, compared to $21.8 million in 2010,
primarily due to a full year of interest expense on the $250.0 million of 5.75% Senior Notes which were
issued by RRNAH on March 17, 2010. During 2011, our preferred share dividends decreased $7.1 million
to $35.0 million, compared to $42.1 million in 2010, principally due to the the redemption of our 7.30%
Series B Preference Shares on December 20, 2010, as noted below.

During 2010, our interest expense increased by $6.7 million to $21.8 million, compared to $15.1 million in
2009, primarily due to interest expense on the $250.0 million of 5.75% Senior Notes which were issued by
RRNAH on March 17, 2010, partially offset by reduced interest expense in respect of our revolving credit
facility. On December 20, 2010, we redeemed all of our 7.30% Series B Preference Shares for $100.0
million, plus accrued and unpaid dividends to December 20, 2010; see “Capital Resources” section below
for additional detail.

Income Tax Benefit (Expense)

Year ended December 31,
(in thousands)
Income tax benefit (expense)

2011

2010

2009

315

6,124

(10,031)

We are subject to income taxes in certain jurisdictions in which we operate; however, since the majority of
our income is currently earned in Bermuda, a non-taxable jurisdiction, the tax impact to our operations has
historically been minimal. During 2011 and 2010, we generated an income tax benefit of $0.3 million and
$6.1 million, respectively, which was principally the result of our U.S. operations incurring pretax losses,
compared to an income tax expense of $10.0 million in 2009, which was principally the result of our U.S.
operations generating pretax income.

Our valuation allowance totaled $35.0 million and $3.5 million at December 31, 2011 and 2010,
respectively. Losses incurred within our U.S. tax-paying subsidiaries in the fourth quarter of 2011 were
significant enough to result in a cumulative GAAP taxable loss for the three year period ended December
31, 2011. Effective December 31, 2011, our valuation allowance was reassessed and we now believe that it
is more likely than not that we will not be able to recover our U.S. net deferred tax asset. At December 31,
2011, our U.S. tax-paying subsidiaries had a net deferred tax asset of $26.4 million, for which a full
valuation allowance was established during the fourth quarter of 2011. The remaining valuation allowance
as of December 31, 2011 relates exclusively to our operations in Ireland and the U.K. Our Ireland and U.K.
operations have produced GAAP taxable losses and we currently do not believe it is more likely than not
that we will be able to recover our net deferred tax assets from these jurisdictions. We expect our

114

consolidated effective tax rate to increase in the future, as our global operations outside of Bermuda
expand. In addition, it is possible that we could be adversely affected by changes in tax laws, regulation, or
enforcement, any of which could increase our effective tax rate more rapidly or steeply than we currently
anticipate.

Net Loss (Income) Attributable to Noncontrolling Interests

Year ended December 31,
(in thousands)
Net loss (income) attributable to noncontrolling interests

2011

2010

2009

33,157

(116,421)

(171,501)

Our net loss attributable to the noncontrolling interests was $33.2 million in 2011, compared to net income
attributable to noncontrolling interests of $116.4 million in 2010. The change is primarily due to net losses
of DaVinciRe as DaVinciRe incurred an underwriting loss in 2011, compared to underwriting income in
2010, principally due to the Large 2011 Losses, as discussed above.

The net income attributable to the noncontrolling interests decreased $55.1 million to $116.4 million in 2010,
compared to $171.5 million in 2009, primarily due to the decreased profitability of DaVinciRe. The change in
net income attributable to noncontrolling interests was driven by DaVinciRe generating lower underwriting
income in 2010, compared to 2009, principally due to the 2010 earthquakes and also due to an increase in
our ownership of DaVinciRe to 41.2% in 2010, compared to 38.2% in 2009.

In January 2011, DaVinciRe redeemed the shares of certain third party DaVinciRe shareholders. As a
result of this transaction, our ownership interest in DaVinciRe increased to 44.0% effective January 1, 2011.

Effective January 1, 2012, we sold a portion of our DaVinciRe shares to a new third party shareholder and
subsequent to this transaction, our ownership interest in DaVinciRe decreased to 34.7% effective January
1, 2012. We expect our ownership in DaVinciRe to fluctuate over time.

(Loss) Income from Discontinued Operations

Year ended December 31,
(in thousands)
(Loss) income from discontinued operations

2011

2010

2009

(15,890)

62,670

6,700

(Loss) income from discontinued operations includes the financial results of substantially all of our U.S.-
based insurance operations sold to QBE. Loss from discontinued operations of $15.9 million in 2011 is
primarily due to certain tax related adjustments and the recognition of a $10.0 million expense related to a
contractually agreed obligation to pay, or otherwise reimburse, QBE for amounts potentially up to $10.0
million in respect of net adverse development on prior accident years net claims and claims expenses for
reserves that were sold to QBE. We recognized a $10.0 million liability and corresponding expense related
to the reserve collar due to purported net adverse development on prior accident years net claims and claim
expenses. The $10.0 million represents the maximum amount payable under the reserve collar. We
continue to evaluate any favorable or adverse developments related to the reserve collar pursuant to the
terms of the Stock Purchase Agreement with QBE.

Included in income from discontinued operations in 2010 is underwriting income of $57.0 million, compared
to $1.9 million in 2009. The $55.1 million increase in underwriting income is primarily attributable to strong
underwriting results for the 2010 crop year. Included in the underwriting result for 2010 and 2009 was
favorable (adverse) development on prior accident years of $56.0 million and $(21.7) million, respectively.
The favorable development on prior accident years in 2010 was primarily related to the crop insurance line
of business which experienced a decrease in the frequency and severity of reported loss activity in 2010 on
the 2009 crop year. The adverse development on prior accident years in 2009 was primarily related to the
crop insurance line of business which experienced an increase in the severity of reported loss activity in
2009 on the 2008 crop year.

115

LIQUIDITY AND CAPITAL RESOURCES

Financial Condition

RenaissanceRe is a holding company, and we therefore rely on dividends from our subsidiaries and
investment income to make principal and interest payments on our debt and to make dividend payments to
our preference and RenaissanceRe common shareholders.

The payment of dividends by our subsidiaries is, under certain circumstances, limited under statutory
regulations and insurance law, which require our insurance subsidiaries to maintain certain measures of
solvency and liquidity. In addition, Bermuda regulations require approval from the BMA for any reduction of
capital in excess of 15% of statutory capital, as defined in the Insurance Act. The Insurance Act also
requires these Bermuda insurance subsidiaries of the Company to maintain certain measures of solvency
and liquidity. At December 31, 2011, the statutory capital and surplus of our Bermuda insurance
subsidiaries was $2.7 billion (2010 - $3.3 billion) and the minimum amount required to be maintained under
Bermuda law, the Minimum Solvency Margin, was $552.9 million (2010 – $483.3 million). During 2011,
Renaissance Reinsurance, DaVinciRe and the operating subsidiaries of RenRe Insurance Holdings Ltd.
(“RenRe Insurance”) returned capital to our holding company, which included dividends declared and return
of capital, net of capital contributions received of $6.7 million, $77.9 million and $547.3 million, respectively
(2010 – $513.1 million, $0.0 million and $69.8 million, respectively).

Under the Insurance Act, Renaissance Reinsurance and DaVinci are classified as Class 4 insurers, and
therefore must maintain capital at a level equal to its ECR which is established by reference to the BSCR
model. The BSCR is a standard mathematical model designed to give the BMA more advanced methods
for determining an insurer’s capital adequacy. Underlying the BSCR is the belief that all insurers should
operate on an ongoing basis with a view to maintaining their capital at a prudent level in excess of the
minimum solvency margin otherwise prescribed under the Insurance Act. Alternatively, under the Insurance
Act, insurers may, subject to the terms of the Insurance Act and to the BMA’s oversight, elect to utilize an
approved internal capital model to determine regulatory capital. In either case, the ECR shall at all times
equal or exceed the Class 4 insurer’s Minimum Solvency Margin and may be adjusted in circumstances
where the BMA concludes that the insurer’s risk profile deviates significantly from the assumptions
underlying its ECR or the insurer’s assessment of its risk management policies and practices used to
calculate the ECR applicable to it. While not specifically referred to in the Insurance Act, the BMA has also
established a TCL for each Class 4 insurer equal to 120% of its ECR. While a Class 4 insurer is not
currently required to maintain its statutory capital and surplus at this level, the TCL serves as an early
warning tool for the BMA and failure to maintain statutory capital at least equal to the TCL will likely result in
increased BMA regulatory oversight. The 2011 BSCR for Renaissance Reinsurance and DaVinci must be
filed with the BMA on or before April 30, 2012; at this time we believe both companies will exceed the target
level of required capital.

RenaissanceRe CCL and Syndicate 1458 are subject to oversight by the Council of Lloyd’s. RSML is
subject to regulation by the FSA under the Financial Services and Markets Act 2000. Underwriting capacity
of a member of Lloyd’s must be supported by providing a deposit in the form of cash, securities or letters of
credit, which are referred to as Funds at Lloyd’s, in an amount determined by Lloyd’s in relation to the
member’s underwriting capacity. This amount is determined by Lloyd’s through application of a risk-based
capital formula. At December 31, 2011, the Company maintained $118.5 million and £24.5 million as a
Funds at Lloyd’s facility (2010 – $74.3 million and £15.0 million). In addition, the FSA requires Lloyd’s
syndicates to satisfy an annual solvency test and to maintain solvency on a continuous basis, which
Syndicate 1458 was in compliance with at December 31, 2011.

As discussed in the “Capital Resources” section below, Renaissance Reinsurance is obligated to make a
mandatory capital contribution of up to $50.0 million in the event that a loss reduces Top Layer Re's capital
below a specified level. Although not required to maintain Top Layer Re's minimum solvency margin as
defined by the BMA, nor mandatorily obligated to, Renaissance Reinsurance contributed $38.5 million in
additional paid-in capital to Top Layer Re during 2011, following the February 2011 New Zealand and
Tohoku earthquakes.

116

In the aggregate, our operating subsidiaries have historically produced sufficient cash flows to meet their
expected claims payments and operational expenses and to provide dividend payments to us. Our
subsidiaries also maintain a concentration of investments in high quality liquid securities, which
management believes will provide additional liquidity for extraordinary claims payments should the need
arise. See “Capital Resources” section below.

Cash Flows and Liquidity

Year ended December 31,
(in thousands)
Net cash provided by operating activities

Net cash provided by (used in) investing activities

Net cash used in financing activities

Effect of exchange rate changes on foreign currency cash

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents of discontinued

operations

Cash and cash equivalents, beginning of period

2011

2010

2009

165,933

494,720

588,889

315,031

108,610

(115,817)

(542,236)

(531,592)

(485,772)

518

(60,754)

(1,003)

70,735

(1,276)

(13,976)

—

3,891

277,738

203,112

31,961

185,127

Cash and cash equivalents, end of period

216,984

277,738

203,112

During 2011, our cash and cash equivalents decreased $60.8 million, to $217.0 million at December 31,
2011, compared to $277.7 million at December 31, 2010.

Cash flows provided by operating activities. Cash flows provided by operating activities during 2011 were
$165.9 million, compared to $494.7 million in 2010. Cash flows provided by operating activities during 2011
were primarily the result of certain adjustments to reconcile our net loss of $90.4 million to net cash
provided by operating activities, including: an increase in our reserve for claims and claim expenses of
$734.5 million driven by the significant catastrophes in 2011; an increase in unearned premiums of $61.5
million due to growth in our gross premiums written; and partially offset by an increase in premiums
receivable and reinsurance recoverable of $149.8 million and $302.3 million, respectively; a decrease in
reinsurance balances payable of $61.1 million; and net realized and unrealized gains on investments of
$70.7 million. As discussed under “Summary of Results of Operations for 2011, 2010 and 2009”, we
incurred significant underwriting losses and lower investment results, which contributed to the decrease in
cash flows provided by operating activities.

Cash flows provided by investing activities. During 2011, our cash flows provided by investing activities
were $315.0 million, which principally reflected $269.5 million in net proceeds from the sale of substantially
all of our U.S.-based insurance operations to QBE and $47.9 million related to the sale of our Platinum
warrant during the first quarter of 2011. In response to the large catastrophes of 2011 and our payment of
valid claims quickly, we had net sales of short term investments of $103.1 million. In addition, we invested a
portion of our net cash provided by operating activities in fixed maturity investments and investments in
other ventures.

Cash flows used in financing activities. Our cash flows used in financing activities in 2011 were $542.2
million, principally comprised of the repurchase of $191.6 million of our common shares, the payment of
$53.5 million and $35.0 million in dividends to our common and preferred shareholders, respectively, the
repurchase of $132.2 million of DaVinciRe shares and the repayment of the outstanding principal of the
DaVinciRe revolving credit facility of $200.0 million, as discussed below in the “Capital Resources” section.
Partially offsetting the above cash flows used in financing activities was a $70.0 million cash inflow
attributable to redeemable noncontrolling interest related to the DaVinciRe equity capital raise executed
during the second quarter of 2011.

During 2010, our cash and cash equivalents increased $74.6 million, to $277.7 million at December 31,
2010, compared to $203.1 million at December 31, 2009, which excludes a decrease of $3.9 million in cash
and cash equivalents related to our discontinued operations held for sale. The following discussion of our
cash flows includes the results of operations and financial position of our discontinued operations held for
sale at December 31, 2010, related to the sale of substantially all of our U.S.-based insurance operations.

117

Cash flows provided by operating activities. Cash flows provided by operating activities in 2010 were
$494.7 million, which consisted of, among other items, our net income of $861.2 million, partially offset by a
decrease in the reserve for claims and claim expenses of $170.0 million, net realized and unrealized
investment gains on fixed maturity investments of $151.2 million and unrealized gains included in net
investment income of $57.5 million related to our other investments. As discussed under “Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations, Summary of
Results of Operations for 2011, 2010 and 2009”, we generated strong underwriting and investment results,
which contributed to the $494.7 million in cash flows provided by operating activities. In addition, as noted
above, the reserve for claims and claim expenses decreased $170.0 million in 2010, primarily as a result of
$402.3 million of paid claims and claim expenses during 2010, partially offset by incurred claims and claim
expenses of $242.5 million. Our 2010 cash flows provided by operating activities were primarily used to
support our common share repurchase activities as discussed below.

Cash flows provided by investing activities. During 2010, our cash flows provided by investing activities
were $108.6 million, which principally reflects our decision to decrease our allocation to other investments,
specifically hedge funds, resulting in net sales of other investments of $122.1 million. In addition, during
2010 we continued to transition our portfolio of fixed maturity investments available for sale to trading. Our
2010 cash flows provided by investing activities were primarily used to support our common share
repurchase activities as discussed below.

Cash flows used in financing activities. Our cash flows used in financing activities in 2010 were $531.6
million. We used the cash flows generated from our operating and investing activities to return capital to
our shareholders as we were in an excess capital position in 2010. This included repurchasing $448.9
million of our common shares, redeeming $100.0 million of our 7.30% Series B Preference Shares as
discussed below, paying $55.9 million and $42.1 million in dividends to our common and preferred
shareholders, respectively, and repurchasing $136.7 million of DaVinciRe shares from third party
shareholders. This was partially offset by the issuance of $250.0 million of 5.75% Senior Notes for $249.1
million.

We have generated cash flows from operations for the three year period between 2009 and 2011
significantly in excess of our operating commitments. However, because a large portion of the coverages
we provide can produce losses of high severity and low frequency, it is not possible to accurately predict our
future cash flows from operating activities. As a consequence, cash flows from operating activities may
fluctuate, perhaps significantly, between individual quarters and years. Due to the magnitude and relatively
recent occurrence of the 2010 and 2011 large loss events, meaningful uncertainty remains regarding losses
from these events and our actual ultimate net losses from these events may vary from preliminary
estimates, perhaps materially. As a result, our cash flows from operations would be impacted accordingly.

Reserves for Claims and Claim Expenses

118

The following table summarizes our claims and claim expense reserves by line of business and split
between case reserves, additional case reserves and IBNR:

At December 31, 2011

(in thousands)
Catastrophe
Specialty
Total Reinsurance
Lloyd’s
Insurance
Total

At December 31, 2010
(in thousands)
Catastrophe
Specialty
Total Reinsurance
Lloyd's
Insurance
Total

Case
Reserves

Additional
Case Reserves

IBNR

Total

681,771
120,189
801,960
17,909
32,944
852,813

173,157
102,521
275,678
172
40,943
316,793

271,990
49,840
321,830
14,459
3,515
339,804

281,202
60,196
341,398
6,874
3,317
351,589

388,147
301,589
689,736
55,127
54,874
799,737

$ 1,341,908
471,618
1,813,526
87,495
91,333
$ 1,992,354

163,021
350,573
513,594
12,985
62,882
589,461

617,380
513,290
1,130,670
20,031
107,142
$ 1,257,843

119

of our contracts. The uncertainty of our estimates for the 2011 and 2010 events is additionally impacted by
the preliminary nature of the information available, the magnitude and relative infrequency of the events, the
expected duration of the respective claims development period, inadequacies in the data provided thus far
by industry participants and the potential for further reporting lags or insufficiencies (particularly in respect of
the Chilean, September 2010 New Zealand, February 2011 New Zealand and Tohoku earthquakes); and in
the case of the Australian flooding and the recent Thailand flooding, significant uncertainty as to the form of
the claims and legal issues including, but not limited to, the number, nature and fiscal periods of the loss
events under the relevant terms of insurance contracts and reinsurance treaties. In addition, a significant
portion of the net claims and claim expenses associated with the New Zealand and Tohoku earthquakes are
concentrated with a few large clients and therefore the loss estimates for these events may vary
significantly based on the claims experience of those clients. Loss reserve estimation in respect of our
retrocessional contracts poses further challenges compared to directly assumed reinsurance. A significant
portion of our reinsurance recoverable relates to the New Zealand and Tohoku earthquakes. There is
inherent uncertainty and complexity in evaluating loss reserve levels and reinsurance recoverable amounts,
due to the nature of the losses relating to earthquake events, including that loss development time frames
tend to take longer with respect to earthquake events. The contingent nature of business interruption and
other exposures will also impact losses in a meaningful way, especially with regard to the Tohoku
earthquake and Thailand flooding, which we believe may give rise to significant complexity in respect of
claims handling, claims adjustment and other coverage issues, over time. Given the magnitude and
relatively recent occurrence of these events, meaningful uncertainty remains regarding total covered losses
for the insurance industry and, accordingly, several of the key assumptions underlying our loss estimates.
In addition, our actual net losses from these events may increase if our reinsurers or other obligors fail to
meet their obligations.

Our reserving techniques, assumptions and processes differ between our property catastrophe reinsurance
and specialty reinsurance units within our Reinsurance segment and within our Lloyd’s segment. Refer to
our “Claims and Claim Expense Reserves Critical Accounting Estimates” discussion in “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more
information on the risks we insure and reinsure, the reserving techniques, assumptions and processes we
follow to estimate our claims and claim expense reserves, and our current estimates versus our initial
estimates of our claims reserves, for each of these units.

Capital Resources

Our total capital resources are as follows:

At December 31,

(in thousands)
Common shareholders’ equity

Preference shares

Total shareholders’ equity attributable to RenaissanceRe

5.875% Senior Notes

5.750% Senior Notes

RenaissanceRe revolving credit facility – borrowed

RenaissanceRe revolving credit facility – unborrowed

DaVinciRe revolving credit facility – borrowed

DaVinciRe revolving credit facility – unborrowed

Renaissance Trading credit facility – borrowed

Renaissance Trading credit facility – unborrowed

Total capital resources

120

2011

2010

$ 3,055,193

$ 3,386,325

550,000

3,605,193

3,936,325

100,000

249,247

—

150,000

—

4,373

5,627

100,000

249,155

—

150,000

200,000

—

10,000

$ 4,114,440

$ 4,645,480

In 2011, our capital resources decreased by $531.0 million, principally due to a decrease in shareholders'
equity as a result of our comprehensive loss attributable to RenaissanceRe of $65.3 million, $53.5 million of
dividends on our common shares, $191.6 million of common share repurchases as discussed in more detail
in “Item 5. Issuer Repurchases of Equity Securities”, and the repayment on April 1, 2011 of the outstanding
principal of $200.0 million under, and subsequent termination of, the DaVinciRe revolving credit facility, as
more fully discussed below.

Preference Shares

In December 2006, we raised $300.0 million through the issuance of 12 million Series D Preference Shares;
in March 2004, we raised $250.0 million through the issuance of 10 million Series C Preference Shares;
and in February 2003, we raised $100.0 million through the issuance of 4 million Series B Preference
Shares. On November 17, 2010, we gave redemption notices to the holders of the 7.30% Series B
Preference Shares to redeem such shares for $25 per share. On December 20, 2010, we redeemed all of
the issued and outstanding 7.30% Series B Preference Shares for $100.0 million plus accrued and unpaid
dividends thereon. The Series D and Series C Preference Shares may be redeemed at $25 per share at
our option on or after December 1, 2011 and March 23, 2009, respectively. Dividends on the Series D and
Series C Preference Shares are cumulative from the date of original issuance and are payable quarterly in
arrears at 6.60% and 6.08%, respectively, when, if and as declared by the Board of Directors. The
preference shares have no stated maturity and are not convertible into any other of our securities.

5.875% Senior Notes

In January 2003, we issued $100.0 million of 5.875% Senior Notes due February 15, 2013, with interest on
the notes payable on February 15 and August 15 of each year. The notes can be redeemed by us prior to
maturity, subject to payment of a “make-whole” premium. The notes, which are senior obligations, contain
various covenants, including limitations on mergers and consolidations, restrictions as to the disposition of
the stock of designated subsidiaries and limitations on liens of the stock of designated subsidiaries.

5.75% Senior Notes

On March 17, 2010, RRNAH issued $250.0 million of 5.75% Senior Notes due March 15, 2020, with interest
on the notes payable on March 15 and September 15 of each year. The notes, which are senior obligations,
are guaranteed by RenaissanceRe and can be redeemed by RRNAH prior to maturity, subject to payment
of a "make-whole" premium. The notes were issued pursuant to an Indenture, dated as of March 17, 2010,
by and among RenaissanceRe, RRNAH, and Deutsche Bank Trust Company Americas, as trustee (the
“Trustee”), as supplemented by the First Supplemental Indenture, dated as of March 17, 2010 (as so
supplemented, the “Indenture”). The documents governing the notes contain various covenants, including
limitations on the ability of RRNAH and RenaissanceRe to merge, consolidate and transfer or lease their
respective properties and assets as an entirety or substantially as an entirety, as well as restrictions on
RRNAH and RenaissanceRe relating to the disposition of the stock of designated subsidiaries and the
creation of liens on the stock of designated subsidiaries.

RenaissanceRe Revolving Credit Facility (the “Credit Agreement”)

The Credit Agreement provides for a revolving commitment to RenaissanceRe of $150.0 million, including
the issuance of letters of credit for the account of RenaissanceRe and RenaissanceRe’s insurance
subsidiaries of up to $150.0 million and the issuance of letters of credit for the account of RenaissanceRe’s
non-insurance subsidiaries of up to $50.0 million. RenaissanceRe has the right, subject to satisfying certain
conditions, to increase the size of the facility to $250.0 million. The scheduled commitment maturity date of
the Credit Agreement is April 22, 2013. At December 31, 2011, the revolving commitment of $150.0 million
remained unused and available to RenaissanceRe.

121

The Credit Agreement contains representations, warranties and covenants customary for bank loan facilities
of this type. In addition to customary covenants which limit the ability of RenaissanceRe and its subsidiaries
to merge, consolidate, enter into negative pledge agreements, sell, transfer or lease all or any substantial
part of their respective assets, incur liens and declare or pay dividends under certain circumstances, the
Credit Agreement also contains certain financial covenants. These financial covenants generally provide
that consolidated debt to capital shall not exceed the ratio of 0.35:1 and that the consolidated net worth of
RenaissanceRe and Renaissance Reinsurance shall equal or exceed $2.4 billion and $960.0 million,
respectively. The foregoing net worth requirements are recalculated effective as of the end of each fiscal
year, all as more fully set forth in the Credit Agreement.

DaVinciRe Revolving Credit Facility

DaVinciRe was a party to a Third Amended and Restated Credit Agreement, dated as of April 5, 2006 (the
“DaVinciRe Credit Agreement”), which provides for a revolving credit facility in an aggregate amount of up
to $200.0 million and was scheduled to mature on April 5, 2011. On April 1, 2011, DaVinciRe repaid in full
the $200.0 million borrowed under the DaVinciRe Credit Agreement and terminated the lenders' lending
commitment thereunder. In connection with such repayment and termination, on March 30, 2011,
DaVinciRe entered into a loan agreement with RenaissanceRe (the “Loan Agreement”) under which
RenaissanceRe made a loan to DaVinciRe in the principal amount of $200.0 million on April 1, 2011. The
loan matures on March 31, 2021 and interest on the loan is payable at a rate of three month LIBOR plus
3.5% and is due at the end of each March, June, September and December, commencing on June 30,
2011. Under the terms of the Loan Agreement, DaVinciRe is required to maintain a debt to capital ratio of
no greater than 0.40 to 1.00 and a net worth of no less than $500.0 million. At December 31, 2011, $200.0
million remained outstanding under the Loan Agreement.

Principal Letter of Credit Facility

Effective April 22, 2010, RenaissanceRe and its affiliates, Renaissance Reinsurance, ROE, Glencoe and
DaVinci (such affiliates, collectively, the “Account Parties”), entered into a Third Amended and Restated
Reimbursement Agreement with various banks and financial institutions parties thereto (collectively, the
“Lenders”), Wells Fargo Bank, National Association, as issuing bank, administrative agent and collateral
agent for the Lenders, and certain other agents (the “Reimbursement Agreement”).

The Reimbursement Agreement serves as our principal secured letter of credit facility and the commitments
thereunder expire on April 22, 2013. As of December 31, 2010, the Reimbursement Agreement provided
commitments from the Lenders in an aggregate amount of $1.0 billion. Effective as of February 15, 2011,
we reduced the commitments under the Reimbursement Agreement from $1.0 billion to $700.0 million.
Effective March 7, 2011, we further reduced the commitments under the Reimbursement Agreement from
$700.0 million to $600.0 million. The reductions were implemented in connection with a reassessment of
the future collateral needs of the Account Parties, taking into account, among other things, their access to
alternative sources of credit enhancement. Prior to the expiration date set forth above and after giving
effect to the full $400.0 million reduction, the commitments of the Lenders under the Reimbursement
Agreement may be increased from time to time up to an aggregate amount not to exceed $1.1 billion,
subject to the satisfaction of certain conditions. At December 31, 2011, we had $420.5 million of letters of
credit with effective dates on or before December 31, 2011 outstanding under the Reimbursement
Agreement.

The Reimbursement Agreement contains representations, warranties and covenants in respect of
RenaissanceRe and the Account Parties and Renaissance Investment Holdings Ltd. (“RIHL”) that are
customary for facilities of this type, including customary covenants limiting the ability to merge, consolidate,
sell, transfer or lease all or any substantial part of their respective assets. RIHL, a wholly owned subsidiary
of the Company, holds investment grade fixed maturity securities and short term investments and was
formed to enhance administrative efficiency and take advantage of the increased benefits and reduced
costs ordinarily associated with the management of large investment portfolios of different subsidiaries in
the same group. Through RIHL, certain of our operating subsidiaries invest in a diversified portfolio of
highly liquid debt securities which are recorded at fair value. RIHL has been assigned a rating of AAf/S2 by
S&P and 100% of the securities held through RIHL have been assigned a rating of A or higher by nationally
recognized rating agencies. The Reimbursement Agreement also contains certain financial covenants that
are customary for reinsurance and insurance companies in facilities of this type, which require

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RenaissanceRe and DaVinci to maintain a minimum net worth of $1.97 billion and $744.0 million,
respectively. The foregoing net worth requirements are recalculated effective as of the end of each fiscal
year, all as more fully set forth in the Reimbursement Agreement.

Under the Reimbursement Agreement, each Account Party is required to pledge eligible collateral having a
value sufficient to cover all of its obligations under the Reimbursement Agreement, including reimbursement
obligations for outstanding letters of credit issued for its account. Eligible collateral includes, among other
things, redeemable preference shares issued to the Account Parties by RIHL. Each Account Party that
pledges RIHL shares as collateral must maintain additional unpledged RIHL shares that have a net asset
value at least equal to 15% of the outstanding RIHL shares pledged by such Account Party pursuant to the
Reimbursement Agreement. In addition, RIHL shares having an aggregate net asset value equal to at least
15% of the net asset value of all outstanding RIHL shares must remain unencumbered.

Under the Second Amended and Restated RIHL Undertaking and Agreement, dated as of April 22, 2010,
executed by RIHL in favor of the administrative agent on behalf of the Banks in connection with the
Reimbursement Agreement (the “RIHL Agreement”), RIHL agrees, among other things, to guarantee
payment of the obligations of the Account Parties under the Reimbursement Agreement on the terms and
subject to the limitations more fully described in the RIHL Agreement.

Bilateral Letter of Credit Facility (“Bilateral Facility”)

Effective September 17, 2010, each of Renaissance Reinsurance, DaVinci and Glencoe (collectively, the
“Bilateral Facility Participants”), entered into a secured letter of credit facility with Citibank Europe plc
(“CEP”). The Bilateral Facility provides a commitment from CEP to issue letters of credit for the account of
one or more of the Bilateral Facility Participants and their respective subsidiaries in multiple currencies and
in an aggregate amount of up to $300.0 million. The Bilateral Facility expires on December 31, 2013 and is
evidenced by a Facility Letter (as amended) and three separate Master Agreements between CEP and
each of the Bilateral Facility Participants, as well as certain ancillary agreements. At December 31, 2011,
the Bilateral Facility of $300.0 million remained unused and available to the Bilateral Facility Participants.

Under the Bilateral Facility, each of the Bilateral Facility Participants is severally obligated to pledge to CEP
at all times during the term of the Bilateral Facility certain securities with a collateral value (as determined
as therein provided) that equals or exceeds 100% of the aggregate amount of its then-outstanding letters of
credit. In the case of an event of default under the Bilateral Facility with respect to a Bilateral Facility
Participant, CEP may exercise certain remedies with respect to such Bilateral Facility Participant, including
terminating its commitment to such Bilateral Facility Participant under the Bilateral Facility and taking certain
actions with respect to the collateral pledged by such Bilateral Facility Participant (including the sale
thereof). In the Facility Letter, each of Renaissance Reinsurance, DaVinci and Glencoe makes, as to itself,
representations and warranties that are customary for facilities of this type and severally agrees that it will
comply with certain informational and other undertakings, including those regarding the delivery of quarterly
and annual financial statements.

Funds at Lloyd's ("FAL") Letter of Credit Facility

On April 26, 2010, Renaissance Reinsurance and CEP entered into an Amended and Restated Pledge
Agreement (the “Pledge Agreement”) in respect of its letter of credit facility with CEP which is evidenced by
the Master Reimbursement Agreement, dated as of April 29, 2009, and provides for the issuance and
renewal of letters of credit which are used to support business written by Syndicate 1458. At December 31,
2011, two letters of credit issued by CEP under the Reimbursement Agreement were outstanding, in the
amount of $118.5 million and £24.5 million, respectively, each having an expiration date of December 31,
2013. Pursuant to the Pledge Agreement, Renaissance Reinsurance has agreed to pledge to CEP at all
times during the term of the Reimbursement Agreement certain securities with a collateral value equal to
100% of the aggregate amount of the then-outstanding letters of credit issued under the Reimbursement
Agreement.

123

Letters of Credit

At December 31, 2011, we had total letters of credit outstanding under all facilities of $576.8 million.

Renaissance Reinsurance is also party to a collateralized letter of credit and reimbursement agreement in
the amount of $37.5 million that supports our Top Layer Re joint venture. Renaissance Reinsurance is
obligated to make a mandatory capital contribution of up to $50.0 million in the event that a loss reduces
Top Layer Re’s capital below a specified level.

Multi-Beneficiary Reinsurance Trusts

Effective March 15, 2011, each of Renaissance Reinsurance and DaVinci was approved as a Trusteed
Reinsurer in the State of New York and established a multi-beneficiary reinsurance trust ("MBRT") to
collateralize its respective (re)insurance liabilities associated with U.S. domiciled cedants. The MBRTs are
subject to the rules and regulations of the State of New York and the respective deed of trust, including but
not limited to certain minimum capital funding requirements, investment guidelines, capital distribution
restrictions and regulatory reporting requirements. Following the initial approval in the State of New York,
Renaissance Reinsurance and DaVinci have submitted applications to essentially all U.S. states to become
Trusteed Reinsurers. As of December 31, 2011, Renaissance Reinsurance and DaVinci are approved in 37
and 35 U.S. states, respectively. We expect, over time, to transition cedants with existing outstanding
letters of credit, to the appropriate MBRT as determined by cedant state of domicile, thereby reducing our
absolute and relative reliance on letters of credit. New business incepting with cedants domiciled in
approved states will be collateralized using a MBRT. Cedants collateralized with a MBRT will be eligible for
automatic reinsurance credit in their respective U.S. regulatory filings. Assets held under trust at
December 31, 2011 with respect to the MBRTs totaled $450.8 million and $101.9 million for Renaissance
Reinsurance and DaVinci, respectively.

Renaissance Trading Margin Facility and Guarantees

Renaissance Trading maintains a brokerage facility with a leading prime broker, which has an associated
margin facility. This margin facility, which we believe allows Renaissance Trading to prudently manage its
cash position related to its exchange traded products, is supported by a $10.0 million guarantee issued by
RenaissanceRe. Interest on amounts outstanding under this facility is at overnight LIBOR plus 75 basis
points. At December 31, 2011, $4.4 million was outstanding under the facility.

At December 31, 2011, RenaissanceRe had provided guarantees in the aggregate amount of $371.2 million
to certain counterparties of the weather and energy risk operations of Renaissance Trading. In the future,
RenaissanceRe may issue guarantees for other purposes or increase the amount of guarantees issued to
counterparties of Renaissance Trading.

Redeemable Noncontrolling Interest – DaVinciRe

DaVinciRe shareholders are party to a shareholders agreement (the “Shareholders Agreement”) which
provides DaVinciRe shareholders, excluding us, with certain redemption rights, that enable each
shareholder to notify DaVinciRe of such shareholder's desire for DaVinciRe to repurchase up to half of such
shareholder's aggregate number of shares held, subject to certain limitations, such as limiting the aggregate
of all share repurchase requests to 25% of DaVinciRe's capital in any given year and satisfying all
applicable regulatory requirements. If total shareholder requests exceed 25% of DaVinciRe's capital, the
number of shares repurchased will be reduced among the requesting shareholders pro-rata, based on the
amounts desired to be repurchased. Shareholders desiring to have DaVinciRe repurchase their shares
must notify DaVinciRe before March 1 of each year. The repurchase price will be based on GAAP book
value as of the end of the year in which the shareholder notice is given, and the repurchase will be effective
as of such date. Payment will be made by April 1 of the following year, following delivery of the audited
financial statements for the year in which the repurchase was effective. The repurchase price is subject to
a true-up for development on outstanding loss reserves after settlement of all claims relating to the
applicable years.

124

Effective January 1, 2012, an existing third party shareholder sold a portion of its shares in DaVinciRe to a
new third party shareholder. In connection with the sale by the existing third party shareholder, DaVinciRe
retained a $4.9 million holdback. In addition, effective January 1, 2012, we sold a portion of our shares of
DaVinci Re to a separate new third party shareholder. We sold these shares for $98.9 million, net of a
$10.0 million reserve holdback due from DaVinciRe. Our ownership in DaVinciRe was 42.8% at December
31, 2011 (2010 - 41.2%) and subsequent to the above transactions, our ownership interest in DaVinciRe
decreased to 34.7% effective January 1, 2012.

Certain third party shareholders of DaVinciRe submitted repurchase notices on or before the required
annual redemption notice date of March 1, 2012, in accordance with the Shareholders Agreement. The
repurchase notices submitted on or before February 15, 2012, were for shares of DaVinciRe with a GAAP
book value of $19.0 million at December 31, 2011.

On June 1, 2011, DaVinciRe completed an equity raise of $100.0 million from new and existing
shareholders, including $30.0 million contributed by the Company. The capital raised was used to support
the ongoing underwriting activities of DaVinci, which primarily writes property catastrophe reinsurance and
certain classes of specialty reinsurance. As a result of the equity raise, our ownership in DaVinciRe
decreased to 42.8% effective June 1, 2011, compared to 44.0% at January 1, 2011. We expect our
ownership in DaVinciRe to fluctuate over time.

In advance of the March 1, 2011 redemption notice date, certain third party shareholders of DaVinciRe
submitted repurchase notices, in accordance with the Shareholders Agreement, for shares of DaVinciRe
with a GAAP book value of $9.2 million at December 31, 2011. Effective January 1, 2012, DaVinciRe
redeemed the shares for $9.2 million, less a $1.8 million reserve holdback.

Ratings

Financial strength ratings are an important factor in respect of the competitive position of reinsurance and
insurance companies. Rating organizations continually review the financial positions of our reinsurers and
insurers. We continue to receive high claims-paying and financial strength ratings from A.M. Best, S&P,
Moody’s and Fitch. These ratings represent independent opinions of an insurer’s financial strength,
operating performance and ability to meet policyholder obligations, and are not an evaluation directed
toward the protection of investors or a recommendation to buy, sell or hold any of our securities.

Presented below are the ratings of our principal operating subsidiaries and joint ventures by segment and
the ERM rating of RenaissanceRe as of February 15, 2012.

February 15, 2012
REINSURANCE SEGMENT (1)
Renaissance Reinsurance
DaVinci
Top Layer Re
ROE

LLOYD’S SEGMENT

RenaissanceRe Syndicate 1458
Lloyd’s Overall Market Rating (2)

INSURANCE SEGMENT (1)

Glencoe

RENAISSANCERE (3)

A.M. Best

S&P (4)

Moody’s

Fitch

A+
A
A+
A+

—
A

A
—

AA-
A+
AA
AA-

—
A+

A
Excellent

A1
A3
—
—

—
—

A+
—
—
—

—
A+

—
—

(1) The A.M. Best, S&P, Moody’s and Fitch ratings for the companies in the Reinsurance and Insurance

segments reflect the insurer’s financial strength rating.

(2) The A.M. Best, S&P and Fitch ratings for the Lloyd’s Overall Market Rating represent its financial

strength rating.

(3) The S&P rating for RenaissanceRe represents rating on its Enterprise Risk Management practices.
(4) The S&P ratings for the companies in the Reinsurance and Insurance segments reflect, in addition to

the insurer’s financial strength rating, the insurer’s issuer credit rating.

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A.M. Best. “A+” is the second highest designation of A.M. Best’s sixteen rating levels. “A+” rated
insurance companies are defined as “Superior” companies and are considered by A.M. Best to have a very
strong ability to meet their obligations to policyholders. “A” is the third highest designation assigned by A.M.
Best, representing A.M. Best’s opinion that the insurer has an excellent ability to meet its ongoing
obligations to policyholders.

On May 23, 2011, A.M. Best affirmed the financial strength rating (“FSR”) of A+ (Superior) of Top Layer Re.
The outlook is stable for this rating.

On May 18, 2011, A.M. Best affirmed the FSR of “A+” (Superior) of Renaissance Reinsurance and ROE.
Concurrently, A.M. Best affirmed the FSR of “A” (Excellent) of DaVinci. In addition, A.M. Best removed from
under review with negative implications and affirmed the FSR of A (Excellent) of Glencoe. The outlook is
stable for these ratings.

S&P. The “AA” range (“AA+”, “AA”, AA-”), which has been assigned by S&P to Renaissance Reinsurance,
ROE and Top Layer Re, is the second highest rating assigned by S&P, and indicates that S&P believes the
insurers have very strong financial security characteristics, differing only slightly from those rated higher.
S&P assigns an issuer credit rating to an entity which is an opinion on the credit worthiness of obligor with
respect to a specific financial obligation.

On June 23, 2011, S&P affirmed its “A” counterparty credit rating (“CCR”) on RenaissanceRe. At the same
time, S&P affirmed its “A” senior debt rating on our senior unsecured notes. In addition, S&P affirmed its
“AA-” CCR and FSR on Renaissance Reinsurance and ROE and its “A+” and “A” CCR and FSR on DaVinci
and Glencoe respectively. The outlook is stable for these ratings.

On May 17, 2011, following the sale of substantially all of our U.S.-based insurance operations, S&P
lowered Glencoe's “CCR” to “A” from “A+”. The outlook is stable for this rating.

On November 1, 2010, S&P revised its outlook on Top Layer to stable from negative and at the same time,
affirmed Top Layer’s CCR and FSR of “AA”.

In addition, S&P assesses companies’ ERM practices, which is an opinion on the many critical dimensions
of risk that determine overall creditworthiness. RenaissanceRe has been assigned an ERM rating of
“Excellent”, which is the highest rating assigned by S&P, and indicates that S&P believes the Company has
extremely strong capabilities to consistently identify, measure, and manage risk exposures and losses
within the Company’s predetermined tolerance guidelines.

Moody’s. Moody’s Insurance Financial Strength Ratings and Moody’s Credit Ratings represent its
opinions of the ability of insurance companies to pay punctually policyholder claims and obligations and
senior unsecured debt instruments. Moody’s believes that insurance companies rated “A1”, such as
Renaissance Reinsurance, and companies rated “A3”, such as RenaissanceRe, offer good financial
security. However, Moody’s believes that elements may be present which suggest a susceptibility to
impairment sometime in the future.

On June 30, 2011, Moody's assigned an “A3” insurance FSR to DaVinci and a “Baa2” long-term issuer
rating to DaVinciRe Holdings Ltd. The outlook is stable for this rating.

On November 18, 2010, following the public announcement that we entered into a definitive agreement with
QBE to sell substantially all of our U.S. based insurance operations, Moody’s affirmed the “A1” insurance
FSR of Renaissance Reinsurance. The outlook is stable for this rating.

Fitch. Fitch’s Issuer Financial Strength (“IFS”) ratings provide an assessment of the financial strength of
an insurance organization. Fitch believes that insurance companies rated “A+”, such as Renaissance
Reinsurance, have “Strong” capacity to meet policyholders and contract obligations on a timely basis with a
low expectation of ceased or interrupted payments.

On December 5, 2011, Fitch affirmed the IFS of Renaissance Reinsurance at “A+”. The outlook is stable for
this rating.

126

Lloyd’s Overall Market Rating

A.M. Best, S&P and Fitch have each assigned an FSR to the Lloyd’s overall market. The financial risks to
policy holders of syndicates within the Lloyd’s market are partially mutualized through the Lloyd’s Central
Fund, to which all underwriting members contribute. Because of the presence of the Lloyd’s Central Fund,
and the current legal and regulatory structure of the Lloyd’s market, FSRs on individual syndicates would
not be particularly meaningful and in any event would not be lower than the FSR of the Lloyd's overall
market.

While the ratings of our principal operating subsidiaries and joint ventures within our Reinsurance segment
remain among the highest in our business, adverse ratings actions could have a negative effect on our
ability to fully realize current or future market opportunities. In addition, it is common for our reinsurance
contracts to contain provisions permitting our customers to cancel coverage pro-rata if our relevant
operating subsidiary is downgraded below a certain rating level. Whether a client would exercise this right
would depend, among other factors, on the reason for such a downgrade, the extent of the downgrade, the
prevailing market conditions and the pricing and availability of replacement reinsurance coverage.
Therefore, in the event of a downgrade, it is not possible to predict in advance the extent to which this
cancellation right would be exercised, if at all, or what effect such cancellations would have on our financial
condition or future operations, but such effect potentially could be material. To date we are not aware that
we have experienced such a cancellation. Our ratings are subject to periodic review and may be revised or
revoked by the agencies which issue them. None of our operating subsidiaries which conduct the trading
activities of REAL are currently rated by any of the nationally recognized rating agencies.

Investments

The table below shows the aggregate amounts of our invested assets:

At December 31,
(in thousands, except percentages)
U.S. treasuries

Agencies

Non-U.S. government (Sovereign debt)

FDIC guaranteed corporate

Non-U.S. government-backed corporate

Corporate

Agency mortgage-backed

Non-agency mortgage-backed

Commercial mortgage-backed

Asset-backed

Short term investments, at fair value

Equity investments trading, at fair value

Other investments, at fair value

Total managed investment portfolio

Investments in other ventures, under equity

method

Total investments

2011

2010

885,152

14.3%

761,461

12.4%

158,561

227,912

423,630

641,082

1,206,904

441,749

104,771

325,729
18,027

905,477
50,560

748,984

6,138,538

2.6%

3.7%

6.8%

10.3%

19.4%

7.1%

1.7%

5.2%

0.3%

71.4%

14.6%

0.8%

12.1%

98.9%

216,963

184,387

388,468

357,504

3.6%

3.0%

6.4%

5.9%

1,512,411

24.7%

401,807

34,149

219,440

40,107

4,116,697

1,110,364

—

787,548

6,014,609

6.6%

0.6%

3.6%

0.7%

67.5%

18.2%

—%

12.9%

98.6%

70,714

1.1%

85,603

$ 6,209,252

100.0%

$ 6,100,212

1.4%

100.0%

Total fixed maturity investments, at fair value

4,433,517

At December 31, 2011, we held investments totaling $6.2 billion, compared to $6.1 billion at December 31,
2010, with net unrealized appreciation included in accumulated other comprehensive income of $11.8
million at December 31, 2011, compared to $19.8 million at December 31, 2010. Our investment guidelines
stress preservation of capital, market liquidity, and diversification of risk. Notwithstanding the foregoing, our
investments are subject to market-wide risks and fluctuations, as well as to risks inherent in particular
securities.

127

As the reinsurance coverages we sell include substantial protection for damages resulting from natural and
man-made catastrophes, we expect from time to time to become liable for substantial claim payments on
short notice. Accordingly, our investment portfolio as a whole is structured to seek to preserve capital and
provide a high level of liquidity which means that the large majority of our investment portfolio consists of
highly rated fixed income securities, including U.S. treasuries, agencies, highly rated sovereign and
supranational securities, high-grade corporate securities, Federal Deposit Insurance Corporation (“FDIC”)
guaranteed corporate securities and mortgage-backed and asset-backed securities. We also have an
allocation to other investments, including hedge funds, private equity partnerships, senior secured bank
loan funds and other investments. At December 31, 2011, these other investments totaled $749.0 million,
or 12.1%, of our total investments (2010 – $787.5 million or 12.9%).

At December 31, 2011, our fixed maturity investments and short term investment portfolio had a dollar-
weighted average credit quality rating of AA (2010 – AA) and a weighted average effective yield of 1.9%
(2010 – 2.1%). At December 31, 2011, our non-investment grade and not rated fixed maturity investments
totaled $199.1 million or 4.5% of our fixed maturity investments (2010 - $125.2 million or 3.0%,
respectively). In addition, within our other investments category we have several funds that invest in non-
investment grade fixed income securities and non-investment grade cat-linked securities. At December 31,
2011, the funds that invest in non-investment grade fixed income securities and non-investment grade cat-
linked securities totaled $328.9 million (2010 – $331.2 million).

At December 31, 2011, we had $905.5 million of short term investments (2010 – $1,110.4 million). Short
term investments are managed as part of our investment portfolio and have a maturity of one year or less
when purchased. Short term investments are carried at fair value.

Our duration for our fixed maturity investments and short term investments at December 31, 2011 was 2.6
years (2010 – 3.2 years). From time to time, we may reevaluate the duration of our portfolio in light of the
duration of our liabilities and market conditions.

As with other fixed income investments, the value of our fixed maturity investments will fluctuate with
changes in the interest rate environment and when changes occur in the overall investment market and in
overall economic conditions. Additionally, our differing asset classes expose us to other risks which could
cause a reduction in the value of our investments. Examples of some of these risks include:

• Changes in the overall interest rate environment can expose us to “prepayment risk” on our mortgage-

backed investments. When interest rates decline, consumers will generally make prepayments on their
mortgages and, as a result, our investments in mortgage-backed securities will be repaid to us more
quickly than we might have originally anticipated. When we receive these prepayments, our
opportunities to reinvest these proceeds back into the investment markets will likely be at reduced
interest rates. Conversely, when interest rates increase, consumers will generally make fewer
prepayments on their mortgages and, as a result, our investments in mortgage-backed securities will be
repaid to us less quickly than we might have originally anticipated. This will increase the duration of our
portfolio, which is disadvantageous to us in a rising interest rate environment.

• Our investments in mortgage-backed securities are also subject to default risk. This risk is due in part
to defaults on the underlying securitized mortgages, which would decrease the market value of the
investment and be disadvantageous to us. Similar risks apply to other asset-backed securities in which
we may invest from time to time.

• Our investments in debt securities of other corporations are exposed to losses from insolvencies of

these corporations, and our investment portfolio can also deteriorate based on reduced credit quality of
these corporations. We are also exposed to widening credit spreads even if specific securities are not
downgraded.

• Our investments in asset-backed securities are subject to prepayment risks, as noted above, and to the

structural risks of these securities. The structural risks primarily emanate from the priority of each
security in the issuer’s overall capital structure. We are also exposed to widening credit spreads.

• Within our other investments category, we have several funds that invest in non-investment grade fixed
income securities as well as securities denominated in foreign currencies. These investments expose
us to losses from insolvencies and other credit-related issues. We are also exposed to fluctuations in
foreign exchange rates that may result in realized losses to us if our exposures are not hedged or if our
hedging strategies are not effective and also to widening of credit spreads.

128

The following table summarizes the fair value by contractual maturity of our fixed maturity investment
portfolio at the dates indicated. Actual maturities may differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without penalty.

At December 31,
(in thousands, except percentages)
Due in less than one year
Due after one through five years
Due after five through ten years
Due after ten years
Mortgage-backed
Asset-backed

2011

2010

619,845
2,035,383
742,050
145,963
872,249
18,027

14.0%
45.9%
16.7%
3.3%
19.7%
0.4%

90,450
2,330,181
827,981
172,582
655,396
40,107

2.2%
56.6%
20.1%
4.2%
15.9%
1.0%

Total fixed maturity investments, at fair

value

$ 4,433,517

100.0%

$ 4,116,697

100.0%

The following table summarizes the composition of the fair value of our fixed maturity investments at the
dates indicated by ratings as assigned by S&P, or Moody’s and/or other rating agencies when S&P ratings
were not available.

At December 31,
(in thousands, except percentages)
AAA
AA (1)
A
BBB
Non-investment grade and not rated

Total fixed maturity investments, at fair

value

2011

2010

$ 1,023,890
2,244,016
631,479
335,002
199,130

23.1%
50.6%
14.2%
7.6%
4.5%

$ 2,531,922
489,780
666,497
303,269
125,229

61.5%
11.9%
16.2%
7.4%
3.0%

$ 4,433,517

100.0%

$ 4,116,697

100.0%

(1) Included in the AA rating category at December 31, 2011 is $1,467.3 million of U.S. treasuries, agencies
and FDIC guaranteed corporate fixed maturity investments that were included in the AAA rating category
in prior periods.

Our fixed maturity investments are classified as available for sale or trading and are reported at fair value.
The net unrealized appreciation or depreciation on fixed maturity investments available for sale is included
in accumulated other comprehensive income. The net unrealized gains (losses) on fixed maturity
investments trading is included in net realized and unrealized gains on fixed maturity investments. Net
investment income includes interest income together with amortization of market premiums and discounts
and is net of investment management and custody fees. The amortization of premium and accretion of
discount for fixed maturity investments is computed using the effective yield method. The Company’s fixed
maturity investments portfolios are priced using pricing services, such as index providers and pricing
vendors, and broker quotations.

Realized gains or losses on the sale of investments are determined on the basis of the first in first out cost
method and include adjustments to the cost basis of investments for declines in value that are considered to
be other-than-temporary. Pursuant to authoritative guidance effective April 1, 2009, we revised our
quarterly process for assessing whether declines in the fair value of our fixed maturity investments available
for sale represent impairments that are other-than-temporary. The process now includes reviewing each
fixed maturity investment available for sale that is impaired and determining: (i) if we have the intent to sell
the debt security or (ii) if it is more likely than not that we will be required to sell the debt security before its
anticipated recovery; and (iii) whether a credit loss exists, that is, where we expect that the present value of
the cash flows expected to be collected from the security are less than the amortized cost basis of the
security. See “Note 5. Investments in our Notes to Consolidated Financial Statements” for additional
information regarding other-than-temporary impairments.

129

During 2011, we recorded $0.6 million (2010 - $0.8 million, 2009 – $22.5 million) in net other-than-
temporary impairment charges. Net other-than-temporary impairments decreased in 2011 and 2010,
compared to 2009 due to the designation, upon acquisition of our fixed maturity investments as trading,
rather than as available for sale, and as a result, at December 31, 2011, our fixed maturity investments
available for sale represented 3.2% of our total fixed maturity investments (2010 - 5.9%, 2009 - 83.1%).
The net other-than-temporary impairment charges in 2009 were primarily due to widening credit spreads
during the early part of 2009 as a result of the turmoil in the financial and capital markets. For the three
months ended March 31, 2009, we recognized impairment charges for principally all of our fixed maturity
investments available for sale that were in an unrealized loss position at the end of each quarter as under
prior authoritative accounting guidance we did not have the intent to hold them until they fully recovered in
value. Credit-related impairment charges were $0.6 million in 2011 and relate to impaired securities which
we believe we would not be able to recover the full principal amount if held to maturity (2010 - $0.8 million,
2009 - $2.2 million). At December 31, 2011, our gross unrealized losses on fixed maturity investments
available for sale totaled $0.8 million. At December 31, 2011, we held 14 fixed maturity investments
available for sale securities that were in an unrealized loss position for greater than twelve months.

130

Weighted Average Effective Yield and Credit Rating

The following table summarizes the composition of the amortized cost and fair value of our fixed maturity investments,
short term investments and other investments at the date indicated by ratings as assigned by S&P, or Moody’s and/or
other rating agencies when S&P ratings were not available, and the respective effective yield.

Amortized
Cost

Fair Value

% of Total
Managed
Investment
Portfolio

Weighted
Average
Effective
Yield

AAA

BBB

Non-
Investment
Grade

Not Rated

Credit Rating (1)

At December 31, 2011

(in thousands, except percentages)

Short term investments

$ 905,477

14.8%

0.2%

$ 723,901

$ 177,247

4,310

—

100.0%

79.9%

19.6%

0.5%

—%

Fixed maturity investments

U.S. treasuries

Agencies

874,969

885,152

14.5%

0.6%

Fannie Mae & Freddie Mac

142,182

143,562

Other agencies

Total agencies

Non-U.S. government (Sovereign
debt)

FDIC guaranteed corporate

Non-U.S. government-backed
corporate

Corporate

Mortgage-backed

Residential mortgage-backed

14,804

14,999

156,986

158,561

225,335

422,505

227,912

423,630

640,892

641,082

1,201,715

1,206,904

Agency securities

433,158

441,749

Non-agency securities - Prime

Non-agency securities - Alt A

Total residential mortgage-backed

Commercial mortgage-backed

Total mortgage-backed

Asset-backed

Credit cards

Student loans

Other

73,228

36,648

543,034

313,327

856,361

8,946

1,323

7,566

68,678

36,093

546,520

325,729

872,249

8,955

1,287

7,785

Total asset-backed

17,835

18,027

Total securitized assets

874,196

890,276

Total fixed maturity investments

4,396,598

4,433,517

Equity investments trading

Other investments

Private equity partnerships

Senior secured bank loan funds

Catastrophe bonds

Non-U.S. fixed income funds

Hedge funds

Miscellaneous other investments

100.0%

50,560

100.0%

367,909

257,870

70,999

28,862

21,344

2,000

2.3%

0.2%

2.5%

3.7%

6.9%

10.5%

19.7%

7.2%

1.1%

0.6%

8.9%

5.3%

14.2%

0.1%

—%

0.1%

0.2%

14.4%

72.2%

0.8%

6.0%

4.2%

1.2%

0.5%

0.3%

—%

Total other investments

748,984

12.2%

—

—%

—

826

—

885,152

143,562

14,999

158,561

—

130,624

54,654

17,285

16,810

7,713

—

423,630

—

598,360

39,465

3,257

—

27,629

186,000

537,977

311,224

133,246

10,828

—

441,749

26,661

18,732

45,393

203,857

249,250

8,955

1,287

7,785

18,027

3,555

—

445,304

51,250

496,554

—

656

6,963

7,619

65,341

72,960

—

906

781

1,687

5,281

6,968

—

36,900

9,617

46,517

—

46,517

—

267,277

496,554

72,960

6,968

46,517

—

0.5%

0.8%

0.5%

2.3%

0.3%

1.4%

4.2%

1.5%

8.0%

9.1%

2.8%

3.2%

3.0%

0.8%

3.1%

0.8%

0.9%

2.9%

2.2%

1,023,890

2,244,016

631,479

335,002

187,476

11,654

23.1%

50.6%

14.2%

—

—%

—

—%

—

—%

7.6%

—

—%

4.2%

—

—%

0.3%

50,560

100.0%

—

28,862

—

367,909

257,870

70,999

—

21,344

2,000

28,862

328,869

391,253

Total managed investment
portfolio

100.0%

—%

3.9%

43.9%

52.2%

$6,138,538

100.0%

$1,747,791

$2,421,263

$ 635,789

$ 363,864

$ 516,364

$ 453,467

100.0%

28.5%

39.4%

10.4%

5.9%

8.4%

7.4%

(1) The credit ratings included in this table are those assigned by S&P. When ratings provided by S&P were not available, ratings from other nationally recognized rating
agencies were used. The Company has grouped short term investments with an A-1+ and A-1 short-term issue credit rating as AAA, short term investments with A-2
short-term issue credit rating as AA and short term investments with an A-3 short-term issue credit rating as A.

131

European Sovereign Debt Exposures

The table below presents our exposure by country to European government and corporate issuers within
our fixed maturity and short term investments portfolio, further segregated by sector, subsector and credit
rating. For corporate issuers, the country of issuer is determined by assessing both the location of principal
management as well as the primary country of business activity.

Sector

Non-U.S.
Government
(Sovereign
debt)

Non-U.S.
Government
-backed
Corporate

Credit Rating

Corporate

AAA

BBB

Non-
Investment
Grade

At December 31, 2011

Amortized
Cost (1)

Fair Value
(1)

(in thousands)

Country of Issuer

Non-Eurozone

United Kingdom

$ 287,839

$ 290,524

34,738

133,883

$ 121,903

$156,456

$ 29,776

$ 87,405

$ 15,003

1,884

Sweden

Norway

Switzerland

Denmark

Russian Federation

Other

123,659

123,744

20,172

62,411

34,698

27,478

15,611

5,542

59,530

34,493

27,537

15,287

5,289

—

3,081

4,949

85,611

23,071

—

24,668

—

17,961

36,459

34,493

2,869

12,206

340

102,490

21,254

—

28,124

7,825

1,854

21,727

—

14,340

18,468

24,668

—

1,113

1,461

2,869

14,410

762

Total Non-Eurozone

$ 557,238

$ 556,404

Eurozone

Netherlands

$ 131,680

$ 131,039

62,940

267,233

$ 226,231

$311,738

$ 73,195

$108,840

$ 56,232

—

100,571

$ 30,468

$104,461

$ 12,036

$ 12,820

637

France

Austria

Germany

Finland

Belgium

Luxembourg

Italy

Spain

Ireland

Greece

Portugal

61,560

37,658

37,816

24,168

6,259

1,117

58,514

37,092

38,053

24,109

6,552

1,052

8,787

—

15,618

8,650

—

9,707

37,092

8,320

15,459

—

300,258

296,411

33,055

171,149

11,562

10,168

6,837

388

—

6,471

351

—

18,787

$ 16,990

40,020

8,788

19,032

9,949

20,745

—

14,115

—

6,552

1,052

92,207

10,168

6,471

351

—

37,092

23,937

24,109

—

5,982

—

6,552

—

6,636

—

198,387

31,068

35,303

28,018

—

6,104

2,650

—

890

961

—

2,813

2,759

—

$ 8,754

$ 1,851

$ 5,572

—

Total Eurozone

$ 319,045

$ 313,401

Total European Issuer

$ 876,283

$ 869,805

171,149

$ 109,197

$198,387

$ 39,822

$ 37,154

$ 33,590

438,382

$ 335,428

$510,125

$113,017

$145,994

$ 89,822

$ 16,990

—

224

—

877

3,414

6,399

1,085

—

1,498

—

1,052

3,635

361

101

351

—

813

4,448

10,847

Subsector

Financial

Industrial, utilities and

energy

Non-U.S. government
(Sovereign debt)

Other

$ 550,307

$ 541,305

107,035

108,891

95,404

95,995

123,537

123,614

355,666

$ 185,639

$339,445

$ 73,277

$ 97,945

$ 30,101

537

32,124

76,767

32,124

19,551

32,379

23,042

—

50,592

73,022

87,964

50,592

—

1,114

3,843

20,189

14,556

32,836

1,795

3,074

5,441

Total European Issuer

$ 876,283

$ 869,805

95,995

438,382

$ 335,428

$510,125

$113,017

$145,994

$ 89,822

10,847

(1) Included in amortized cost and fair value is $2.3 million of fixed maturity investments available for sale.

At December 31, 2011, we held fixed maturity and short term investments with a fair value of $869.8 million
and weighted average credit rating of AA in European issuers, including holdings of $96.0 million, $438.4
million and $335.4 million related to non-U.S. government (Sovereign debt), non-U.S. government backed
corporates and corporates, respectively. Our holdings of fixed maturity investment and short term
investments in Ireland, Italy, Spain, Greece and Portugal was comprised entirely of corporate securities and
had a fair value of $17.0 million at December 31, 2011.

At December 31, 2011, we had foreign currency forward contracts outstanding, primarily related to the Euro
and British pound sterling, with $24.6 million in notional long positions, $151.3 million in notional short
positions and a fair value of $4.3 million. From time to time, we enter into foreign currency forward
contracts to economically hedge our exposure to currency fluctuations from certain non-U.S. denominated
investments. We typically use these hedges to hedge fixed maturity investments with exposure to
European currencies.

132

—

33,055

95,995

—

95,995

—

In addition to our Eurozone sovereign debt exposure noted above, we have investments in private equity
funds, hedge funds, bank loan funds and a non-U.S. dollar fixed income fund that may have exposure to
European sovereign debt. We also have exposure to European sovereign debt directly and indirectly
through our underwriting portfolio. This portfolio contains insurance and reinsurance risks that we have
assumed and ceded in respect of risks related to companies located within Europe, to companies that
provide coverage within Europe, and to companies that have investments in European sovereign debt. We
underwrite these risks in accordance with our underwriting standards as described in "Item 1. Business,
Underwriting and Enterprise Risk Management". As a result of the underwriting operations noted above,
our cash and cash equivalents, premiums receivable, reinsurance recoverable, reserve for claims and claim
expenses may be indirectly impacted by European debt exposure. In addition, see "Note. 18 Derivative
Instruments of our Notes to Consolidated Financial Statements" for additional information regarding
underwriting operations related foreign currency contracts outstanding related to the balances noted above.
We will continue to monitor our Eurozone risks, but to date, the financial turmoil within Europe has not
materially impacted our results of operations or financial condition.

Corporate Fixed Maturity Investments

The following table summarizes the composition of the fair value of our corporate fixed maturity investments
at the date indicated by ratings as assigned by S&P, or Moody’s and/or other rating agencies when S&P
ratings were not available.

At December 31, 2011

(in thousands)

Sector
Financials

Industrial, utilities
and energy

Communications
and technology

Consumer

Basic materials

Health care

Other

Total corporate
fixed maturity
investments, at
fair value (1)

Total
$ 586,442

AAA
$ 18,589

AA
$ 119,673

A
$ 345,834

BBB
$ 80,360

Non-
Investment
Grade
$ 11,732

Not Rated
$ 10,254

214,272

155,777

95,112

67,422

57,990

29,889

—

9,040

20,826

68,698

86,224

38,524

942

6,719

—
28,021

9,819

55,216

31,750

12,381

15,240

8,858

69,603

33,169

36,735

3,086

2,047

29,465

23,459

18,298

11,643

125

—

551

—

$ 1,206,904

$ 27,629

$ 186,000

$ 537,977

$ 311,224

$ 133,246

$ 10,828

(1) Excludes FDIC guaranteed and non-U.S. government-backed corporate fixed maturity investments, at

fair value.

133

The following table summarizes the composition of the fair value of the fixed maturity investments and short
term investments of our top ten corporate issuers at the date indicated.

At December 31, 2011

(in thousands)

Issuer
JP Morgan Chase & Co.
General Electric Company
Citigroup Inc.
Bank of America Corp.
Credit Suisse Group AG
Goldman Sachs Group Inc.
Morgan Stanley
Lloyds Banking Group PLC
HSBC Holdings PLC
Eksportfinans ASA

Total (1)

Total

66,718
47,218
45,018
34,520
32,958
24,651
23,561
22,516
22,200
21,727
341,087

Short term
investments

Fixed
maturity
investments

1,683
—
—
—
—
—
—
—
—
—
1,683

65,035
47,218
45,018
34,520
32,958
24,651
23,561
22,516
22,200
21,727
339,404

(1) Excludes FDIC guaranteed and non-U.S. government-backed corporate fixed maturity investments,

repurchase agreements and commercial paper, at fair value.

Other Investments

The table below shows our portfolio of other investments:

At December 31,

(in thousands)
Private equity partnerships

Senior secured bank loan funds

Catastrophe bonds

Non-U.S. fixed income funds

Hedge funds

Miscellaneous other investments

Total other investments

2011

2010

367,909

347,556

257,870

70,999

28,862

21,344

2,000

166,106

123,961

80,224

41,005

28,696

748,984

787,548

We account for our other investments at fair value in accordance with ASC Topic Financial Instruments.
The fair value of certain of our fund investments, which principally include hedge funds, private equity funds,
senior secured bank loan funds and non-U.S. fixed income funds, are recorded on our balance sheet in
other investments, and is generally established on the basis of the net valuation criteria established by the
managers of such investments, if applicable. The net valuation criteria established by the managers of
such investments is established in accordance with the governing documents of such investments. Many of
our fund investments are subject to restrictions on redemptions and sales which are determined by the
governing documents and limit our ability to liquidate these investments in the short term. Certain of our
fund managers, fund administrators, or both, are unable to provide final fund valuations as of our current
reporting date. The typical reporting lag experienced by us to receive a final net asset value report is one
month for hedge funds, senior secured bank loan funds and non-U.S. fixed income funds and three months
for private equity funds, although, in the past, in respect of certain of our private equity funds, we have on
occasion experienced delays of up to six months at year end, as the private equity funds typically complete
their respective year-end audits before releasing their final net asset value statements.

In circumstances where there is a reporting lag between the current period end reporting date and the
reporting date of the latest fund valuation, we estimate the fair value of these funds by starting with the prior
month or quarter-end fund valuations, adjusting these valuations for actual capital calls, redemptions or

134

distributions, as well as the impact of changes in foreign currency exchange rates, and then estimating the
return for the current period. In circumstances in which we estimate the return for the current period, all
information available to us is utilized. This principally includes preliminary estimates reported to us by our
fund managers, obtaining the valuation of underlying portfolio investments where such underlying
investments are publicly traded and therefore have a readily observable price, using information that is
available to us with respect to the underlying investments, reviewing various indices for similar investments
or asset classes, as well as estimating returns based on the results of similar types of investments for which
we have obtained reported results, or other valuation methods, where possible. Actual final fund valuations
may differ, perhaps materially so, from our estimates and these differences are recorded in our statement of
operations in the period in which they are reported to us as a change in estimate. Included in net
investment income for the year ended December 31, 2011 is a loss of $1.4 million (2010 - income of $5.3
million, 2009 - loss of $10.7 million) representing the change in estimate during the period related to the
difference between our estimated net investment income due to the lag in reporting discussed above and
the actual amount as reported in the final net asset values provided by our fund managers.

Our estimate of the fair value of catastrophe bonds are based on quoted market prices, or when such prices
are not available, by reference to broker or underwriter bid indications.

Interest income, income distributions and realized and unrealized gains and losses on other investments
are included in net investment income and resulted in $36.0 million of net investment income for the year
ended December 31, 2011 (2010 - $103.7 million, 2009 - $163.6 million). Of this amount, $12.7 million
relates to net unrealized gains (2010 - $57.5 million, 2009 - $88.5 million).

We have committed capital to private equity partnerships and other entities of $684.0 million, of which
$540.6 million has been contributed at December 31, 2011. Our remaining commitments to these funds at
December 31, 2011 totaled $144.6 million. In the future, we may enter into additional commitments in
respect of private equity partnerships or individual portfolio company investment opportunities.

Measuring the Fair Value of Other Investments Using Net Asset Valuations

The table below shows our portfolio of other investments measured using net asset valuations:

At December 31, 2011

(in thousands)
Private equity partnerships

Senior secured bank loan funds

Non-U.S. fixed income funds

Hedge funds

Total other investments

measured using net asset
valuations

Fair Value

Unfunded
Commitments

Redemption Frequency

Redemption
Notice Period

367,909

257,870

28,862

21,344

139,454
5,099

—

See below

Monthly, Bi-monthly

5 - 20 days

Annually, Bi-annually

45 - 90 days

675,985

144,553

Private equity partnerships - Included in our investments in private equity partnerships are alternative asset
limited partnerships (or similar corporate structures) that invest in certain private equity asset classes
including U.S. and global leveraged buyouts; mezzanine investments; distressed securities; real estate; and
oil, gas and power. The fair values of the investments in this category have been estimated using the net
asset value of the investments. We generally have no right to redeem our interest in any of these private
equity partnerships in advance of dissolution of the applicable partnership. Instead, the nature of these
investments is that distributions are received by us in connection with the liquidation of the underlying
assets of the applicable limited partnership. It is estimated that the majority of the underlying assets of the
limited partnerships would liquidate over 7 to 10 years from inception of the limited partnership.

Senior secured bank loan funds - Our investment in senior secured bank loan funds includes funds that
invest primarily in senior secured bank loans and other senior debt instruments. The fair values of the
investments in this category have been estimated using the net asset value per share of the funds.
Investments of $237.8 million are redeemable, in part on a monthly basis, or in whole over a three month
period.

135

We also have a $20.1 million investment in a closed end fund which invests in loans. We have no right to
redeem our investment in this fund.

Non-U.S. fixed income funds - Our non-U.S. fixed income funds invest primarily in non-U.S. convertible
securities. The fair values of the investments in this category have been estimated using the net asset
value per share of the funds. Investments of $28.9 million are redeemable, in whole or in part, on a bi-
monthly basis.

Hedge funds - We invest in hedge funds that pursue multiple strategies. The fair values of the investments
in this category have been estimated using the net asset value per share of the funds. Included in our
investments in hedge funds at December 31, 2011 are $6.6 million of so called “side pocket” investments
which are not redeemable at the option of the shareholder. As to each investment in a hedge fund that
includes side pocket investments, if the investment is otherwise fully redeemed, we will still retain our
interest in the side pocket investments until the underlying investments attributable to such side pockets are
liquidated, realized or deemed realized at the discretion of the fund manager.

Investments in Other Ventures, under Equity Method

The table below shows our investments in other ventures, under equity method:

At December 31,

2011

2010

(in thousands, except percentages)
THIG

Investment
$ 50,000

Ownership
%
25.0%

Carrying
Value
$ 32,645

Investment
$ 50,000

Ownership
%
25.0%

Carrying
Value
$ 38,431

Tower Hill

Tower Hill Signature

Total Tower Hill Companies

Top Layer Re

Other

Total investments in other
ventures, under equity
method

10,000

500

60,500

65,375
6,000

28.6%

25.0%

50.0%

40.0%

14,173

10,000

28.6%

14,155

—

46,818

15,872

8,024

—

60,000

26,875

19,000

—%

50.0%

n/a

—

52,586

14,844

18,173

$ 131,875

$ 70,714

$ 105,875

$ 85,603

Top Layer Re incurred net claims and claims expenses from the February 2011 New Zealand and Tohoku
earthquakes, subsequently, the Company contributed $38.5 million of additional paid-in capital to Top Layer
Re to replenish its capital position.

Our equity in earnings of the Tower Hill Companies are reported one quarter in arrears.

Effects of Inflation

The potential exists, after a catastrophe loss, for the development of inflationary pressures in a local
economy. The anticipated effects on us are considered in our catastrophe loss models. Our estimates of
the potential effects of inflation are also considered in pricing and in estimating reserves for unpaid claims
and claim expenses. In addition, as summarized in “Current Outlook” below, it is possible that the risk of
general economic inflation has increased which could, among other things, cause claims and claim
expenses to increase and also impact the performance of our investment portfolio. The actual effects of
this potential increase in inflation on our results cannot be accurately known until, among other items,
claims are ultimately settled. The onset, duration and severity of an inflationary period cannot be estimated
with precision.

Off-Balance Sheet and Special Purpose Entity Arrangements

At December 31, 2011, we have not entered into any off-balance sheet arrangements, as defined by
Item 303(a)(4) of Regulation S-K.

136

Contractual Obligations

The table below shows our contractual obligations:

—

31,043

—

337,158
—

—

At December 31, 2011

(in thousands)
Long term debt obligations (1)

5.875% Senior Notes

5.75% Senior Notes

Private equity and investment

commitments (2)

Operating lease obligations

Capital lease obligations

Payable for investments

purchased

Total

Less than 1
year

1-3 years

3-5 years

More than 5
years

$ 106,615
367,914

5,875
14,375

$ 100,740

—

28,750

296,039

144,553

20,310

44,871

6,242

2,892

303,264

—

8,360

5,784

—

5,639

5,152

—

Reserve for claims and claim

expenses (3)

Renaissance Trading credit facility

Other

Total contractual obligations

1,992,354
4,373

7,113
$ 2,991,367

(1) Includes contractual interest payments.

871,547
4,373

3,355

564,673
—

3,488

218,976
—

270

$ 1,356,476

$ 711,795

$ 258,787

$ 664,309

(2) The private equity and investment commitments do not have a defined contractual commitment date

and we have therefore included them in the less than one year category.

(3) We caution the reader that the information provided above related to estimated future payment dates of
our reserves for claims and claim expenses is not prepared or utilized for internal purposes and that we
currently do not estimate the future payment dates of claims and claim expenses. Because of the
nature of the coverages that we provide, the amount and timing of the cash flows associated with our
policy liabilities will fluctuate, perhaps significantly, and therefore are highly uncertain. We have based
our estimates of future claim payments upon benchmark industry payment patterns, drawing upon
available relevant sources of loss and allocated loss adjustment expense development data. These
benchmarks are revised periodically as new trends emerge. We believe that it is likely that this
benchmark data will not be predictive of our future claim payments and that material fluctuations can
occur due to the nature of the losses which we insure and the coverages which we provide.

In certain circumstances, many of our contractual obligations may be accelerated to dates other than
those reflected in the table, due to defaults under the agreements governing those obligations
(including pursuant to cross-default provisions in such agreements) or in connection with certain
changes in control of the Company, if applicable. In addition, in connection with any such default under
the agreement governing these obligations, in certain circumstances, these obligations may bear an
increased interest rate or be subject to penalties as a result of such a default.

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Current Outlook

Impact of Recent Catastrophes and Other Developments

During 2011, the global insurance and reinsurance markets experienced significant losses from natural
catastrophes, including severe flooding in Australia, the series of earthquakes affecting New Zealand,
tornadoes in the U.S., hurricane Irene, the flooding which occurred in Thailand over four months and, most
materially, the Tohoku earthquake. According to leading global intermediaries and other published reports,
aggregate industry losses in 2011 already constitute the second most severe year for insured industry loss
on record, exceeded only by 2005 which was impacted by hurricanes Katrina, Rita and Wilma. Overall, we
believe these events somewhat depleted the excess capital we estimated was held by private market
insurers and reinsurers in 2010, and may lead, over time, to increased demand for the coverages and
solutions in which we specialize. In addition, we currently estimate that demand may be favorably impacted
by the release of Version 11.0 of the RMS Atlantic Hurricane Model for the U.S. (“RMS version 11”) and the
continued low investment return environment. In addition, RMS has released a further updated model
relating to European windstorms as part of the broader RMS version 11 changes, which can produce
substantial increases in annual average loss estimates for many insurers in respect of this peril. We believe
that over time adoption of this model is likely to affect demand for our products in Europe, although it is
unclear at this time whether or not such impact will be favorable; moreover, at this time widespread
utilization of RMS version 11 by market participants for policies due to be renewed effective January 1,
2012 remains uncertain. We cannot assure you that increased demand will indeed materialize or be
sustained, or will lead directly to improvements in our book of business.

General Economic Conditions

Although the U.S. reported modest improvements in terms of certain key macroeconomic measures in the
fourth quarter of 2011, meaningful uncertainty remains regarding the strength, duration and
comprehensiveness of any economic recovery in the U.S. and our other key markets. In particular, global
economic markets, including many of the key markets which we serve, may continue to be adversely
impacted by the financial and fiscal instability of several European jurisdictions and, increasingly, the
Eurozone market as a whole, the rising cost of oil and for energy more generally, the rising prices for
various agricultural and other commodities, and other factors. Accordingly, we continue to believe that
meaningful risk remains for continued uncertainty or disruptions in general economic conditions, including
dislocations in the financial markets which could give rise to increased economic uncertainty, or to further
deterioration of economic conditions. Moreover, if economic growth were to continue, such growth may be
only at a comparably suppressed rate for a relatively extended period of time. If the current economic
conditions persist at their current levels or decline, demand for the products sold by us or our customers or
our overall ability to write business at risk-adequate rates could weaken. In addition, persistent low levels of
economic activity could adversely impact other areas of our financial performance, such as by contributing
to unforeseen premium adjustments, mid-term policy cancellations or commutations, or asset devaluation.
Any of the foregoing or other outcomes of a prolonged period of relative economic weakness could
adversely impact our financial position or results of operations. In addition, during a period of extended
economic weakness, we believe our consolidated credit risk, reflecting our counterparty dealings with
customers, agents, brokers, retrocessionaires, capital providers and parties associated with our investment
portfolio, among others, is likely to be increased. Several of these risks could materialize, and our financial
results could be negatively impacted, even after the end of any economic downturn.

Moreover, we continue to monitor the risk that our principal markets will experience increased inflationary
conditions, which would, among other things, cause costs related to our claims and claim expenses to
increase, and impact the performance of our investment portfolio. The onset, duration and severity of an
inflationary period cannot be estimated with precision. The sovereign debt crisis in Europe and the related
financial restructuring efforts has, among other factors, made it more difficult to predict the inflationary
environment.

Our catastrophe-exposed operations are subject to the ever-present potential for significant volatility in
capital due primarily to our exposure to severe catastrophic events. Our specialty reinsurance portfolio is
also exposed to emerging risks arising from the ongoing relative economic weakness, including with respect
to a potential increase of claims in directors and officers, errors and omissions, surety, casualty clash and
other lines of business.

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Historically low interest rates and lower spreads have lowered the yields at which we invest our assets
relative to historical levels. We expect these developments, combined with the current composition of our
investment portfolio and other factors, to continue to put downward pressure on our net investment income
for the near term. In 2009 and 2010, our investment results benefited substantially from factors including
spreads tightening and improving valuations at levels which we would not anticipate repeating in future
periods. In addition to impacting our reported net income, potential future losses on our investment
portfolio, including potential future mark-to-market results, would adversely impact our equity capital.
Moreover, as we invest cash from new premiums written or reinvest the proceeds of invested assets that
mature or that we choose to sell, the yield on our portfolio is impacted by the prevailing environment of
comparably low yields. While it is possible yields will improve in future periods, we currently expect the
challenging economic conditions to persist and we are unable to predict with certainty when conditions will
substantially improve, or the pace of any such improvement.

Market Conditions and Competition

Over the last few renewal periods, regions directly impacted by the catastrophe events of 2010 and 2011
have evidenced signs of stabilization and, for certain coverages or accounts, improvement. During the
January 2012 renewal season, the property catastrophe reinsurance market overall continued to indicate
signs of gradual firming driven by the recent catastrophe losses incurred through the year and, to some
degree, by the incorporation of updated catastrophe models and exposure data. While market pricing and
terms in general remain subject to a range of unpredictable factors, and while a wide range of
considerations impact the terms and conditions of any single placement, we currently continue to estimate
that future periods may be characterized by a general increase in demand for certain of the products in
which we specialize, driven by factors including these losses, the prevailing interest rate environment, and
the ongoing adoption of revised vendor catastrophe models. According to U.S. state regulators, brokers
and other parties, there is also growing evidence of rate increases on underlying U.S. primary property
insurance business, as well as certain improvements in respect of terms and conditions, which over time
may support increased demand for catastrophe reinsurance coverage. Notwithstanding these catastrophe
market developments, leading global intermediaries and other sources have generally reported that the
U.S. casualty reinsurance market continues to reflect a relatively soft pricing environment, with pockets of
niche or specialty casualty renewals providing more attractive opportunities for stronger or well-positioned
reinsurers.

As a result of these developments, we currently estimate that demand for our catastrophe coverages may
increase over time in our key markets. However, it is not certain that any increase in demand will indeed
occur, will be sustained over time, or will not be offset by adverse or unforeseen factors. It is also possible
that we will encounter more significant competitive barriers than we have in the past and therefore render
us unable to participate in improving markets, should they transpire, to the degree we may wish to pursue
opportunities in such markets or to the same or a superior degree than our competitors. Renewal terms
vary widely by insured account and our ability to shape our portfolio to improve its risk and return
characteristics as estimated by us is subject to a range of competitive and commercial factors. While we
believe that our strong relationships, and track record of superior claims paying ability and other client
service will enable us to compete for the business we find attractive, we may not succeed in doing so;
moreover, our relationships in emerging markets are not as developed as they are in our current core
markets.

The market for our catastrophe reinsurance products is generally dynamic and volatile. The market
dynamics noted above, increased or decreased catastrophe loss activity, and changes in the amount of
capital in the industry can result in significant changes to the pricing, policy terms and demand for our
catastrophe reinsurance products over a relatively short period of time. In addition, changes in state-
sponsored catastrophe funds, or residual markets, which have generally grown dramatically in recent years,
or the implementation of new government-subsidized or sponsored programs, can dramatically alter market
conditions. We believe that the overall trend of increased frequency and severity of tropical cyclones
experienced in recent years may continue for the foreseeable future. Increased understanding of the
potential increase in frequency and severity of storms may contribute to increased demand for protection in
respect of coastal risks which could impact pricing and terms and conditions in coastal areas over time.
Overall, we expect higher property loss cost trends, driven by increased severity and by the potential for
increased frequency, to continue in the future. At the same time, certain markets we target continue to be

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impacted by fundamental weakness experienced by primary insurers, due to the ongoing economic
dislocation and, in many cases, inadequate primary insurance rate levels, including without limitation
insurers operating on an admitted basis in Florida. These conditions, which occurred in a period
characterized by relatively low insured catastrophic losses for these respective regions, have contributed to
certain publicly announced instances of insolvency, regulatory supervision and other regulatory actions, and
have weakened the ability of certain carriers to invest in reinsurance and other protections for coming
periods, and in some cases to meet their existing premium obligations. It is possible that these dynamics
will continue in future periods.

In addition, we continue to explore potential strategic transactions or investments, and other opportunities,
from time to time that are presented to us or that we originate. In evaluating these potential investments
and opportunities, we seek to improve the portfolio optimization of our business as a whole, to enhance our
strategy, to achieve an attractive estimated return on equity in respect of investments, to develop or
capitalize on a competitive advantage, and to source business opportunities that will not detract from our
core operations.

Legislative and Regulatory Update

In April 2010, the U.S. House Financial Services Committee approved H.R. 2555, titled “The Homeowners
Defense Act,” by a vote of 39-26. Concurrently, the Financial Services Committee passed legislation which
would expand the National Flood Insurance Program (the “NFIP”) to cover damage to or loss of real or
related personal property located in the U.S. arising from any windstorm (any hurricane, tornado, cyclone,
typhoon, or other wind event) (this legislation, together with H.R. 2555, is referred to below as the “House
Bills”). H.R. 2555 would, if enacted, provide for the creation of (i) a federal reinsurance catastrophe fund;
(ii) a federal consortium to facilitate qualifying state residual markets and catastrophe funds in securing
reinsurance; and (iii) a federal bond guarantee program for state catastrophe funds in qualifying state
residual markets. While neither of the House Bills has been passed in Congress, members of both the
House and Senate continue to express support for this legislation and it remains possible this legislation or
similar legislation will be considered by Congress.

In early 2011, California's two Senators, Dianne Feinstein and Barbara Boxer, introduced the Earthquake
Insurance Affordability Act of 2011 (S. 367), pursuant to which the federal government would provide limited
federal backing to certain qualifying state-affiliated organizations that provide catastrophic residential
earthquake insurance as a way to help them reduce the amount they spend each year in reinsurance
premiums. In the third quarter of 2011, companion legislation was introduced in respect of S. 367 in the
U.S. House of Representatives. According to published reports, the sole state organization currently
eligible to participate is the California Earthquake Authority (the “CEA”). Should the legislation be enacted,
the CEA has stated it would decrease significantly the relative and, perhaps, the absolute amount of private
reinsurance purchased by the CEA in the future.

If enacted, any of these bills, or legislation similar to these proposals, would, we believe, likely contribute to
the growth of state entities offering below market priced insurance and reinsurance in a manner adverse to
us and market participants more generally. While none of this legislation has been enacted to date, and
although we believe such legislation will continue to be vigorously opposed, if adopted these bills would
likely diminish the role of private market catastrophe reinsurers and could adversely impact our financial
results, perhaps materially. Throughout 2009 and into early 2010, Congress passed a series of short term
extensions of the NFIP. In July 2011, the U.S. House passed, by a 406-22 vote, the Flood Insurance
Reform Act of 2011, which would renew the NFIP through September 30, 2016, and effect substantial
reforms in the program. The NFIP's current authorization expires in May 2012. Among other things,
pursuant to this statute, the Federal Emergency Management Agency (“FEMA”) would be explicitly
authorized to carry out initiatives to determine the capacity of private insurers, reinsurers, and financial
markets to assume a greater portion of the flood risk exposure in the United States, and to assess the
capacity of the private reinsurance market to assume some of the program's risk. FEMA would be required
to submit a report on this assessment within six months of enactment. The House bill would also increase
the annual limitation on program premium increases from 10 percent to 20 percent of the average of the risk
premium rates for the properties concerned; would establish a four-year phase-in, after the first year, in
annual 20 percent increments, of full actuarial rates for a newly mapped risk premium rate area; and would
instruct FEMA to establish new flood insurance rate maps. If enacted, these reforms could increase the role
of private risk-bearing capital in respect of U.S. flood perils, perhaps significantly. In September, the Senate

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Banking Committee passed companion legislation. However, at this time the full Senate has yet to act in
respect of the legislation and there can be no assurance that Congress will ultimately pass reform
legislation, or that the studies and pilot programs contemplated by the bill will indeed contribute
meaningfully to private sector reforms. At the same time, expansions or weakening of the NFIP, or a failure
to act on the expiring current program in a timely fashion, particularly if unanticipated by industry
participants, could have dislocating impacts on the industry and our customers and potentially have an
adverse impact on us.

In 2007, the State of Florida enacted legislation to expand the Florida Hurricane Catastrophe Fund's
(“FHCF”) provision of below-market rate reinsurance to up to $28.0 billion per season (the “2007 Florida
Bill”). In May of 2009, the Florida legislature enacted Bill No. CS/HB 1495 (the “2009 Bill”), which will
gradually phase out $12.0 billion in optional reinsurance coverage under the FHCF over the succeeding five
years. The 2009 Bill similarly allows the state-sponsored property insurer, Citizens, to raise its rates up to
10% starting in 2010 and every year thereafter, until such time that it has sufficient funds to pay its claims
and expenses. For 2012, Citizens' rates will increase a statewide average of 6.2%. The rate increases and
cut back on coverage by FHCF and Citizens are expected to support, over time, a relatively increased role
of the private insurers in Florida, a market in which we have established substantial market share.

We believe the 2007 Florida Bill caused a substantial decline in the private reinsurance and insurance
markets in and relating to Florida, and contributed to the ongoing instability in the Florida primary insurance
market, where many insurers have reported substantial and continuing losses from 2009 through 2011, an
unusually low period for catastrophe losses in the state. Because of our position as one of the largest
providers of catastrophe-exposed coverage, both on a global basis and in respect of the Florida market, the
2007 Florida Bill and the weakened financial position of Florida insurers may have a disproportionate
adverse impact on us compared to other reinsurance market participants. The advent of a large windstorm,
or of multiple smaller storms, could challenge the assessment-based claims paying capacity of Citizens and
the FHCF. In October 2011, the FHCF Advisory Council approved official bonding capacity estimates in
respect of the current contract year, reflecting the amount of post-catastrophe bonding currently estimated
to be achievable by the FHCF's management and lead financial advisor. The FHCF projected a 2011 year-
end fund balance of approximately $7.2 billion, and a total bonding capacity estimate of $8.0 billion; given
the FHCF's total potential claims-paying obligation of $18.4 billion; this estimated claims-paying capacity of
approximately $15.2 billion was therefore estimated by the FHCF's lead adviser to reflect a potential
shortfall of $3.2 billion in respect of an initial season or event. Any inability, or delay, in the claims paying
ability of these entities or of private market participants could further weaken or destabilize the Florida
market, potentially giving rise to an unpredictable range of adverse impacts. The FHCF and the Florida
Office of Insurance Regulation ("OIR") have each estimated that even partial failure, or deferral, of the
FHCF's ability to pay claims in full could substantially weaken numerous private insurers, with the OIR
having estimated that a 25% shortfall in the FHCF's claims-paying capacity could cause as many as 24 of
the top 50 insurers in the state to have less than the statutory minimum surplus of $5.0 million, with such
insurers representing approximately 35% of the market based on premium volume, or approximately 2.2

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million policies. Adverse market, regulatory or legislative changes impacting Florida could affect our ability
to sell certain of our products, to collect premiums we may be owed on policies we have already written, to
renew business with our customers for future periods, or have other adverse impacts, some of which may
be difficult to foresee, and could therefore have a material adverse effect on our operations.

In July 2010 the Dodd-Frank Act was signed into law by President Obama. The Dodd-Frank Act represents
a comprehensive overhaul of the financial services industry within the United States, establishes the new
federal Bureau of Consumer Financial Protection (the “BCFP”), and will require the BCFP and other federal
agencies to implement many new rules. At this time, it is difficult to predict the extent to which the Dodd-
Frank Act or the resulting regulations will impact the Company's business. However, compliance with these
new laws and regulations will result in additional costs, which may adversely impact the Company's results
of operations, financial condition or liquidity. Even if we are not subject to significant additional regulation by
the federal government, new or additional state, federal or international financial sector regulatory reform,
including the Dodd-Frank Act, could have a significant impact on us. For example, legislative or regulatory
changes, or their resultant impact on our market, could have an unexpected adverse effect on our
customers, our competitive position or our rights as a creditor. Although we do not currently expect material
adverse consequences to our business from the developments of which we are aware, we cannot assure
you this expectation will prove accurate or that the Dodd-Frank Act or other developments will not impact
our business more adversely than we currently estimate.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are principally exposed to five types of market risk: interest rate risk; foreign currency risk; credit risk;
energy and weather-related risk; and equity price risk. The Company’s guidelines permit investments in
derivative instruments such as futures, forward contracts, options, swap agreements and other derivative
contracts which may be used to assume risk or for hedging purposes.

Interest Rate Risk

Our investment portfolio includes fixed maturity investments and short term investments, whose fair values
will fluctuate with changes in interest rates. We attempt to maintain adequate liquidity in our fixed maturity
investments portfolio to fund operations, pay reinsurance and insurance liabilities and claims and provide
funding for unexpected events. We seek to manage our interest rate risk in part by monitoring the duration
and structure of our investment portfolio.

The aggregate hypothetical loss generated from an immediate adverse parallel shift in the treasury yield
curve of 100 basis points would cause a decrease in market value of 1.9%, which equated to a decrease in
market value of approximately $101.4 million on a portfolio valued at $5.3 billion at December 31, 2011.
The foregoing reflects the use of an immediate time horizon, since this presents the worst-case scenario.
Credit spreads are assumed to remain constant in these hypothetical examples.

We use interest rate futures within our portfolio of fixed maturity investments to manage our exposure to
interest rate risk, which can include increasing or decreasing our exposure to this risk. At December 31,
2011, we had $3.2 billion of notional long positions and $285.7 million of notional short positions of primarily
Eurodollar, U.S. Treasury and non-U.S. dollar futures contracts (2010 - $2.2 billion and $209.1 million,
respectively). The fair value of these derivatives is determined using exchange traded prices. The fair
value of these derivatives recognized in other assets and liabilities, depending on the rights or obligations,
in our consolidated balance sheet at December 31, 2011, was $0.6 million (2010 - $2.5 million) and $0.3
million (2010 - $0.7 million), respectively. During 2011, we recorded a loss of $25.3 million (2010 - loss of
$9.1 million, 2009 - gain of $5.2 million) in our consolidated statement of operations related to these
derivatives.

The aggregate hypothetical loss generated from an immediate upward parallel shift in the treasury yield
curve of 100 basis points would cause a decrease in market value of our net position in these derivatives of
approximately $2.3 million at December 31, 2011. The foregoing reflects the use of an immediate time
horizon, since this presents the worst-case scenario. Credit spreads are assumed to remain constant in
these hypothetical examples.

Foreign Currency Risk

Our functional currency is the U.S. dollar. We write a portion of our business in currencies other than U.S.
dollars and may, from time to time, experience foreign exchange gains and losses in our consolidated
financial statements. All changes in exchange rates, with the exception of non-U.S. dollar denominated
investments classified as available for sale, are recognized currently in our consolidated statements of
operations.

Underwriting Operations Related Foreign Currency Contracts

Our foreign currency policy with regard to our underwriting operations is generally to hold foreign currency
assets, including cash, investments and receivables that approximate the foreign currency liabilities,
including claims and claim expense reserves and reinsurance balances payable. When necessary, we may
use foreign currency forward and option contracts to minimize the effect of fluctuating foreign currencies on
the value of non-U.S. dollar denominated assets and liabilities associated with our underwriting operations.
The fair value of the Company's underwriting operations related foreign currency contracts is determined
using indicative pricing obtained from counterparties or broker quotes. At December 31, 2011, the
Company had outstanding underwriting related foreign currency contracts of $160.5 million in notional long
positions and $700.8 million in notional short positions, denominated in U.S. dollars (2010 - $42.0 million
and $188.1 million, respectively). During 2011, we recorded a loss of $5.4 million (2010 - gain of $4.2
million, 2009 - loss of $0.1 million), on our foreign currency forward and option contracts related to our
underwriting operations.

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Investment Portfolio Related Foreign Currency Forward Contracts

Our investment operations are exposed to currency fluctuations through our investments in non-U.S. dollar
fixed maturity investments, short term investments and other investments. At December 31, 2011, our
combined investment in these non-U.S. dollar investments was $262.9 million. To economically hedge our
exposure to currency fluctuations from these investments, we have entered into foreign currency forward
contracts. Unrealized foreign exchange gains or losses arising from non-U.S. dollar investments classified
as available for sale are recorded in accumulated other comprehensive income. Realized foreign exchange
gains or losses from the sale of our non-U.S. dollar fixed maturity investments available for sale, realized
and unrealized foreign exchange gains or losses from the sale of our non-U.S. dollar fixed maturity
investments trading and other investments, and foreign exchange gains or losses associated with our
hedging of these non-U.S. dollar investments are recorded in net foreign exchange gains (losses) in our
consolidated statements of operations. The fair value of the Company's investment portfolio related foreign
currency forward contracts is determined using an interpolated rate based on closing forward market rates.
At December 31, 2011, we had outstanding investment portfolio related foreign currency contracts of $48.1
million in notional long positions and $211.6 million in notional short positions, denominated in U.S. dollars
(2010 - $69.2 million and $281.0 million, respectively). During 2011, we recorded a loss of $4.3 million
(2010 - gain of $20.1 million, 2009 - loss of $6.4 million) on our foreign currency forward contracts related to
hedging our non-U.S. dollar investments. We also generated a gain of $1.0 million (2010 - loss of $17.8
million, 2009 - gain of $5.5 million) on our non-U.S. dollar denominated investments in 2011. This was
offset by a loss of $0.1 million in accumulated other comprehensive income (2010 - $2.8 million) related to
the change in unrealized foreign exchange losses on non-U.S. dollar investments which are classified as
available for sale. In the future, we may choose to increase our exposure to non-U.S. dollar investments.

Energy and Risk Management Operations Related Foreign Currency Contracts

Our energy and risk management operations are exposed to currency fluctuations through certain derivative
transactions we enter into that are denominated in non-U.S. dollars. The Company may, from time to time,
use foreign currency forward and option contracts to minimize the effect of fluctuating foreign currencies on
the value of non-U.S. dollar denominated assets and liabilities associated with these operations. The fair
value of the Company's energy and risk operations related foreign currency contracts is based on exchange
traded prices. At December 31, 2011, our energy and risk management operations had outstanding foreign
currency contracts of the total notional amount in U.S. dollars of our energy and risk management
operations related foreign currency contracts of $7.8 million in notional long positions and $12.7 million in
notional short positions (2010 - $0.0 million and $10.0 million). During 2011, we recorded a gain of $0.6
million (2010 - gain of $0.5 million, 2009 - loss of $0.5 million) on our foreign currency forward and option
contracts related to our energy and risk management operations.

Credit Risk

Our exposure to credit risk is primarily due to our fixed maturity investments, short term investments,
premiums receivable and reinsurance recoverables. At December 31, 2011 and 2010, our invested asset
portfolio had a dollar weighted average rating of AA. From time to time, we purchase credit derivatives to
hedge our exposures in the insurance industry and to assist in managing the credit risk associated with
ceded reinsurance. The Company also employs credit derivatives in its investment portfolio to either
assume credit risk or hedge its credit exposure. The fair value of the credit derivatives are determined
using industry valuation models, broker bid indications or internal valuation models. We record them on our
consolidated balance sheet as other assets or other liabilities depending on the rights or obligations. The
fair value of these credit derivatives can change based on a variety of factors including changes in credit
spreads, default rates and recovery rates, the correlation of credit risk between the referenced credit and
the counterparty, and market rate inputs such as interest rates. At December 31, 2011, we had outstanding
credit derivatives of $15.0 million in notional long positions and $38.1 million in notional short positions,
denominated in U.S. dollars (2010 - $15.0 million and $118.0 million respectively). The fair value of these
credit derivatives, as recognized in other liabilities in our consolidated balance sheet at December 31, 2011,
was $0.5 million (2010 - other assets of $3.1 million). During 2011, we recorded a loss of $1.5 million (2010
- gain of $1.3 million, 2009 - loss of $0.3 million) in our consolidated statement of operations from our credit
derivative positions.

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Energy and Weather-Related Risk

Energy and Risk Management Operations

We regularly transact in certain derivative-based risk management products primarily to address weather
and energy risks and engage in hedging and trading activities related to these risks. The trading markets
for these derivatives are generally linked to energy and agriculture commodities, weather and other natural
phenomena. The unit which conducts these activities also transacts business which contemplates the
physical delivery of energy-related commodities, including natural gas. Currently, a significant percentage
of our derivative-based risk management products are transacted on a dual-trigger basis combining
weather or other natural phenomenon, with prices for commodities or securities related to energy or
agriculture. The fair value of these contracts is obtained through the use of quoted market prices, or in the
absence of such quoted prices, industry or internal valuation models. Generally, our current portfolio of
such derivative contracts is of comparably short duration and such contracts are predominantly seasonal in
nature. Over time, we currently expect that our participation in these markets, and the impact of these
operations on our financial results, is likely to increase on both an absolute and relative basis. It is possible
the duration of derivative contracts in this portfolio will lengthen in the future.

We use, among other things, value-at-risk (“VaR”) analysis to monitor the risks associated with our energy
and weather derivatives trading portfolio. VaR is a tool that measures the potential loss that could occur if
our trading positions were maintained over a defined period of time, calculated at a given statistical
confidence level. Due to the seasonal nature of our energy and weather derivatives trading activities, the
VaR is based on a rolling two season (one-year) holding period assuming no dynamic trading during the
holding period. A 99% confidence level is used for the VaR analysis. A 99% confidence level implies that
within a one-year period, the potential loss in our portfolio is not expected to exceed the VaR estimate in
99% of the possible modeled outcomes. In the remaining estimated 1% of the possible outcomes, the
anticipated potential loss is expected to be higher than the VaR figure, and on average substantially higher.

The VaR model, based on a Monte Carlo simulation methodology, seeks to take into account correlations
between different positions and potential for movements to offset one another within the portfolio. The
expected value of the risk factors in our portfolio is generally obtained from exchange-traded futures
markets. For most of the risk factors, the volatility is derived from exchange-traded options markets. For
those risk factors for which exchange-traded options might not exist, the volatility is based on historical
analysis matched to broker quotes from the over-the-counter market, where available. The joint distribution
of outcomes is based on our estimate of the historical seasonal dependence among the underlying risk
factors, scaled to the current market levels. We then estimate the expected outcomes by applying a Monte
Carlo simulation to these risk factors. The joint distribution of the simulated risk factors is then filtered
through the portfolio positions, and then the distribution of the outcomes is realized. The 99th percentile of
this distribution is then calculated as the portfolio VaR. The major limitation of this methodology is that the
market data used to forecast parameters of the model may not be an appropriate proxy of those
parameters. The VaR methodology uses a number of assumptions, such as (i) risks are measured under
average market conditions, assuming normal distribution of market risk factors, (ii) future movements in
market risk factors follow estimated historical movements, and (iii) the assessed exposures do not change
during the holding period. There is no guarantee that these assumptions will prove correct. We expect that,
for any given period, our actual results will differ from our assumptions, including with respect to previously
estimated potential losses and that such losses could be substantially higher than the estimated VaR.

At December 31, 2011, the estimated VaR for our portfolio of energy and weather-related derivatives, as
described above, calculated at an estimated 99% confidence level, was $45.1 million. The average, low
and high amounts calculated by our VaR analysis during the year ended December 31, 2011 were $35.6
million, $10.8 million and $84.8 million, respectively. The energy and weather-related derivative trading
markets in which we transact are cyclical in nature, with the three months ended December 31, 2011
experiencing the greatest level of volatility during 2011. The average, low and high amounts calculated by
our VaR analysis during the three months ended December 31, 2011 were $65.8 million, $41.9 million and
$84.8 million, respectively.

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Equity Price Risk

We are indirectly exposed to equity price risk through our investments in: 1) equity investments trading
which are traded on nationally recognized stock exchanges, and totaled $50.6 million at December 31, 2011
(2010 - $0.0 million); 2) some hedge funds that have net long equity positions and private equity
partnerships whose exit strategies often depend on the equity markets; such investments totaled $389.3
million at December 31, 2011 (2010 - $388.6 million); and 3) our investments in other ventures, under equity
method, which totaled $70.7 million at December 31, 2011 (2010 - $85.6 million). A hypothetical 10 percent
decline in the prices of these equity investments trading, hedge funds, private equity partnerships and
investments in other ventures, under equity method, holding all other factors constant, would have resulted
in a $51.1 million decline in the fair value of these investments at December 31, 2011.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to Item 15(a) of this Report for the Consolidated Financial Statements of
RenaissanceRe and the Notes thereto, as well as the Schedules to the Consolidated Financial Statements.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

146

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Internal Controls: We have designed various disclosure controls and procedures
(as defined in Rules 13a-15(e) and Rule 15d-15(e) under the Exchange Act), to help ensure that information
required to be disclosed in our periodic Exchange Act reports, such as this annual report, is recorded,
processed, summarized and reported on a timely and accurate basis. Our disclosure controls and
procedures are also designed with the objective of ensuring that such information is accumulated and
communicated to our senior management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure. Our internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles and includes those policies and procedures that: (1) pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the issuer; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the issuer are being made only in accordance with
authorizations of management and directors of the issuer; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that
could have a material effect on the financial statements.

Limitations on the Effectiveness of Controls: Our Board of Directors and management, including our Chief
Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures or
internal control over financial reporting will prevent all errors and all fraud. Controls, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
controls are met. Further, we believe that the design of prudent controls must reflect appropriate resource
constraints, such that the benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all controls, there can be no absolute assurance that all control issues and instances
of fraud, if any, applicable to us have been or will be detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple
errors or mistakes. Additionally, controls can be circumvented by the individual acts of some individuals, by
collusion of more than one person, or by management override of the control. The design of any system of
controls also is based in part upon certain assumptions about the likelihood of future events, and there can
be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions; over time, controls may become inadequate because of changes in conditions, or the degree of
compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-
effective control system, misstatements due to error or fraud may occur and not be detected.

Evaluation: An evaluation was performed under the supervision and with the participation of the Company's
management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures as required by Rules 13a-15(b)
and 15d-15(b) of the Exchange Act. Based upon that evaluation, the Company's management, including
our Chief Executive Officer and Chief Financial Officer, concluded that, at December 31, 2011, the
Company's disclosure controls and procedures were effective at the reasonable assurance level in ensuring
that information required to be disclosed in Company reports filed under the Exchange Act is (i) recorded,
processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii)
accumulated and communicated to management, including the Company's Chief Executive Officer and
Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. There has
been no change in the Company's internal control over financial reporting during the three months ended
December 31, 2011 that has materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

147

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

This item is omitted because a definitive proxy statement that involves the election of directors will be filed
with the Securities and Exchange Commission not later than 120 days after the close of the fiscal year
pursuant to Regulation 14A, which proxy statement is incorporated by reference.

RenaissanceRe has adopted a Code of Ethics that applies to its directors and executive officers. The Code
of Ethics is available free of charge on our website http://www.renre.com. We will also provide a printed
version of the Code of Ethics to any shareholder who requests it. We intend to disclose any amendments to
our Code of Ethics by posting such information on our website. As outlined in the Code of Ethics, any
waivers of our Code of Ethics applicable to our directors, principal executive officer, principal financial
officer, principal accounting officer or controller and other executive officers who perform similar functions
will be disclosed by filing a Form 8-K.

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

148

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

Financial Statements, Financial Statement Schedules and Exhibits.

Financial Statements

The Consolidated Financial Statements of RenaissanceRe Holdings Ltd. and related Notes thereto are
listed in the accompanying Index to Consolidated Financial Statements and are filed as part of this Form
10-K.

Financial Statement Schedules

The Schedules to the Consolidated Financial Statements of RenaissanceRe Holdings Ltd. are listed in the
accompanying Index to Schedules to Consolidated Financial Statements and are filed as a part of this Form
10-K.

3.1

3.2

3.3
3.4

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

Exhibits

Memorandum of Association. (1)

Amended and Restated Bye-Laws. (2)

Memorandum of Increase in Share Capital of RenaissanceRe Holdings Ltd. (3)
Specimen Common Share certificate. (1)

Form of Director Retention Agreement, dated as of November 8, 2002, entered into by each of
the non-employee directors of RenaissanceRe Holdings Ltd. (4)

Further Amended and Restated Employment Agreement, dated as of February 19, 2009,
between RenaissanceRe Holdings Ltd. and Neill A. Currie. (8)

Amendment No. 1 to the Further Amended and Restated Employment Agreement, dated
January 8, 2010, by and among RenaissanceRe Holdings Ltd. and Neill A. Currie. (9)

Employment Agreement, dated as of June 10, 2009, by and between RenaissanceRe Holdings
Ltd. and Jeffrey D. Kelly. (11)

Amendment No. 1 the Employment Agreement, dated January 8, 2010, by and among
RenaissanceRe Holdings Ltd. and Jeffrey D. Kelly. (9)

Form of Employment Agreement for Executive Officers. (10)

Form of Amendment to Employment Agreement for Executive Officers. (13)

Form of Amendment No. 2 to Employment Agreement for Executive Officers. (7)

Form of Amendment No. 3 to the Amended and Restated Employment Agreement for Executive
Officers. (9)

Third Amended and Restated Credit Agreement, dated as of April 5, 2006, by and among
DaVinciRe Holdings Ltd., the banks, financial institutions and other institutional lenders listed
thereto (the “Lenders”), Citigroup Global Markets Inc., as sole lead arranger, book manager and
syndication agent, and Citibank, N.A. as administrative agent for the Lenders. (16)

Amendment No. 1 to Third Amended and Restated Credit Agreement, dated as of March 9,
2010, among DaVinciRe Holdings Ltd., the banks, financial institutions and other institutional
lenders listed thereto and Citibank, N.A., as administrative agent for the lenders. (32)

RenaissanceRe Holdings Ltd. 2001 Stock Incentive Plan. (18)

Amendment No. 1 to the RenaissanceRe Holdings Ltd. 2001 Stock Incentive Plan. (19)

Amendment No. 2 to the RenaissanceRe Holdings Ltd. 2001 Stock Incentive Plan. (19)

Amendment No. 3 to the RenaissanceRe Holdings Ltd. 2001 Stock Incentive Plan. (20)

Amendment No. 4 to the RenaissanceRe Holdings Ltd. 2001 Stock Incentive Plan. (40)

Amendment No. 5 to the RenaissanceRe Holdings Ltd. 2001 Stock Incentive Plan. (37)

UK Schedule to the RenaissanceRe Holdings Ltd. 2001 Stock Incentive Plan. (20)

UK Sub-Plan to the RenaissanceRe Holdings 2001 Stock Incentive Plan. (20)

Form of Option Grant Notice and Agreement pursuant to which option grants are made under
the RenaissanceRe Holdings Ltd. 2001 Stock Incentive Plan. (21)

149

10.21

10.22

10.23

10.24

10.25

10.26

10.27

10.28

10.29

10.30

10.31

10.32

10.33

10.34

10.35

10.36

10.37

10.38

10.39

10.40

10.41

10.42

10.43

10.44

10.45

Form of Restricted Stock Grant Notice and Agreement pursuant to which Restricted Stock
grants are made under the RenaissanceRe Holdings Ltd. 2001 Stock Incentive Plan. (21)

RenaissanceRe Holdings Ltd. 2004 Stock Option Incentive Plan. (22)

Amendment No. 1 to the RenaissanceRe Holdings Ltd. 2004 Stock Option Incentive Plan. (23)

Form of Option Agreement pursuant to which option grants are made under the
RenaissanceRe Holdings 2004 Stock Option Incentive Plan to executive officers. (22)

Amended and Restated RenaissanceRe Holdings Ltd. Non-Employee Director Stock Plan. (25)

Amendment No. 1 to the RenaissanceRe Holdings Ltd. Non-Employee Director Stock Plan.
(25)

Amendment No. 2 to the RenaissanceRe Holdings Ltd. Non-Employee Director Stock Plan.
(26)

Amendment No. 3 to the RenaissanceRe Holdings Ltd. Non-Employee Director Stock Plan.
(31)

Form of Restricted Stock Grant Agreement for Directors. (5)

Form of Option Grant Agreement for Directors. (5)

Master Standby Letter of Credit Reimbursement Agreement, dated as of November 2, 2001,
between Renaissance Reinsurance Ltd. and Fleet National Bank. Timicuan Reinsurance Ltd.
has become a party to this agreement pursuant to an accession agreement. (27)

Certificate of Designation, Preferences and Rights of 6.08% Series C Preference Shares. (29)

Certificate of Designation, Preferences and Rights of 6.60% Series D Preference Shares. (30)

Senior Indenture, dated as of July 1, 2001, between RenaissanceRe Holdings Ltd., as Issuer,
and Bankers Trust Company, as Trustee. (12)

Second Supplemental Indenture, by and between RenaissanceRe Holdings Ltd. and Deutsche
Bank Trust Company Americas (f/k/a Bankers Trust Company), dated as of January 31, 2003.
(14)

Master Reimbursement Agreement, dated as of April 29, 2009, by and between Renaissance
Reinsurance Ltd. and Citibank Europe PLC. (20)

Pledge Agreement, dated as of April 29, 2009, by and between Renaissance Reinsurance Ltd.
and Citibank Europe PLC. (20)

Agreement Regarding Use of Aircraft Interest, dated as of November 17, 2009, by and between
RenaissanceRe Holdings Ltd. and Neill A. Currie. (42)

RenaissanceRe Holdings Ltd. 2010 Restricted Stock Unit Plan. (42)

Form of Restricted Stock Unit Agreement, pursuant to which restricted stock unit grants are
made under the RenaissanceRe Holdings Ltd. 2010 Restricted Stock Unit Plan. (42)

Senior Indenture, dated as of March 17, 2010, among RenRe North America Holdings Inc., as
Issuer, RenaissanceRe Holdings Ltd., as Guarantor, and Deutsche Bank Trust Companies
America, as Trustee. (33)

First Supplemental Indenture, dated as of March 17, 2010, among RenRe North America
Holdings Inc., as Insurer, RenaissanceRe Holdings Ltd., as Guarantor, and Deutsche Bank
Trust Companies America, as Trustee. (33)

Senior Debt Securities Guarantee Agreement, dated as of March 17, 2010, between
RenaissanceRe Holdings Ltd., as Guarantor, and Deutsche Bank Trust Companies America, as
Guarantee Trustee. (33)

Waiver Agreement, dated as of January 21, 2011, by and among RenRe North America
Holdings Inc., RenaissanceRe Holdings Ltd. and Deutsche Bank Trust Company Americas, as
Trustee. (41)

Credit Agreement, dated as of April 22, 2010, by and among RenaissanceRe Holdings Ltd., as
Borrower, the financial institutions parties thereto, as Lenders, and Bank of America, N.A., as
Fronting Bank, LC Administrator and Administrative Agent. (34)

150

10.46

10.47

10.48

10.49

10.50

10.51

10.52

10.53

10.54

10.55

10.56

Amendment, Consent and Waiver to Credit Agreement, dated as of January 18, 2011, by and
among RenaissanceRe Holdings Ltd., as Borrower, the financial institutions parties thereto, as
Lenders, and Bank of America, N.A., as Fronting Bank, LC Administrator and Administrative
Agent. (41)

Third Amended and Restated Reimbursement Agreement, dated as of April 22, 2010, by and
among Renaissance Reinsurance Ltd., Renaissance Reinsurance of Europe, Glencoe
Insurance Ltd., DaVinci Reinsurance Ltd., RenaissanceRe Holdings Ltd., the financial
institutions parties thereto and Wells Fargo Bank, National Association, as successor by merger
to Wachovia Bank, National Association, as issuing bank, collateral agent and administrative
agent. (34)

Amendment, Consent and Waiver to Third Amended and Restated Reimbursement Agreement,
dated as of January 18, 2011, by and among Renaissance Reinsurance Ltd., Renaissance
Reinsurance of Europe, Glencoe Insurance Ltd., DaVinci Reinsurance Ltd., RenaissanceRe
Holdings Ltd., the financial institutions parties thereto and Wells Fargo Bank, National
Association, as issuing bank, collateral agent and administrative agent. (41)

Second Amended and Restated RIHL Undertaking and Agreement, dated as of April 22, 2010,
by RenaissanceRe Investment Holdings Ltd., in favor of Wells Fargo Bank, National
Association (as successor by merger to Wachovia Bank, National Association), as
Administrative Agent, and the other Lender Parties. (34)

Form of Letter Agreement with Neill A. Currie Regarding Performance Share Awards. (35)

Form of Letter Agreement with the Named Executive Officers Regarding Performance Share
Awards. (35)

Form of Tax Reimbursement Waiver Letter with the Named Executive Officers.

Form of Performance-Based Restricted Stock Grant Notice and Agreement pursuant to which
performance-based restricted stock awards are made under the RenaissanceRe Holdings Ltd.
2010 Performance-Based Equity Incentive Plan. (36)

Performance-Based Restricted Stock Grant Notice and Agreement under the RenaissanceRe
Holdings Ltd. 2010 Performance-Based Equity Incentive Plan, dated June 9, 2010, between
RenaissanceRe Holdings Ltd. and Neill A. Currie. (36)

Facility Letter, dated September 17, 2010, from Citibank Europe plc to Renaissance
Reinsurance Ltd., DaVinci Reinsurance Ltd. and Glencoe Insurance Ltd. (38)

Insurance Letters of Credit - Master Agreement, dated September 17, 2010, between
Renaissance Reinsurance Ltd. and Citibank Europe plc. DaVinci Reinsurance Ltd. and Glencoe
Insurance Ltd. have each entered into an agreement with Citibank Europe plc that is identical to
the foregoing agreement, except with respect to party names. (38)

10.57

Stock Purchase Agreement, dated as of November 18, 2010, by and between RenRe North
America Holdings Inc., and QBE Holdings Inc. (39)

21.1

23.1

31.1

31.2

32.1

32.2

List of Subsidiaries of the Registrant.

Consent of Ernst & Young Ltd.

Certification of Neill A. Currie, Chief Executive Officer of RenaissanceRe Holdings Ltd.,
pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as
amended.

Certification of Jeffrey D. Kelly, Chief Financial Officer of RenaissanceRe Holdings Ltd.,
pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as
amended.

Certification of Neill A. Currie, Chief Executive Officer of RenaissanceRe Holdings Ltd.,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.

Certification of Jeffrey D. Kelly, Chief Financial Officer of RenaissanceRe Holdings Ltd.,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.

151

101.INS

XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

(12)

(13)

(14)

(15)

(16)

(17)

(18)

(19)

Incorporated by reference to the Registration Statement on Form S-1 of RenaissanceRe Holdings
Ltd. (Registration No. 33-70008) which was declared effective by the SEC on July 26, 1995.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Quarterly Report on Form 10-Q for the
period ended June 30, 2002, filed with the SEC on August 14, 2002.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Quarterly Report on Form 10-Q for the
period ended March 31, 1998, filed with the SEC on May 14, 1998 (SEC File Number 000-26512)

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Annual Report on Form 10-K for the
year ended December 31, 2002, filed with the SEC on March 31, 2003 (SEC File Number
001-14428)
Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on February 27, 2006

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Quarterly Report on Form 10-Q for the
period ended March 31, 2007, filed with the SEC on May 2, 2007.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on November 25, 2008.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on February 25, 2009.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on January 14, 2010.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on July 21, 2006, relating to certain events which occurred on July 19, 2006. Other than
with respect to the Percent and Lump Sum Percent (as defined and disclosed in the Form 8-K) and
matters such as names and titles, the employment agreements for Messrs. O’Donnell and Ashley
are identical to the form filed as Exhibit 10.9.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on June 15, 2009.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on July 17, 2001.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Quarterly Report on Form 10-Q for the
period ended March 31, 2008, filed with the SEC on May 2, 2008.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on January 31, 2003.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on April 14, 2009.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on April 11, 2006, relating to certain events which occurred on April 5, 2006.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on May 3, 2007.

Incorporated by reference to Exhibit 99.2 to the Registration Statement on Form S-8 (Registration
No. 333-90758) dated June 19, 2002.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Quarterly Report on Form 10-Q for the
period ended March 31, 2007, filed with the SEC on May 2, 2007.

152

(20)

(21)

(22)

(23)

(24)

(25)

(26)

(27)

(28)

(29)

(30)

(31)

(32)

(33)

(34)

(35)

(36)

(37)

(38)

(39)

(40)

(41)

(42)

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Quarterly Report on Form 10-Q for the
period ended March 31, 2009, filed with the SEC on May 1, 2009.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Quarterly Report on Form 10-Q for the
period ended September 30, 2004, filed with the SEC on November 9, 2004.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on September 2, 2004.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Annual Report on Form 10-K for the
year ended December 31, 2004, filed with the SEC on March 31, 2005 (SEC File Number
001-14428).

Incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-8 (Registration
No. 333-90758) dated June 19, 2002.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Quarterly Report on Form 10-Q for the
period ended March 31, 2007, filed with the SEC on May 2, 2007.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Quarterly Report on Form 10-Q for the
period ended September 30, 2008, filed with the SEC on October 30, 2008.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Annual Report on Form 10-K for the
year ended December 31, 2001, filed with the SEC on April 1, 2002.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on February 4, 2003.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on March 18, 2004.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Form 8-A, filed with the SEC on
December 14, 2006.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Annual Report on Form 10-K for the
year ended December 31, 2008, filed with the SEC on February 20, 2009.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on March 11, 2010.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on March 18, 2010.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on April 27, 2010.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Quarterly Report on Form 10-Q, filed
with the SEC on April 29, 2010.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on June 11, 2010.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on August 13, 2010.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on September 23, 2010.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on November 18, 2010.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Definitive Proxy Statement filed with
the Commission on April 8, 2010.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Current Report on Form 8-K, filed with
the SEC on January 24, 2011.

Incorporated by reference to RenaissanceRe Holdings Ltd.’s Annual Report on Form 10-K for the
year ended December 31, 2009, filed with the SEC on February 19, 2010.

153

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in
Hamilton, Bermuda on February 23, 2012.

RENAISSANCERE HOLDINGS LTD.

/s/ Neill A. Currie
Neill A. Currie
President, Chief Executive Officer,
Director

Signature

Title

/s/ Neill A. Currie

Neill A. Currie

/s/ Jeffrey D. Kelly

Jeffrey D. Kelly

/s/ Mark A. Wilcox

Mark A. Wilcox

/s/ Ralph B. Levy

Ralph B. Levy

/s/ David C. Bushnell

David C. Bushnell

President, Chief Executive Officer,
Director

Executive Vice President, Chief
Financial Officer

Date

February 23, 2012

Senior Vice President, Corporate
Controller and Chief Accounting Officer

February 23, 2012

Chairman of the Board of
Directors

February 23, 2012

Director

February 23, 2012

/s/ Thomas A. Cooper

Director

February 23, 2012

Thomas A. Cooper

/s/ James L. Gibbons

James L. Gibbons

/s/ Jean D. Hamilton

Jean D. Hamilton

/s/ Henry Klehm, III

Henry Klehm, III

Director

/s/ W. James MacGinnitie

Director

W. James MacGinnitie

/s/ Anthony M. Santomero

Director

Anthony M. Santomero

/s/ Nicholas L. Trivisonno

Director

Nicholas L. Trivisonno

February 23, 2012

/s/ Edward J. Zore

Edward J. Zore

Director

February 23, 2012

154

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Management’s Report on Internal Control Over Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . .

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Balance Sheets at December 31, 2011 and 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Operations for the Years Ended December 31, 2011, 2010, and 2009

Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31,
2011, 2010 and 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31,

2011, 2010 and 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Cash Flows for the Years Ended December 31, 2011, 2010 and 2009

Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

F-2

F-3

F-4

F-5

F-6

F-7

F-8

F-9

F-10

F-1

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management at RenaissanceRe Holdings Ltd. (“RenaissanceRe”) is responsible for establishing and
maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Securities Exchange Act of 1934, as amended. RenaissanceRe’s internal control over financial
reporting was designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with U.S. generally accepted
accounting principles and to reflect management’s judgments and estimates concerning effects of events
and transactions that are accounted for or disclosed. There are inherent limitations to the effectiveness of
any controls. Controls, no matter how well conceived and operated, can provide only reasonable assurance
that its objectives are met. No evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within RenaissanceRe have been detected.

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, assessed its
internal control over financial reporting as of December 31, 2011. In making this assessment, management
used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control-Integrated Framework. Based on this assessment, management believes that
RenaissanceRe maintained effective internal control over financial reporting as of December 31, 2011.

RenaissanceRe’s effectiveness of internal control over financial reporting as of December 31, 2011, has
been audited by Ernst & Young Ltd., the Independent Registered Public Accountants who also audited
RenaissanceRe’s consolidated financial statements. Ernst & Young Ltd.’s attestation report on the
effectiveness of RenaissanceRe’s internal control over financial reporting appears on page F-4.

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF RENAISSANCERE HOLDINGS LTD.

We have audited the accompanying consolidated balance sheets of RenaissanceRe Holdings Ltd. and
Subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of operations,
changes in shareholders’ equity, comprehensive (loss) income, and cash flows for each of the three years in
the period ended December 31, 2011. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the
consolidated financial position of RenaissanceRe Holdings Ltd. and Subsidiaries at December 31, 2011 and
2010, and the consolidated results of their operations and their cash flows for each of the three years in the
period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), RenaissanceRe Holdings Ltd.’s internal control over financial reporting as of
December 31, 2011, based on criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23,
2012 expressed an unqualified opinion thereon.

/s/ Ernst & Young Ltd.

Hamilton, Bermuda
February 23, 2012

F-3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF RENAISSANCERE HOLDINGS LTD.

We have audited RenaissanceRe Holdings Ltd. and Subsidiaries' internal control over financial reporting as
of December 31, 2011, based on criteria established in Internal Control – Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).
RenaissanceRe Holdings Ltd. and Subsidiaries' management is responsible for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting included in the accompanying Management’s Report on Internal Control over Financial
Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, RenaissanceRe Holdings Ltd. and Subsidiaries maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2011, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of RenaissanceRe Holdings Ltd. and Subsidiaries
as of December 31, 2011 and 2010, and the related consolidated statements of operations, changes in
shareholders’ equity, comprehensive (loss) income, and cash flows for each of the three years in the period
ended December 31, 2011 of RenaissanceRe Holdings Ltd. and Subsidiaries and our report dated
February 23, 2012 expressed an unqualified opinion thereon.

/s/ Ernst & Young Ltd.

Hamilton, Bermuda
February 23, 2012

F-4

RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Balance Sheets
At December 31, 2011 and 2010
(in thousands of United States Dollars, except per share amounts)

Assets
Fixed maturity investments trading, at fair value

(Amortized cost $4,265,929 and $3,859,442 at December 31, 2011 and
2010, respectively) (Notes 5 and 6)

4,291,465

3,871,780

2011

2010

Fixed maturity investments available for sale, at fair value

(Amortized cost $130,669 and $225,549 at December 31, 2011 and
2010 respectively) (Notes 5 and 6)

Short term investments, at fair value (Notes 5 and 6)
Equity investments trading, at fair value (Notes 5 and 6)
Other investments, at fair value (Notes 5 and 6)
Investments in other ventures, under equity method (Note 5)

Total investments

Cash and cash equivalents
Premiums receivable
Prepaid reinsurance premiums (Note 7)
Reinsurance recoverable (Notes 7 and 8)
Accrued investment income
Deferred acquisition costs
Receivable for investments sold
Other assets
Goodwill and other intangible assets (Note 4)
Assets of discontinued operations held for sale (Note 3)

Total assets

Liabilities, Noncontrolling Interests and Shareholders’ Equity
Liabilities
Reserve for claims and claim expenses (Note 8)
Unearned premiums
Debt (Note 9)
Reinsurance balances payable
Payable for investments purchased
Other liabilities
Liabilities of discontinued operations held for sale (Note 3)

Total liabilities

Commitments and Contingencies (Note 19)
Redeemable noncontrolling interest – DaVinciRe (Note 10)
Shareholders’ Equity (Note 11)
Preference Shares: $1.00 par value – 22,000,000 shares issued and
outstanding at December 31, 2011 (2010 – 22,000,000 shares)

Common shares: $1.00 par value – 51,542,955 shares issued and
outstanding at December 31, 2011 (2010 – 54,109,840 shares)

Accumulated other comprehensive income
Retained earnings

Total shareholders’ equity attributable to RenaissanceRe

Noncontrolling interest (Note 10)
Total shareholders’ equity
Total liabilities, noncontrolling interests and shareholders’ equity

142,052
905,477
50,560
748,984
70,714
6,209,252
216,984
471,878
58,522
404,029
33,523
43,721
117,117
180,992
8,894
—
7,744,912

1,992,354
347,655
353,620
256,883
303,264
211,369
13,507
3,478,652

244,917
1,110,364
—
787,548
85,603
6,100,212
277,738
322,080
60,643
101,711
34,560
35,648
99,226
219,623
14,690
872,147
8,138,278

1,257,843
286,183
549,155
318,024
195,383
236,310
598,511
3,441,409

657,727

757,655

550,000

51,543
11,760
2,991,890
3,605,193
3,340
3,608,533
7,744,912

54,110
19,823
3,312,392
3,936,325
2,889
3,939,214
8,138,278

See accompanying notes to the consolidated financial statements

F-5

RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Statements of Operations
For the years ended December 31, 2011, 2010 and 2009
(in thousands of United States Dollars, except per share amounts)

Revenues
Gross premiums written
Net premiums written (Note 7)
(Increase) decrease in unearned premiums
Net premiums earned (Note 7)
Net investment income (Note 5)
Net foreign exchange losses
Equity in (losses) earnings of other ventures (Note 5)
Other (loss) income
Net realized and unrealized gains on investments (Note 5)
Total other-than-temporary impairments
Portion recognized in other comprehensive income, before taxes

Net other-than-temporary impairments (Note 5)

Total revenues

Expenses

Net claims and claim expenses incurred (Notes 7 and 8)
Acquisition expenses
Operational expenses
Corporate expenses
Interest expense (Note 9)
Total expenses

(Loss) income from continuing operations before taxes
Income tax benefit (expense) (Note 14)

(Loss) income from continuing operations

(Loss) income from discontinued operations (Note 3)

Net (loss) income

Net loss (income) attributable to noncontrolling interests (Note 10)

Net (loss) income attributable to RenaissanceRe

Dividends on preference shares (Note 11)

Net (loss) income (attributable) available to RenaissanceRe

common shareholders

(Loss) income from continuing operations (attributable) available
to RenaissanceRe common shareholders per common share –
basic

(Loss) income from discontinued operations (attributable)
available to RenaissanceRe common shareholders per
common share – basic
Net (loss) income (attributable) available to RenaissanceRe
common shareholders per common share – basic (Note 12)

(Loss) income from continuing operations (attributable) available
to RenaissanceRe common shareholders per common share –
diluted

(Loss) income from discontinued operations (attributable)
available to RenaissanceRe common shareholders per
common share – diluted

Net (loss) income (attributable) available to RenaissanceRe

common shareholders per common share – diluted (Note 12)

Dividends per common share (Note 11)

2011

2010

2009

$1,434,976
$1,012,773
(61,724)
951,049
118,000
(6,911)
(36,533)
(685)
70,668
(630)
78
(552)
1,095,036

$1,165,295
$ 848,965
15,956
864,921
203,955
(17,126)
(11,814)
41,120
144,444
(831)
2
(829)
1,224,671

$1,228,881
$ 838,333
43,871
882,204
318,179
(13,623)
10,976
1,798
93,679
(26,968)
4,518
(22,450)
1,270,763

861,179
97,376
169,666
18,264
23,368
1,169,853
(74,817)
315
(74,502)
(15,890)
(90,392)
33,157
(57,235)
(35,000)

129,345
94,961
166,042
20,136
21,829
432,313
792,358
6,124
798,482
62,670
861,152
(116,421)
744,731
(42,118)

(70,698)
104,150
153,552
12,658
15,111
214,773
1,055,990
(10,031)
1,045,959
6,700
1,052,659
(171,501)
881,158
(42,300)

(92,235)

$ 702,613

$ 838,858

(1.53)

11.28

13.39

(0.31)

1.14

0.11

(1.84)

12.42

13.50

(1.53)

11.18

13.29

(0.31)

1.13

0.11

(1.84)

1.04

12.31

1.00

13.40

0.96

See accompanying notes to the consolidated financial statements

F-6

RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
For the years ended December 31, 2011, 2010 and 2009
(in thousands of United States Dollars)

Preference shares

Balance – January 1
Repurchase of shares
Balance – December 31

Common shares

Balance – January 1
Repurchase of shares
Exercise of options and issuance of restricted stock awards

(Note 16)

Balance – December 31
Additional paid-in capital

Balance – January 1
Repurchase of shares
Change in redeemable noncontrolling interest – DaVinciRe
Exercise of options and issuance of restricted stock awards

(Note 16)

Balance – December 31

Accumulated other comprehensive income

Balance – January 1
Cumulative effect of change in accounting principle, net of

taxes (1)

Change in net unrealized gains on fixed maturity investments

available for sale

Portion of other-than-temporary impairments recognized in

other comprehensive income

Balance – December 31

Retained earnings

Balance – January 1
Cumulative effect of change in accounting principle, net of

taxes (1)

Net (loss) income
Net loss (income) attributable to noncontrolling interests
(Note 10)
Repurchase of shares
Dividends on common shares
Dividends on preference shares
Balance – December 31

Noncontrolling interest (Note 10)

2011

2010

2009

550,000
—
550,000

650,000
(100,000)
550,000

650,000
—
650,000

54,110
(2,889)

322
51,543

—
(13,923)
(473)

14,396
—

61,745
(8,198)

563
54,110

—
(30,284)
5,200

25,084
—

61,503
(951)

1,193
61,745

—
(36,455)
896

35,559
—

19,823

41,438

75,387

—

(76,198)

(7,985)

(21,613)

46,767

(78)
11,760

(2)
19,823

(4,518)
41,438

3,312,392

3,087,603

2,245,853

—
(90,392)

—
861,152

76,198
1,052,659

33,157
(174,807)
(53,460)
(35,000)
2,991,890
3,340
$ 3,608,533

(116,421)
(421,888)
(55,936)
(42,118)
3,312,392
2,889
$ 3,939,214

(171,501)
(13,566)
(59,740)
(42,300)
3,087,603
—

Total shareholders’ equity

$ 3,840,786
(1) Cumulative effect adjustment to opening retained earnings as of April 1, 2009, related to the recognition

and presentation of other-than-temporary impairments, as required by Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) Topic Investments – Debt and Equity
Securities.

See accompanying notes to the consolidated financial statements

F-7

RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Statements of Comprehensive (Loss) Income
For the years ended December 31, 2011, 2010 and 2009
(in thousands of United States Dollars)

Comprehensive (loss) income

Net (loss) income

Change in net unrealized gains on fixed maturity investments

available for sale

Portion of other-than-temporary impairments recognized in

other comprehensive income

Comprehensive (loss) income

Net loss (income) attributable to noncontrolling interests

Change in net unrealized gains on fixed maturity investments
available for sale attributable to noncontrolling interests

Comprehensive loss (income) attributable to noncontrolling

interests

2011

2010

2009

(90,392)

$ 861,152

$1,052,659

(7,991)

(25,040)

46,069

(78)

(2)

(4,518)

(98,461)

836,110

1,094,210

33,157

(116,421)

(171,501)

3,427

698

33,163

(112,994)

(170,803)

Comprehensive (loss) income attributable to RenaissanceRe

(65,298)

$ 723,116

$ 923,407

Disclosure regarding net unrealized gains

Total realized and net unrealized holding gains on fixed maturity
investments available for sale and net other-than-temporary
impairments

Net realized gains on fixed maturity investments available for

sale (1)

(2,426)

58,284

$ 130,179

(6,111)

(80,726)

(105,893)

Net other-than-temporary impairments recognized in earnings (2)

552

829

22,481

Change in net unrealized gains on fixed maturity investments

available for sale

(7,985)

$ (21,613)

46,767

(1) Included in net realized gains on fixed maturity investments available for sale is $0.0 million, $7.7

million and $0.1 million of net realized gains on fixed maturity investments available for sale included
within the Company’s discontinued operations for the years ended December 31, 2011, 2010 and 2009,
respectively.

(2) Included in net other-than-temporary impairments recognized in earnings is $0.0 million, $0.0 million

and $31 thousand of net other-than-temporary impairments recognized in earnings included within the
Company’s discontinued operations for the years ended December 31, 2011, 2010 and 2009,
respectively.

See accompanying notes to the consolidated financial statements

F-8

RenaissanceRe Holdings Ltd. and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended December 31, 2011, 2010 and 2009
(in thousands of United States Dollars)

Cash flows provided by operating activities

Net (loss) income
Adjustments to reconcile net (loss) income to net cash

provided by operating activities
Amortization, accretion and depreciation
Equity in undistributed losses (earnings) of other ventures
Net realized and unrealized gains on investments
Net other-than-temporary impairments
Net unrealized gains included in net investment income
Net unrealized losses (gains) included in other (loss) income
Change in:

Premiums receivable
Prepaid reinsurance premiums
Reinsurance recoverable
Deferred acquisition costs
Reserve for claims and claim expenses
Unearned premiums
Reinsurance balances payable
Other
Net cash provided by operating activities
Cash flows provided by (used in) investing activities
Proceeds from sales and maturities of fixed maturity

investments trading

Purchases of fixed maturity investments trading
Proceeds from sales and maturities of fixed maturity

investments available for sale

Purchases of fixed maturity investments available for sale
Purchases of equity investments trading
Net sales (purchases) of short term investments
Net sales of other investments
Net purchases of investments in other ventures
Net sales (purchases) of other assets
Net proceeds from sale of discontinued operations held for sale
Net purchases of subsidiaries

Net cash provided by (used in) investing activities

Cash flows used in financing activities

Dividends paid – RenaissanceRe common shares
Dividends paid – preference shares
RenaissanceRe common share repurchases
Net (repayment) issuance of debt
Redemption of 7.30% Series B preference shares
Reverse repurchase agreement
Net third party DaVinciRe share repurchases
Third party investment in noncontrolling interest

Net cash used in financing activities

Effect of exchange rate changes on foreign currency cash

Net (decrease) increase in cash and cash equivalents
Net decrease in cash and cash equivalents of discontinued

operations

Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year

2011

2010

2009

(90,392)

861,152

$ 1,052,659

42,298
39,581
(70,668)
552
(22,683)
1,553

(149,798)
2,121
(302,318)
(8,073)
734,511
61,472
(61,141)
(11,082)
165,933

59,719
23,959
(151,213)
829
(57,540)
(12,337)

(23,215)
14,030
10,110
10,479
(169,974)
(46,023)
(29,432)
4,176
494,720

9,213
(592)
(93,162)
22,481
(88,545)
(20,378)

(24,197)
(3,833)
105,293
20,034
(458,606)
(63,586)
66,147
65,961
588,889

6,089,468
(6,271,623)

7,795,587
(11,122,823)

61,218
(845,466)

106,362
(4,107)
(47,995)
103,148
50,940
(39,000)
58,318
269,520
—
315,031

(53,460)
(35,000)
(191,619)
(200,000)
—
—
(62,157)
—
(542,236)
518
(60,754)

3,751,669
(403,660)
—
(26,752)
122,065
(1,915)
(5,561)
—
—
108,610

(55,936)
(42,118)
(448,882)
249,046
(100,000)
—
(136,702)
3,000
(531,592)
(1,003)
70,735

10,036,434
(10,516,908)
—
1,170,037
3,994
(3,000)
(19,385)
—
(2,741)
(115,817)

(59,740)
(42,300)
(50,972)
(150,000)
—
(50,042)
(132,718)
—
(485,772)
(1,276)
(13,976)

—
277,738
$ 216,984

3,891
203,112
277,738

31,961
185,127
203,112

See accompanying notes to the consolidated financial statements

F-9

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2011

(amounts in tables expressed in thousands of United States (“U.S.”) dollars, except per share amounts and
percentages)

NOTE 1. ORGANIZATION

RenaissanceRe Holdings Ltd. (“RenaissanceRe”), was formed under the laws of Bermuda on June 7, 1993.
Together with its wholly owned and majority-owned subsidiaries and DaVinciRe (as defined below), which
are collectively referred to herein as the “Company”, RenaissanceRe provides reinsurance and insurance
coverages and related services to a broad range of customers.

• Renaissance Reinsurance Ltd. (“Renaissance Reinsurance”), the Company’s principal reinsurance

subsidiary, provides property catastrophe and specialty reinsurance coverages to insurers and
reinsurers on a worldwide basis.

• The Company also manages property catastrophe and specialty reinsurance business written on
behalf of joint ventures, which principally include Top Layer Reinsurance Ltd. (“Top Layer Re”),
recorded under the equity method of accounting, and DaVinci Reinsurance Ltd. (“DaVinci”). Because
the Company owns a noncontrolling equity interest in, but controls a majority of the outstanding voting
power of, DaVinci’s parent, DaVinciRe Holdings Ltd. (“DaVinciRe”), the results of DaVinci and
DaVinciRe are consolidated in the Company’s financial statements. Redeemable noncontrolling
interest – DaVinciRe represents the interests of external parties with respect to the net loss (income)
and shareholders’ equity of DaVinciRe. Renaissance Underwriting Managers Ltd. (“RUM”), a wholly
owned subsidiary, acts as exclusive underwriting manager for these joint ventures in return for fee-
based income and profit participation.

• RenaissanceRe Syndicate 1458 (“Syndicate 1458”) is the Company’s Lloyd’s syndicate which was
licensed to start writing certain lines of insurance and reinsurance business effective June 1, 2009.
RenaissanceRe Corporate Capital (UK) Limited (“RenaissanceRe CCL”), a wholly owned subsidiary
of the Company, is Syndicate 1458’s sole corporate member and RenaissanceRe Syndicate
Management Ltd. (“RSML”), a wholly owned subsidiary of the Company from November 2, 2009, is
the managing agent for Syndicate 1458.

• The Company, through Renaissance Trading Ltd. (“Renaissance Trading”) and RenRe Energy

Advisors Ltd. (“REAL”), transacts certain derivative-based risk management products primarily to
address weather and energy risk and engages in hedging and trading activities related to those
transactions.

• On November 18, 2010, the Company entered into a definitive stock purchase agreement (the “Stock

Purchase Agreement”) with QBE Holdings, Inc. (“QBE”) to sell substantially all of its U.S.-based
insurance operations including its U.S. property and casualty business underwritten through
managing general agents, its crop insurance business underwritten through Agro National Inc. (“Agro
National”), its commercial property insurance operations and its claims operations. At December 31,
2010, the Company classified the assets and liabilities associated with this transaction as held for
sale. The financial results for these operations have been presented in the Company's consolidated
financial statements as “discontinued operations” for all periods presented. On March 4, 2011, the
Company and QBE closed the transaction contemplated by the Stock Purchase Agreement. Refer to
“Note 3. Discontinued Operations,” for more information.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the U.S. (“GAAP”) and include the accounts of RenaissanceRe and its wholly owned
and majority-owned subsidiaries and DaVinciRe. All significant intercompany transactions and balances
have been eliminated on consolidation. Except as discussed in “Note 3. Discontinued Operations,” and
unless otherwise noted, the notes to the consolidated financial statements reflect the Company’s continuing
operations. Certain prior year comparatives have been reclassified to conform to the current year
presentation.

F-10

USE OF ESTIMATES IN FINANCIAL STATEMENTS

The preparation of financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported and disclosed amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ materially from those
estimates. The major estimates reflected in the Company’s consolidated financial statements include, but
are not limited to, the reserve for claims and claim expenses, reinsurance recoverables, including
allowances for reinsurance recoverables deemed uncollectible, estimates of written and earned premiums,
fair value, including the fair value of investments, financial instruments and derivatives, impairment charges
and the Company’s net deferred tax asset.

DISCONTINUED OPERATIONS

The results of operations of substantially all of the Company’s U.S.-based insurance operations sold to QBE
are classified as held for sale and are reported as discontinued operations in accordance with Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic Discontinued
Operations. The consolidated financial statements and notes thereto are presented excluding the
operations and cash flows of the discontinued operations from the continuing operations of the Company
since the Company will not have any significant continuing involvement in the operations after the sale. The
financial position and results of operations of discontinued operations are presented as single line items on
the consolidated balance sheets and statements of operations, respectively. Certain prior year
comparatives have been reclassified to conform to the current year presentation.

PREMIUMS AND RELATED EXPENSES

Premiums are recognized as income, net of any applicable reinsurance or retrocessional coverage
purchased, over the terms of the related contracts and policies. Premiums written are based on contract
and policy terms and include estimates based on information received from both insureds and ceding
companies. Subsequent differences arising on such estimates are recorded in the period in which they are
determined. Unearned premiums represents the portion of premiums written that relate to the unexpired
terms of contracts and policies in force. Amounts are computed by pro-rata methods based on statistical
data or reports received from ceding companies. Reinstatement premiums are estimated after the
occurrence of a significant loss and are recorded in accordance with the contract terms based upon paid
losses and case reserves. Reinstatement premiums are earned when written.

Acquisition costs, consisting principally of commissions, brokerage and premium tax expenses incurred at
the time a contract or policy is issued, are deferred and amortized over the period in which the related
premiums are earned. Deferred policy acquisition costs are limited to their estimated realizable value
based on the related unearned premiums. Anticipated claims and claim expenses, based on historical and
current experience, and anticipated investment income related to those premiums are considered in
determining the recoverability of deferred acquisition costs.

CLAIMS AND CLAIM EXPENSES

The reserve for claims and claim expenses includes estimates for unpaid claims and claim expenses on
reported losses as well as an estimate of losses incurred but not reported. The reserve is based on
individual claims, case reserves and other reserve estimates reported by insureds and ceding companies
as well as management estimates of ultimate losses. Inherent in the estimates of ultimate losses are
expected trends in claim severity and frequency and other factors which could vary significantly as claims
are settled. Also, during the past few years, the Company has increased its specialty reinsurance business,
but does not have the benefit of a significant amount of its own historical experience in certain of these lines
of business. Accordingly, the setting and reserving for incurred losses in these lines of business could be
subject to greater variability.

Ultimate losses may vary materially from the amounts provided in the consolidated financial statements.
These estimates are reviewed regularly and, as experience develops and new information becomes known,
the reserves are adjusted as necessary. Such adjustments, if any, are reflected in the consolidated
statements of operations in the period in which they become known and are accounted for as changes in
estimates.

F-11

REINSURANCE

Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability
associated with the reinsured policies. For multi-year retrospectively rated contracts, the Company accrues
amounts (either assets or liabilities) that are due to or from assuming companies based on estimated
contract experience. If the Company determines that adjustments to earlier estimates are appropriate, such
adjustments are recorded in the period in which they are determined. Reinsurance recoverables on dual
trigger reinsurance contracts require the Company to estimate its ultimate losses applicable to these
contracts as well as estimate the ultimate amount of insured industry losses that will be reported by the
applicable statistical reporting agency, as per the contract terms. Amounts recoverable from reinsurers are
recorded net of a valuation allowance for estimated uncollectible recoveries.

Assumed and ceded reinsurance contracts that lack a significant transfer of risk are treated as deposits.

INVESTMENTS, CASH AND CASH EQUIVALENTS

Fixed Maturity Investments

Investments in fixed maturities are classified as available for sale or trading and are reported at fair value.
Investment transactions are recorded on the trade date with balances pending settlement reflected in the
balance sheet as a receivable for investments sold or a payable for investments purchased. Net investment
income includes interest and dividend income together with amortization of market premiums and discounts
and is net of investment management and custody fees. The amortization of premium and accretion of
discount for fixed maturity securities is computed using the effective yield method. For mortgage-backed
securities and other holdings for which there is prepayment risk, prepayment assumptions are evaluated
quarterly and revised as necessary. Any adjustments required due to the change in effective yields and
maturities are recognized on a prospective basis through yield adjustments. Fair values of investments are
based on quoted market prices, or when such prices are not available, by reference to broker or underwriter
bid indications and/or internal pricing valuation techniques. The net unrealized appreciation or depreciation
on fixed maturity investments available for sale is included in accumulated other comprehensive income.
The net unrealized appreciation or depreciation on fixed maturity investments trading is included in net
realized and unrealized gains on investments in the consolidated statements of operations. Realized gains
or losses on the sale of investments are determined on the basis of the first in first out cost method and, for
fixed maturity investments available for sale, include adjustments to the cost basis of investments for
declines in value that are considered to be other-than-temporary.

Other-Than-Temporary Impairment Effective April 1, 2009

The Company recognizes other-than-temporary impairments in earnings for its impaired fixed maturity
securities available for sale (i) for which the Company has the intent to sell the security or (ii) it is more likely
than not that the Company will be required to sell the debt security before its anticipated recovery and
(iii) for those securities which have a credit loss. In assessing whether a credit loss exists, the Company
compares the present value of the cash flows expected to be collected from the security with the amortized
cost basis of the security. In instances in which a determination is made that an impairment exists but the
Company does not intend to sell the security and it is not more likely than not that the Company will be
required to sell the security before the anticipated recovery of its remaining amortized cost basis, the
impairment is separated into (i) the amount of the total impairment related to the credit loss and (ii) the
amount of the total impairment related to all other factors. The amount of the total other-than-temporary
impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary
impairment related to all other factors is recognized in other comprehensive income. In periods after the
recognition of other-than-temporary impairments on the Company’s fixed maturity securities available for
sale, the Company accounts for such securities as if they had been purchased on the measurement date of
the other-than-temporary impairment at an amortized cost basis equal to the previous amortized cost basis
less the other-than-temporary impairment recognized in earnings. For debt securities in which other-than-
temporary impairments were recognized in earnings, the difference between the new amortized cost basis
and the cash flows expected to be collected will be amortized into net investment income.

F-12

Other-Than-Temporary Impairment Process Prior to April 1, 2009

Under the pre-existing guidance, which was in effect for the three months ended March 31, 2009, the
Company assessed, on a quarterly basis, whether declines in the fair value of its fixed maturity investments
available for sale represented impairments that were other-than-temporary based on several factors. The
factors the Company considered in the assessment of a security included: (i) the time period during which
there had been a significant decline below cost; (ii) the extent of the decline below cost; (iii) the Company’s
intent and ability to hold the security; (iv) the potential for the security to recover in value; (v) an analysis of
the financial condition of the issuer; and (vi) an analysis of the collateral structure and credit support of the
security, if applicable. Where the Company determined that there was an other-than-temporary decline in
the fair value of the security, the cost of the security was written down to its fair value and the unrealized
loss at the time of determination was reflected in the Company’s consolidated statements of operations.

Equity Investments, Classified as Trading

Equity investments are accounted for at fair value in accordance with FASB ASC Topic Financial
Instruments. Fair values are primarily priced by pricing services, reflecting the closing price quoted for the
final trading day of the period. Net investment income includes dividend income and the net realized and
unrealized appreciation or depreciation on equity investments is included in net realized and unrealized
gains on investments in the consolidated statements of operations.

Short Term Investments and Cash and Cash Equivalents

Short term investments, which are managed as part of the Company’s investment portfolio and have a
maturity of one year or less when purchased, are carried at amortized cost, which approximates fair value.
The net unrealized appreciation or depreciation on short term investments is included in net realized and
unrealized gains on investments in the consolidated statements of operations. Cash equivalents include
money market instruments with a maturity of ninety days or less when purchased.

Other Investments

The Company accounts for its other investments at fair value in accordance with FASB ASC Topic Financial
Instruments. The fair value of certain of the Company's fund investments, which principally include hedge
funds, private equity funds, senior secured bank loan funds and non-U.S. fixed income funds, are recorded
on its balance sheet in other investments, and is generally established on the basis of the net valuation
criteria established by the managers of such investments, if applicable. The net valuation criteria
established by the managers of such investments is established in accordance with the governing
documents of such investments. Certain of the Company's fund managers, fund administrators, or both,
are unable to provide final fund valuations as of the Company's current reporting date. The typical reporting
lag experienced by the Company to receive a final net asset value report is one month for hedge funds,
senior secured bank loan funds and non-U.S. fixed income funds and three months for private equity funds,
although, in the past, in respect of certain of the Company's private equity funds, the Company has on
occasion experienced delays of up to six months at year end, as the private equity funds typically complete
their respective year-end audits before releasing their final net asset value statements.

In circumstances where there is a reporting lag between the current period end reporting date and the
reporting date of the latest fund valuation, the Company estimates the fair value of these funds by starting
with the prior month or quarter-end fund valuations, adjusting these valuations for actual capital calls,
redemptions or distributions, as well as the impact of changes in foreign currency exchange rates, and then
estimating the return for the current period. In circumstances in which the Company estimates the return for
the current period, all information available to the Company is utilized. This principally includes preliminary
estimates reported to the Company by its fund managers, obtaining the valuation of underlying portfolio
investments where such underlying investments are publicly traded and therefore have a readily observable
price, using information that is available to the Company with respect to the underlying investments,
reviewing various indices for similar investments or asset classes, as well as estimating returns based on
the results of similar types of investments for which the Company has obtained reported results, or other
valuation methods, where possible. Actual final fund valuations may differ, perhaps materially so, from the
Company's estimates and these differences are recorded in the Company's statement of operations in the
period in which they are reported to the Company as a change in estimate.

F-13

Investments in Other Ventures

Investments in which the Company has significant influence over the operating and financial policies of the
investee are classified as investments in other ventures, under equity method, and are accounted for under
the equity method of accounting. Under this method, the Company records its proportionate share of
income or loss from such investments in its results for the period. Any decline in value of investments in
other ventures, under equity method considered by management to be other-than-temporary is charged to
income in the period in which it is determined.

STOCK INCENTIVE COMPENSATION

The Company is authorized to issue restricted stock awards and units, stock options and other equity-based
awards to its employees and directors. The fair value of the compensation cost is measured at the grant
date and expensed over the period for which the employee is required to provide services in exchange for
the award. Forfeiture benefits are estimated on a quarterly basis and incorporated in the determination of
stock-based compensation.

DERIVATIVES

The Company enters into derivative instruments such as futures, options, swaps, forward contracts and
other derivative contracts in order to manage its foreign currency exposure, obtain exposure to a particular
financial market, for yield enhancement, or for trading and speculation. The Company accounts for its
derivatives in accordance with FASB ASC Topic Derivatives and Hedging, which requires all derivatives to
be recorded at fair value on the Company’s balance sheet as either assets or liabilities, depending on their
rights or obligations, with changes in fair value reflected in current earnings. The Company does not
currently apply hedge accounting. The fair value of the Company’s derivatives are estimated by reference
to quoted prices or broker quotes, where available, or in the absence of quoted prices or broker quotes, the
use of industry or internal valuation models.

FAIR VALUE

The Company accounts for certain of its assets and liabilities at fair value in accordance with FASB ASC
Topic Fair Value Measurements and Disclosures. The Company recognizes the change in unrealized gains
and losses arising from changes in fair value in its statements of operations, with the exception of changes
in unrealized gains and losses on its fixed maturity investments available for sale, which are recognized as
a component of accumulated other comprehensive (loss) income in shareholders’ equity.

BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

The Company accounts for business combinations in accordance with FASB ASC Topic Business
Combinations, and goodwill and other intangible assets that arise from business combinations in
accordance with FASB ASC Topic Intangibles – Goodwill and Other. A purchase price that is in excess of
the fair value of the net assets acquired arising from a business combination is recorded as goodwill, and is
not amortized. Other intangible assets with a finite life are amortized over the estimated useful life of the
asset. Other intangible assets with an indefinite useful life are not amortized.

Goodwill and other indefinite life intangible assets are tested for impairment on an annual basis or more
frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable.
Definite life intangible assets are reviewed for indicators of impairment on an annual basis or more
frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable,
and tested for impairment if appropriate. For purposes of the annual impairment evaluation, goodwill is
assigned to the applicable reporting unit of the acquired entities giving rise to the goodwill. Goodwill and
other intangible assets recorded in connection with investments accounted for under the equity method, are
recorded as “Investments in other ventures, under equity method” on the Company’s consolidated balance
sheets.

The Company has established September 30 as the date for performing its annual impairment tests. If
goodwill or other intangible assets are impaired, they are written down to their estimated fair value with a
corresponding expense reflected in the Company’s consolidated statements of operations.

F-14

NONCONTROLLING INTERESTS

The Company accounts for its noncontrolling interest in the shareholders’ equity section of the Company’s
consolidated balance sheet in accordance with FASB ASC Topic Consolidations, and presents such
noncontrolling shareholders' interest in the net assets of the subsidiary. Net income (loss) attributable to
noncontrolling interests is presented separately in the Company’s consolidated statements of operations.

In addition, the Company accounts for its redeemable noncontrolling interest in DaVinciRe in the mezzanine
section of the Company’s consolidated balance sheet in accordance with Securities and Exchange
Commission (“SEC”) guidance which is applicable to SEC registrants. The SEC guidance requires shares,
not required to be accounted for in accordance with FASB ASC Topic Distinguishing Liabilities from Equity,
and having redemption features that are not solely within the control of the issuer, to be classified outside of
permanent equity in the mezzanine section of the balance sheet. Because the share classes related to the
redeemable noncontrolling interest portion of DaVinciRe are not considered liabilities in accordance with
FASB ASC Topic Distinguishing Liabilities from Equity and have redemption features that are not solely
within the control of DaVinciRe, the redeemable noncontrolling interest in DaVinciRe is presented in the
mezzanine section on the Company’s consolidated balance sheet in accordance with the SEC guidance
noted above. The SEC guidance does not impact the accounting for redeemable noncontrolling interest on
the consolidated statements of operations; therefore, the provisions of FASB ASC Topic Consolidation with
respect to the consolidated statements of operations still apply.

Refer to “Note 10. Noncontrolling Interests” for more information.

VARIABLE INTEREST ENTITIES

The Company accounts for variable interest entities (“VIE”) in accordance with FASB ASC Topic
Consolidation, which requires the consolidation of all VIE’s by the primary beneficiary, that being the
investor that has the power to direct the activities of the VIE and will absorb a majority of the VIE’s expected
losses or residual returns. The Company determines whether it is the primary beneficiary of a VIE by
performing an analysis that principally considers: (i) the VIE’s purpose and design, including the risks the
VIE was designed to create and pass through to its variable interest holders; (ii) the VIE’s capital structure;
(iii) the terms between the VIE and its variable interest holders and other parties involved with the VIE;
(iv) which variable interest holders have the power to direct the activities of the VIE that most significantly
impact the VIE’s economic performance; (v) which variable interest holders have the obligation to absorb
losses or the right to receive benefits from the VIE that could potentially be significant to the VIE; and
(vi) related party relationships. The Company reassesses its initial evaluation of an entity as a VIE upon the
occurrence of certain reconsideration events. The Company reassesses its determination of whether the
Company is the primary beneficiary of a VIE upon changes in facts and circumstances that could potentially
alter the Company’s assessment.

Refer to “Note 10. Noncontrolling Interests” for additional information.

EARNINGS PER SHARE

The Company calculates earnings per share in accordance with FASB ASC Topic Earnings per Share.
Basic earnings per share are based on weighted average common shares and exclude any dilutive effects
of options and restricted stock. Diluted earnings per share assumes the exercise of all dilutive stock options
and restricted stock grants.

The two-class method is used to determine earnings per share based on dividends declared on common
stock and participating securities (i.e. distributed earnings) and participation rights of participating securities
in any undistributed earnings. Unvested restricted stock granted by the Company to its employees is
considered a participating security and the Company uses the two-class method to calculate its net (loss)
income (attributable) available to RenaissanceRe common shareholders per common share – basic and
diluted.

F-15

FOREIGN EXCHANGE

The Company’s functional currency is the U.S. dollar. Revenues and expenses denominated in foreign
currencies are translated at the prevailing exchange rate at the transaction date. Monetary assets and
liabilities denominated in foreign currencies are translated at exchange rates in effect at the balance sheet
date, which may result in the recognition of exchange gains or losses which are included in the
determination of net (loss) income.

TAXATION

Income taxes have been provided in accordance with the provisions of FASB ASC Topic Income Taxes.
Deferred tax assets and liabilities result from temporary differences between the amounts recorded in the
consolidated financial statements and the tax basis of the Company’s assets and liabilities. Such temporary
differences are primarily due to net operating loss carryforwards and GAAP versus tax basis accounting
differences relating to accrued expenses, investments and tax sharing obligations. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance against deferred tax assets is recorded if it is more likely than not
that all, or some portion, of the benefits related to deferred tax assets will not be realized.

Uncertain tax positions are also accounted for in accordance with FASB ASC Topic Income Taxes.
Uncertain tax positions must meet a more-likely-than-not recognition threshold to be recognized.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts

In October 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-26, Accounting for
Costs Associated with Acquiring or Renewing Insurance Contracts (“ASU 2010-26”), which amends FASB
ASC Topic Financial Services - Insurance. ASU 2010-26 modifies the definition of the types of costs that
can be capitalized in relation to the acquisition of new and renewal insurance contracts. The amended
guidance requires costs to be incremental or directly related to the successful acquisition of new or renewal
contracts in order to be capitalized as a deferred acquisition cost. Capitalized costs would include
incremental direct costs, such as commissions paid to brokers. Additionally, the portion of employee
salaries and benefits directly related to time spent for acquired contracts would be capitalized. Costs that
fall outside the revised definition must be expensed when incurred. ASU 2010-26 will be effective for fiscal
periods beginning on or after December 15, 2011 with prospective or retroactive application permitted. The
Company is currently evaluating the potential impacts of the adoption of ASU 2010-26, but does not
currently expect this standard to have a material impact on its consolidated statements of operations and
financial condition.

Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP
and IFRSs

In May 2011, the FASB issued ASU No. 2011-04, Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”), which amends
FASB ASC Topic Fair Value Measurement. ASU 2011-04 was issued to provide largely identical guidance
about fair value measurement and disclosure requirements with the International Accounting Standards
Board's new International Financial Reporting Standards (“IFRS”) 13, Fair Value Measurement. ASU
2011-04 does not extend the use of fair value but, rather, provides guidance about how fair value should be
applied where it is already required or permitted under GAAP and requires enhanced disclosures covering
all transfers between Levels 1 and 2 of the fair value hierarchy. Additional disclosures covering Level 3
assets are also required. ASU 2011-04 will be effective for fiscal years, and interim periods within those
years, beginning after December 15, 2011. Early adoption is not permitted. The Company is currently
evaluating the potential impacts of the adoption of ASU 2011-04, but does not currently expect this standard
to have a material impact on its consolidated statements of operations and financial condition.

F-16

Presentation of Comprehensive Income

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”),
which amends FASB ASC Topic Comprehensive Income. ASU 2011-05 increases the prominence of items
reported in other comprehensive income and eliminates the option to present components of other
comprehensive income as part of the statement of changes in shareholders' equity. ASU 2011-05 requires
that all non-owner changes in shareholders' equity be presented either in a single continuous statement of
comprehensive income or in two separate but consecutive statements. ASU 2011-05 will be effective for
fiscal years, and interim periods within those years, beginning after December 15, 2011, with retroactive
application required. The Company is currently evaluating the potential impacts of the adoption of ASU
2011-05, but does not currently expect this standard to have a material impact on its consolidated
statements of operations, consolidated statements of comprehensive (loss) income, or its financial
condition.

NOTE 3. DISCONTINUED OPERATIONS

U.S.-Based Insurance Operations

On November 18, 2010, the Company entered into a Stock Purchase Agreement with QBE to sell
substantially all of its U.S.-based insurance operations, including its U.S. property and casualty business
underwritten through managing general agents, its crop insurance business underwritten through Agro
National, its commercial property insurance operations and its claims operations. At December 31, 2010,
the Company classified the assets and liabilities associated with this transaction as held for sale and the
assets and liabilities were recorded at the lower of the carrying value or fair value less costs to sell. The
financial results for these operations have been presented as discontinued operations in the Company's
consolidated statements of operations for all periods presented.

During 2011, the Company recognized a $10.0 million liability and corresponding expense in liabilities of
discontinued operations held for sale and (loss) income from discontinued operations, respectively, due to
purported net adverse development on prior accident years net claims and claim expenses associated with
the Reserve Collar. The $10.0 million represents the maximum amount payable under the Reserve Collar.

F-17

The Company has reclassified the assets and liabilities of the discontinued operations to assets of
discontinued operations and liabilities of discontinued operations, respectively, on its consolidated balance
sheets. Details of the assets, liabilities and shareholder’s equity of discontinued operations held for sale at
December 31, 2011 and 2010 are as follows:

At December 31,
Assets of Discontinued Operations Held for Sale
Fixed maturity investments trading, at fair value (Amortized cost $0 and

$157,744 at December 31, 2011 and 2010, respectively)

Fixed maturity investments available for sale, at fair value (Amortized cost $0

and $529 at December 31, 2011 and 2010, respectively)

Short term investments, at fair value

Total investments

Cash and cash equivalents

Premiums receivable

Prepaid reinsurance premiums

Reinsurance recoverable

Accrued investment income

Deferred acquisition costs

Other assets

Goodwill and other intangibles

Amounts due from affiliates

Total assets of discontinued operations held for sale

Liabilities of Discontinued Operations Held for Sale
Reserve for claims and claim expenses

Unearned premiums

Reinsurance balances payable

Other liabilities

2011

2010

—

$ 156,282

—

13,507

529

59,594

216,405

53,713

290,962

17,179

82,420

1,240

15,743

27,832

57,034

109,619

$ 872,147

$ 274,189

114,443

143,711

66,168

Total liabilities of discontinued operations held for sale

13,507

$ 598,511

Shareholder’s Equity of Discontinued Operations Held for Sale

Total shareholder’s equity of discontinued operations held for sale

(13,507)

273,636

Total liabilities and shareholder’s equity of discontinued operations

held for sale

—

$ 872,147

F-18

The Company has reclassified the results of operations of the discontinued operations to (loss) income from
discontinued operations in its consolidated statements of operations. Details of the (loss) income from
discontinued operations for the years ended December 31, 2011, 2010 and 2009 are as follows:

Year ended December 31,
Revenues

Gross premiums written

Net premiums written

Decrease in unearned premiums

Net premiums earned

Net investment income

Other (loss) income

Net realized and unrealized gains (losses) on fixed maturity

investments

Net other-than-temporary impairments

Total revenues

Expenses

Net claims and claim expenses incurred

Acquisition expenses

Operational expenses

Corporate expenses

Total expenses

(Loss) income before taxes

Income tax (expense) benefit

2011

2010

2009

21,546

(44,935)

66,137

478,308

290,188

16,037

500,051

368,064

23,548

21,202

306,225

391,612

339

(9,904)

—

5,082

5,811

6,769

—

5,802

223

(517)

(31)

11,679

323,887

397,089

8,430

6,059

7,272

770

22,531

(10,852)

(5,038)

113,186

267,985

68,777

67,236

5,567

85,625

36,134

1,582

254,766

391,326

69,121

(6,451)

5,763

937

6,700

(Loss) income from discontinued operations

(15,890)

62,670

F-19

NOTE 4. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table shows an analysis of goodwill and other intangible assets for the years ended
December 31, 2010 and 2011:

Balance as of December 31, 2009 (1)

Gross amount

Accumulated impairment losses and amortization

Acquired during the year

Amortization

Impairment losses

Balance as of December 31, 2010 (1)

Gross amount

Accumulated impairment losses and amortization

Acquired during the year

Amortization

Impairment losses

Balance as of December 31, 2011

Gross amount

Accumulated impairment losses and amortization

Goodwill and other intangibles

Goodwill

Other
intangible
assets

Total

8,160

12,999

21,159

—

8,160

—

8,160

—

8,160

—

(2,299)

8,160

(2,299)

(5,853)

7,146

—

(616)

—

12,999

(6,469)

6,530

—

(563)

(2,934)

(5,853)

15,306

—

(616)

—

21,159

(6,469)

14,690

—

(563)

(5,233)

12,999

(9,966)

21,159

(12,265)

5,861

3,033

8,894

(1) Excludes goodwill and intangible assets of $23.7 million and $33.3 million, respectively, at

December 31, 2010 associated with the assets of discontinued operations held for sale (2009 – $23.7
million and $37.7 million, respectively).

F-20

The following table shows an analysis of goodwill and other intangible assets included in investments in
other ventures, under equity method for the years ended December 31, 2010 and 2011:

Balance as of December 31, 2009

Gross amount

Accumulated impairment losses and amortization

Acquired during the year

Amortization

Impairment losses

Balance as of December 31, 2010

Gross amount

Accumulated impairment losses and amortization

Acquired during the year

Amortization

Impairment losses

Balance as of December 31, 2011

Gross amount

Accumulated impairment losses and amortization

Goodwill and other intangible assets included
in investments in other
ventures, under equity method

Goodwill

Other
intangible
assets

Total

8,477

44,323

52,800

—

8,477

—

8,477

—

8,477

544

—

9,021

—

(8,989)

35,334

—

(8,989)

43,811

—

(5,670)

—

44,323

(14,659)

29,664

—

(5,161)

—

52,800

(14,659)

38,141

544

(5,161)

—

44,323

(19,820)

53,344

(19,820)

9,021

24,503

33,524

The gross carrying value and accumulated amortization by major category of other intangible assets is
shown below:

At December 31, 2011
Customer relationships and customer lists
Covenants not-to-compete
Patents and intellectual property
Software
Trademarks and trade names
Lloyd’s managing agency license

Other intangible assets

Gross
carrying
value

Accumulated
amortization
and
impairment
losses

39,485
2,130
4,500
8,730
610
1,867
57,322

(16,777)
(1,065)
(4,134)
(7,725)
(85)
—
(29,786)

Total

22,708
1,065
366
1,005
525
1,867
27,536

F-21

The useful life of intangible assets with finite lives ranges from two to 25 years, with a weighted-average
amortization period of 11 years. Expected amortization of the other intangible assets, including other
intangible assets recorded in investments in other ventures, under equity method, is shown below:

Other
intangible
assets
included
in
investments
in other
ventures,
under
equity
method

Other
intangibles

409
375
209
173
—
1,166
1,867
3,033

4,653
3,979
3,305
2,644
9,922
24,503
—
24,503

Total

5,062
4,354
3,514
2,817
9,922
25,669
1,867
27,536

2012
2013
2014
2015
2016 and thereafter
Total remaining amortization expense
Indefinite lived
Total

NOTE 5. INVESTMENTS

Fixed Maturity Investments Trading

The following table summarizes the fair value of fixed maturity investments trading:

At December 31,
U.S. treasuries
Agencies
Non-U.S. government (Sovereign debt)
FDIC guaranteed corporate
Non-U.S. government-backed corporate
Corporate
Agency mortgage-backed
Non-agency mortgage-backed
Commercial mortgage-backed
Asset-backed

Total fixed maturity investments trading

2011
885,152
158,561
216,916
423,630
640,757
1,187,437
428,042
82,096
255,885
12,989
$ 4,291,465

2010
761,461
216,963
157,867
388,468
356,119
1,476,029
383,403
5,765
125,705
—
$ 3,871,780

F-22

Fixed Maturity Investments Available For Sale

The following table summarizes the amortized cost, fair value and related unrealized gains and losses and
non-credit other-than-temporary impairments of fixed maturity investments available for sale:

Included in Accumulated
Other Comprehensive Income

Amortized
Cost

Gross

Unrealized

Gains

Losses

Fair Value

Non-Credit
Other-Than-
Temporary
Impairments
(1)

10,087

921

(12)

10,996

312

18,449

12,636

21,097

63,269
4,819

1,535

1,071

1,862

6,576

219

—

(517)

—

(284)

(1)

—

325

19,467

13,707

22,675

69,844

5,038

—

(176)

—

(1,837)

—

130,669

12,197

(814)

142,052

(2,013)

Included in Accumulated
Other Comprehensive Income

Amortized
Cost

Gross

Unrealized

Gains

Losses

Fair Value

Non-Credit
Other-Than-
Temporary
Impairments
(1)

23,836

2,830

(146)

26,520

1,332

33,018

17,159

24,972

86,194

39,038

3,768

1,245

3,452

7,570

1,124

—

(404)

—

(40)

(29)

(55)

1,385

36,382

18,404

28,384

93,735

40,107

—

(1,818)

—

(2,063)

—

(598)

225,549

20,042

(674)

244,917

(4,479)

At December 31, 2011
Non-U.S. government
(Sovereign debt)

Non-U.S. government-backed

corporate

Corporate

Agency mortgage-backed

Non-agency mortgage-backed

Commercial mortgage-backed

Asset-backed

Total fixed maturity investments

available for sale

At December 31, 2010
Non-U.S. government
(Sovereign debt)

Non-U.S. government-backed

corporate

Corporate

Agency mortgage-backed

Non-agency mortgage-backed

Commercial mortgage-backed

Asset-backed

Total fixed maturity investments

available for sale

(1) Represents the non-credit component of other-than-temporary impairments recognized in accumulated
other comprehensive income since the adoption of guidance related to the recognition and presentation
of other-than-temporary impairments under FASB ASC Topic Financial Instruments – Debt and Equity
Securities, during the second quarter of 2009, adjusted for subsequent sales of securities. It does not
include the change in fair value subsequent to the impairment measurement date.

F-23

Contractual maturities of fixed maturity investments are as follows. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties.

Trading

Available for Sale

Total Fixed Maturity
Investments

Amortized
Cost

Fair Value

Amortized
Cost

Fair Value

Amortized
Cost

Fair Value

$ 617,974

$ 619,717

152

128

$ 618,126

$ 619,845

At December 31, 2011
Due in less than

one year

Due after one

through five years

2,029,005

2,022,698

12,010

12,685

2,041,015

2,035,383

Due after five

through ten years

Due after ten years

Mortgage-backed

719,737

127,223

758,975

730,259

139,779

766,023

Asset-backed

Total

13,015
$ 4,265,929

12,989
$ 4,291,465

11,223

5,463
97,002

4,819

11,791

6,184

106,226

5,038

730,960

132,686

855,977

17,834

742,050

145,963

872,249

18,027

$ 130,669

$ 142,052

$ 4,396,598

$ 4,433,517

Equity Investments Trading

The following table summarizes the fair value of equity investments trading:

At December 31,
Financial institution securities

Pledged Investments

2011
50,560

2010

—

At December 31, 2011, $1,292.7 million of cash and investments at fair value were on deposit with, or in
trust accounts for the benefit of various counterparties, including with respect to the Company's principal
letter of credit facility. Of this amount, $403.4 million is on deposit with, or in trust accounts for the benefit
of, U.S. state regulatory authorities.

Net Investment Income, Net Realized and Unrealized Gains on Investments and Net Other-Than-
Temporary Impairments

The components of net investment income are as follows:

Year ended December 31,
Fixed maturity investments

Short term investments

Equity investments

Other investments

Hedge funds and private equity investments

Other

Cash and cash equivalents

Investment expenses

Net investment income

2011
89,858

2010
108,195

2009
160,476

1,666

471

2,318

—

4,139

—

27,541

8,458

163

128,157

(10,157)

64,419

39,305

277

214,514

(10,559)

18,279

145,367

600

328,861

(10,682)

118,000

203,955

318,179

F-24

Net realized and unrealized gains on investments and net other-than-temporary impairments are as follows:

Year ended December 31,
Gross realized gains

Gross realized losses

Net realized gains on fixed maturity investments

Net unrealized gains (losses) on fixed maturity investments

trading

Net unrealized gains on equity investments trading

Net realized and unrealized gains on investments

Total other-than-temporary impairments

Portion recognized in other comprehensive income, before

taxes

Net other-than-temporary impairments

2011
79,358

(30,659)

48,699

2010
138,814

(19,147)

119,667

2009
143,173

(38,655)

104,518

19,404

2,565

70,668

(630)

24,777

(10,839)

—

144,444

(831)

93,679

(26,968)

4,518

(552)

(829)

(22,450)

The following table provides an analysis of the length of time the Company’s fixed maturity investments
available for sale in an unrealized loss have been in a continual unrealized loss position.

At December 31, 2011
Non-U.S. government
(Sovereign debt)

Corporate

Non-agency mortgage-backed

Commercial mortgage-backed

Total

Less than 12 Months

12 Months or Greater

Total

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

915
3,935

8,024

—

$ 12,874

(9)
(385)
(224)
—
(618)

(3)

957

412

798

455

(132)

(60)

(1)

4,347

8,822

455

(12)

(517)

(284)

(1)

1,707

(196)

$ 14,581

(814)

At December 31, 2010
Non-U.S. government
(Sovereign debt)

Corporate

Non-agency mortgage-backed

Commercial mortgage-backed

Asset-backed

Total

Less than 12 Months

12 Months or Greater

Total

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

2,363

2,581

—

2,199

3,172

$ 10,315

(129)
(285)
—
(29)
(39)
(482)

291

801

1,645

—

3,196

(17)

2,654

(119)

(40)

—

(16)

3,382

1,645

2,199

6,368

(146)

(404)

(40)

(29)

(55)

5,933

(192)

$ 16,248

(674)

At December 31, 2011, the Company held 14 fixed maturity investments available for sale securities that
were in an unrealized loss position for twelve months or greater. The Company does not intend to sell
these securities and it is not more likely than not that the Company will be required to sell these securities
before the anticipated recovery of the remaining amortized cost basis. The Company performed reviews of
its fixed maturity investments available for sale for the year ended December 31, 2011 and 2010,
respectively, in order to determine whether declines in the fair value below the amortized cost basis were
considered other-than-temporary in accordance with the applicable guidance, as discussed below.

F-25

Other-Than-Temporary Impairment Process Prior to April 1, 2009

Other-Than-Temporary Impairment Process Effective April 1, 2009

Pursuant to the guidance effective April 1, 2009, the Company revised its quarterly process for assessing
whether declines in the fair value of its fixed maturity investments available for sale represent impairments
that are other-than-temporary. The process now includes reviewing each fixed maturity investment
available for sale that is impaired and determining: (i) if the Company has the intent to sell the debt security
or (ii) if it is more likely than not that the Company will be required to sell the debt security before its
anticipated recovery; and (iii) whether a credit loss exists, that is, where the Company expects that the
present value of the cash flows expected to be collected from the security are less than the amortized cost
basis of the security.

In assessing the Company’s intent to sell securities, the Company’s procedures may include actions such
as discussing planned sales with its third party investment managers, reviewing sales that have occurred
shortly after the balance sheet date, and consideration of other qualitative factors that may be indicative of
the Company’s intent to sell or hold the relevant securities. For the year ended December 31, 2011, the
Company recognized $0.0 million other-than-temporary impairments due to the Company’s intent to sell
these securities as of December 31, 2011 (2010 – $0.0 million, 2009 - $1.3 million).

In assessing whether it is more likely than not that the Company will be required to sell a security before its
anticipated recovery, the Company considers various factors including its future cash flow forecasts and
requirements, legal and regulatory requirements, the level of its cash, cash equivalents, short term
investments, fixed maturity investments trading and fixed maturity investments available for sale in an
unrealized gain position, and other relevant factors. For the year ended December 31, 2011, the Company
recognized $0.0 million of other-than-temporary impairments due to required sales (2010 – $0.0 million,
2009 - $0.0 million).

In evaluating credit losses, the Company considers a variety of factors in the assessment of a security
including: (i) the time period during which there has been a significant decline below cost; (ii) the extent of
the decline below cost and par; (iii) the potential for the security to recover in value; (iv) an analysis of the
financial condition of the issuer; (v) the rating of the issuer; (vi) the implied rating of the issuer based on an
analysis of option adjusted spreads; (vii) the absolute level of the option adjusted spread for the issuer; and
(viii) an analysis of the collateral structure and credit support of the security, if applicable.

Once the Company determines that it is possible that a credit loss may exist for a security, the Company
performs a detailed review of the cash flows expected to be collected from the issuer. The Company
estimates expected cash flows by applying estimated default probabilities and recovery rates to the
contractual cash flows of the issuer, with such default and recovery rates reflecting long-term historical
averages adjusted to reflect current credit, economic and market conditions, giving due consideration to
collateral and credit support, if applicable, and discounting the expected cash flows at the purchase yield on
the security. In instances in which a determination is made that an impairment exists but the Company
does not intend to sell the security and it is not more likely than not that the Company will be required to sell
the security before the anticipated recovery of its remaining amortized cost basis, the impairment is
separated into: (i) the amount of the total other-than-temporary impairment related to the credit loss; and
(ii) the amount of the total other-than-temporary impairment related to all other factors. The amount of the
other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the

F-26

other-than-temporary impairment related to all other factors is recognized in other comprehensive income.
For the year ended December 31, 2011, the Company recognized $0.6 million of other-than-temporary
impairments which were recognized in earnings and $0.1 million, related to other factors which were
recognized in other comprehensive income (2010 – $0.8 million and $2 thousand, respectively, 2009 –
$22.5 million and $4.5 million, respectively).

The following table provides a rollforward of the amount of other-than-temporary impairments related to
credit losses recognized in earnings for which a portion of an other-than-temporary impairment was
recognized in accumulated other comprehensive income for the year ended December 31, 2011 and 2010:

Year ended December 31,
Balance – January 1

Additions:

Amount related to credit loss for which an other-than-temporary

impairment was not previously recognized

Amount related to credit loss for which an other-than-temporary

impairment was previously recognized

Reductions:

Securities sold during the period

Securities for which the amount previously recognized in other

comprehensive income was recognized in earnings, because the
Company intends to sell the security or is more likely than not the
Company will be required to sell the security

Increases in cash flows expected to be collected that are recognized

over the remaining life of the security

Balance – December 31

Other Investments

2011

2010

3,098

9,987

172

—

(2,736)

(6,959)

—

564

3,098

The table below shows the fair value of the Company’s portfolio of other investments:

At December 31,
Private equity partnerships

Senior secured bank loan funds

Catastrophe bonds

Non-U.S. fixed income funds

Hedge funds

Miscellaneous other investments

Total other investments

2011
367,909

257,870

70,999

28,862

21,344

2,000

2010
347,556

166,106

123,961

80,224

41,005

28,696

748,984

787,548

Interest income, income distributions and realized and unrealized gains and losses on other investments
are included in net investment income and totaled $36.0 million (2010 – $103.7 million, 2009 – $163.6
million) of which $12.7 million was related to net unrealized gains (2010 – $57.5 million, 2009 – $88.5
million). Included in net investment income for the year ended December 31, 2011 is a loss of $1.4 million
(2010 - income of $5.3 million, 2009 - loss of $10.7 million) representing the change in estimate during the
period related to the difference between the Company's estimated net investment income due to the lag in
reporting, as discussed in "Note 2. Significant Accounting Policies", and the actual amount as reported in
the final net asset values provided by the Company's fund managers.

The Company has committed capital to private equity partnerships and other entities of $684.0 million, of
which $540.6 million has been contributed at December 31, 2011. The Company’s remaining commitments
to these funds at December 31, 2011 totaled $144.6 million. In the future, the Company may enter into
additional commitments in respect of private equity partnerships or individual portfolio company investment
opportunities.

F-27

Investments in Other Ventures, under Equity Method

The table below shows the Company’s portfolio of investments in other ventures, under equity method:

At December 31,
THIG

Tower Hill

Tower Hill Signature

Total Tower Hill Companies

Top Layer Re

Other

Total investments in other
ventures, under equity
method

2011

2010

Investment
$ 50,000

Ownership
%
25.0%

Carrying
Value
$ 32,645

Investment
$ 50,000

Ownership
%
25.0%

Carrying
Value
$ 38,431

10,000

500

60,500

65,375
6,000

28.6%

25.0%

50.0%

40.0%

14,173

10,000

28.6%

14,155

—

46,818

15,872

8,024

—

60,000

26,875

19,000

—%

50.0%

n/a

—

52,586

14,844

18,173

$ 131,875

$ 70,714

$ 105,875

$ 85,603

On July 1, 2008, the Company invested $50.0 million in the Tower Hill Companies representing a 25.0%
equity ownership. Included in the purchase price was $40.0 million of other intangibles and $7.8 million of
goodwill, which, in accordance with generally accepted accounting principles, are recorded as “Investments
in other ventures, under equity method” rather than “Goodwill and other intangibles” on the Company’s
consolidated balance sheet.

The Company originally invested $13.1 million and $10.0 million in Top Layer Re and Tower Hill,
respectively, representing a 50.0% and 28.6% ownership, respectively. In December 2010, March 2011
and December 2011, primarily as a result of the September 2010, February 2011 New Zealand and Tohoku
earthquakes, respectively, the Company invested an additional $13.8 million, $20.5 million and $18.0 million
respectively, in Top Layer Re, maintaining the Company’s 50.0% ownership interest.

The table below shows the Company’s equity in (losses) earnings of other ventures, under equity method:

Year ended December 31,
Tower Hill Companies

Top Layer Re

Other

2011

2010

2009

2,923

1,151

(2,083)

(37,471)

(1,985)

(12,103)

(862)

12,619

440

Total equity in (losses) earnings of other ventures

(36,533)

(11,814)

10,976

Undistributed losses in the Company’s investments in other ventures, under equity method were $39.6
million at December 31, 2011. During 2011, the Company received $9.5 million of dividends from its
investments in other ventures, under equity method (2010 – $17.9 million, 2009 – $16.4 million). During the
third quarter of 2011, the Company sold its entire ownership interest in NBIC Holdings, Inc. (“NBIC”), a
holding company for a specialty underwriter of homeowners' insurance products and services, for $12.0
million. Included in Other in the table above is equity in losses of NBIC of $2.8 million, which was
accounted for under the equity method of accounting prior to its sale. As a result of the sale, the Company
recorded a $4.8 million gain, included in other income.

The equity in earnings of the Tower Hill Companies are reported one quarter in arrears.

F-28

NOTE 6. FAIR VALUE MEASUREMENTS

The use of fair value to measure certain assets and liabilities with resulting unrealized gains or losses is
pervasive within the Company's financial statements. Fair value is defined under accounting guidance
currently applicable to the Company to be the price that would be received upon the sale of an asset or paid
to transfer a liability in an orderly transaction between open market participants at the measurement date.
The Company recognizes the change in unrealized gains and losses arising from changes in fair value in its
consolidated statements of operations, with the exception of changes in unrealized gains and losses on its
fixed maturity investments available for sale, which are recognized as a component of accumulated other
comprehensive income in shareholders' equity.

FASB ASC Topic Fair Value Measurements and Disclosures prescribes a fair value hierarchy that prioritizes
the inputs to the respective valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and
the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are
described below:

• Fair values determined by Level 1 inputs utilize unadjusted quoted prices obtained from active
markets for identical assets or liabilities for which the Company has access. The fair value is
determined by multiplying the quoted price by the quantity held by the Company;

• Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1

• Level 3 inputs are based on unobservable inputs for the asset or liability, and include situations where
there is little, if any, market activity for the asset or liability. In these cases, significant management
assumptions can be used to establish management's best estimate of the assumptions used by other
market participants in determining the fair value of the asset or liability.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value
hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its
entirety falls has been determined based on the lowest level input that is significant to the fair value
measurement of the asset or liability. The Company's assessment of the significance of a particular input to
the fair value measurement in its entirety requires judgment, and the Company considers factors specific to
the asset or liability.

In order to determine if a market is active or inactive for a security, the Company considers a number of factors,
including, but not limited to, the spread between what a seller is asking for a security and what a buyer is
bidding for the same security, the volume of trading activity for the security in question, the price of the security
compared to its par value (for fixed maturity investments), and other factors that may be indicative of market
activity.

There have been no material changes in the Company's valuation techniques, nor have there been any
transfers between Level 1 and Level 2, during the period represented by these consolidated financial
statements. The Company transferred $6.6 million of so called “side pocket” investments which are not
redeemable at the option of the shareholder to Level 3, from Level 2, at the end of the period.

F-29

Below is a summary of the assets and liabilities that are measured at fair value on a recurring basis and
also represents the carrying amount on the Company’s consolidated balance sheet at December 31, 2011
and 2010:

Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)

Total

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

885,152

—

Total fixed maturity investments

4,433,517

885,152

3,520,604

27,761

At December 31, 2011
Fixed maturity investments

U.S. treasuries

Agencies

Non-U.S. government (Sovereign debt)

FDIC guaranteed corporate

Non-U.S. government-backed corporate

Corporate

Agency mortgage-backed

Non-agency mortgage-backed

Commercial mortgage-backed

Asset-backed

158,561

227,912

423,630

641,082

1,206,904

441,749

104,771

325,729
18,027

—

Short term investments

Equity investments trading

Other investments

Private equity partnerships

Senior secured bank loan funds

Catastrophe bonds

Non-U.S. fixed income funds

Hedge funds

Miscellaneous other investments

Total other investments

Other assets and (liabilities)

Assumed and ceded (re)insurance contracts

Derivatives (1)

Other

Total other assets and (liabilities)

905,477
50,560

367,909

257,870
70,999

28,862

21,344

2,000

748,984

2,115

3,312
10,644

16,071

1,179,143

27,761

441,749

104,771

325,729

18,027

—

905,477

158,561

227,912

423,630

641,082

—

237,815

70,999

28,862

14,782

—

367,909

20,055

—

6,562

2,000

50,560

—

352,458

396,526

—

707

(6,869)

(6,162)

—

(6,293)

—

(6,293)

2,115

8,898

17,513

28,526

(1) See "Note 18. Derivative Instruments" for additional information related to the fair value by type of

contract, of derivatives entered into by the Company.

$ 6,154,609

929,550

$ 4,772,246

452,813

F-30

December 31, 2010
Fixed maturity investments

U.S. treasuries

Agencies

Non-U.S. government (Sovereign debt)

FDIC guaranteed corporate

Non-U.S. government-backed corporate

Corporate

Agency mortgage-backed

Non-agency mortgage-backed

Commercial mortgage-backed

Asset-backed

Total fixed maturity investments

Short term investments

Other investments

Private equity partnerships

Senior secured bank loan funds

Catastrophe bonds

Non-U.S. fixed income funds

Hedge funds

Miscellaneous other investments

Total other investments

Other secured assets

Other assets and (liabilities)

Platinum warrants

Assumed and ceded (re)insurance contracts

Derivatives (1)

Other

Total other assets and (liabilities)

Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)

Total

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

761,461

—

216,963

184,387

388,468

357,504

1,512,411

401,807
34,149

219,440
40,107

4,116,697

1,110,364

347,556

166,106

123,961
80,224

41,005

28,696

787,548
14,250

44,925

1,772

2,693
13,629

63,019

216,963

184,387

388,468

357,504

—

1,490,626

21,785

401,807

34,149

219,440

40,107

—

761,461

3,333,451

21,785

—

1,110,364

—

(51)

(4,599)

(4,650)

—

347,556

158,386

123,961

80,224

41,005

21,870

425,446

14,250

44,925

—

6,245

—

51,170

7,720

—

6,826

362,102

—

1,772

(3,501)

18,228

16,499

$ 6,091,878

756,811

$ 4,934,681

400,386

(1) See "Note 18. Derivative Instruments" for additional information related to the fair value by type of

contract, of derivatives entered into by the Company.

Fixed Maturity Investments

Fixed maturity investments included in Level 1 consist of the Company’s investments in U.S. treasuries.
Fixed maturity investments included in Level 2 are agencies, non-U.S. government, FDIC guaranteed
corporate, non-U.S. government-backed corporate, corporate, agency mortgage-backed, non-agency
mortgage-backed, commercial mortgage-backed and asset-backed fixed maturity investments.

The Company’s fixed maturity investments portfolios are priced using pricing services, such as index
providers and pricing vendors, as well as broker quotations. In general, the pricing vendors provide pricing
for a high volume of liquid securities that are actively traded. For securities that do not trade on an
exchange, the pricing services generally utilize market data and other observable inputs in matrix pricing
models to determine month end prices. Observable inputs include benchmark yields, reported trades,

F-31

broker-dealer quotes, issuer spreads, bids, offers, reference data and industry and economic events. Index
pricing generally relies on market traders as the primary source for pricing, however models are also utilized
to provide prices for all index eligible securities. The models use a variety of observable inputs such as
benchmark yields, transactional data, dealer runs, broker-dealer quotes and corporate actions. Prices are
generally verified using third party data. Securities which are priced by an index provider, are generally
included in the index.

In general, broker-dealers value securities through their trading desks based on observable inputs. The
methodologies include mapping securities based on trade data, bids or offers wanted, observed spreads,
and performance on newly issued securities. Broker-dealers also determine valuations by observing
secondary trading of similar securities. Prices are generally verified using third party data. Prices obtained
from broker quotations are considered non-binding, however they are based on observable inputs and by
observing secondary trading of similar securities obtained from active, non-distressed markets.

The Company considers these Level 2 inputs as they are corroborated with other externally obtained
information. The techniques generally used to determine the fair value of our fixed maturity investments are
detailed below by asset class.

U.S. treasuries

At December 31, 2011, the Company’s U.S. treasuries fixed maturity investments had a weighted average
effective yield of 0.6%, a weighted average credit quality of AA, and are primarily priced by pricing vendors.
When pricing these securities, the pricing services utilize daily data from many real time market sources,
including active broker dealers, as such, the Company considers its U.S. treasuries fixed maturity
investments Level 1. All data sources are regularly reviewed for accuracy to ensure the most reliable price
source is used for each issue and maturity date.

Agencies

At December 31, 2011, the Company’s agency fixed maturity investments had a weighted average effective
yield of 0.5% and a weighted average credit quality of AA. The issuers of the Company’s agency fixed
maturity investments primarily consist of the Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation and other agencies. Fixed maturity investments included in agencies are
primarily priced by pricing vendors. When evaluating these securities, the pricing services gather
information from market sources and integrates other observations from markets and sector news.
Evaluations are updated by obtaining broker dealer quotes and other market information including actual
trade volumes, when available. The dollar value for each security is individually computed using analytical
models which incorporate option adjusted spreads and other daily interest rate data. The Company
considers its agency fixed maturity investments Level 2.

Non-U.S. government (Sovereign debt)

Non-U.S. government fixed maturity investments held by the Company at December 31, 2011, had a
weighted average yield to maturity of 2.3% and a weighted average credit quality of AA. The issuers for
securities in this sector are generally non-U.S. governments and their respective agencies as well as
supranational organizations. Securities held in these sectors are primarily priced by pricing services who
employ proprietary discounted cash flow models to value the securities. Key quantitative inputs for these
models are daily observed benchmark curves for treasury, swap and high issuance credits. The pricing
services then apply a credit spread for each security which is developed by in-depth and real time market
analysis. For securities in which trade volume is low, the pricing services utilize data from more frequently
traded securities with similar attributes. These models may also be supplemented by daily market and
credit research for international markets. The Company considers its non-U.S. government fixed maturity
investments Level 2.

FDIC guaranteed corporate

The Company’s FDIC guaranteed corporate fixed maturity investments had a weighted average effective
yield of 0.3% and a weighted average credit quality of AA at December 31, 2011. The issuers consist of
well known corporate issuers who participate in the FDIC program. The Company’s FDIC guaranteed
corporate fixed maturity investments are primarily priced by pricing services. When evaluating these

F-32

securities, the pricing services gather information from market sources regarding the issuer of the security,
obtain credit data, as well as other observations from markets and sector news. Evaluations are updated
by obtaining broker dealer quotes and other market information including actual trade volumes, when
available. The pricing services also consider the specific terms and conditions of the securities, including
any specific features which may influence risk. Each security is individually evaluated using a spread model
which is added to the U.S. treasury curve. The Company considers its FDIC guaranteed corporate fixed
maturity investments Level 2.

Non-U.S. government-backed corporate

Non-U.S. government-backed corporate fixed maturity investments are considered Level 2 by the Company
and had a weighted average effective yield of 1.4% and a weighted average credit quality of AAA at
December 31, 2011. Non-U.S. government-backed fixed maturity investments are primarily priced by
pricing services who employ proprietary discounted cash flow models to value the securities. Key
quantitative inputs for these models are daily observed benchmark curves for treasury, swap and high
issuance credits. The pricing services then apply a credit spread for each security which is developed by
in-depth and real time market analysis. For securities in which trade volume is low, the pricing services
utilize data from more frequently traded securities with similar attributes. These models may also be
supplemented by daily market and credit research for international markets.

Corporate

At December 31, 2011, the Company’s corporate fixed maturity investments had a weighted average
effective yield of 4.2% and a weighted average credit quality of A, and principally consist of U.S. and
international corporations. The Company’s corporate fixed maturity investments are primarily priced by
pricing services, and are considered Level 2 by the Company. When evaluating these securities, the pricing
services gather information from market sources regarding the issuer of the security, obtains credit data, as
well as other observations from markets and sector news. Evaluations are updated by obtaining broker
dealer quotes and other market information including actual trade volumes, when available. The pricing
services also consider the specific terms and conditions of the securities, including any specific features
which may influence risk. Each security is individually evaluated using a spread model which is added to the
U.S. treasury curve or a security specific swap curve as appropriate.

The fair value of certain corporate fixed maturity investments are valued using internally developed models
and are considered Level 3 by the Company. The internally developed models use a combination of
quantitative and qualitative factors, which may include, but are not limited to, discounted cash flow analysis,
financial statement analysis, budgets and forecasts, capital transactions and third party valuations.

Agency mortgage-backed

At December 31, 2011, the Company’s agency mortgage-backed fixed maturity investments included
agency residential mortgage-backed securities with a weighted average effective yield of 1.5%, a weighted
average credit quality of AA and a weighted average life of 2.6 years. The Company’s agency mortgage-
backed fixed maturity investments are primarily priced by pricing services using a mortgage pool specific
model which utilizes daily inputs from the active and the to be announced ("TBA") market which is very
liquid, as well as the U.S. treasury market. The model also utilizes additional information, such as the
weighted average maturity, weighted average coupon and other available pool level data which is provided
by the sponsoring agency. Valuations are also corroborated with daily active market quotes. The Company
considers its agency mortgage-backed fixed maturity investments Level 2.

Non-agency mortgage-backed

The Company’s non-agency mortgage-backed fixed maturity investments include non-agency prime
residential mortgage-backed and non-agency Alt-A fixed maturity investments, and the Company considers
these fixed maturity investments Level 2. The Company has no fixed maturity investments classified as
sub-prime held in its fixed maturity investments portfolio. At December 31, 2011, the Company’s non-
agency prime residential mortgage-backed fixed maturity investments have a weighted average effective
yield of 8.0%, a weighted average credit quality of BBB, and a weighted average life of 3.3 years. The
Company’s non-agency Alt-A fixed maturity investments held at December 31, 2011 have a weighted

F-33

average effective yield of 9.1%, a weighted average credit quality of A, a weighted average life of 3.8 years,
and are from vintage years 2006 and prior. Securities held in these sectors are primarily priced by pricing
services using an option adjusted spread (”OAS”) model or other relevant models, which principally utilize
inputs including benchmark yields, available trade information or broker quotes, and issuer spreads. The
pricing services also review collateral prepayment speeds, loss severity and delinquencies among other
collateral performance indicators for the securities valuation, when applicable.

Commercial mortgage-backed

The Company’s commercial mortgage-backed fixed maturity investments held at December 31, 2011 have
a weighted average effective yield of 3.2%, a weighted average credit quality of AA, and a weighted
average life of 4.2 years. Securities held in these sectors are primarily priced by pricing services and are
considered Level 2 by the Company. The pricing services apply dealer quotes and other available trade
information such as bid and offers, prepayment speeds which may be adjusted for the underlying collateral
or current price data, the U.S. treasury curve and swap curve as well as cash settlement. The model
utilizes a single cash flow stream and computes both a yield to call and weighted average effective yield.
The model generates a derived price for the bond by applying the most likely scenario.

Asset-backed

At December 31, 2011, the Company’s asset-backed fixed maturity investments had a weighted average
effective yield of 0.9%, a weighted average credit quality of AAA and a weighted average life of 1.8 years.
The underlying collateral for the Company’s asset-backed fixed maturity investments primarily consists of
student loans, credit card receivables and other receivables. Securities held in these sectors are primarily
priced by pricing services and are considered Level 2 by the Company. The pricing services apply dealer
quotes and other available trade information such as bids and offers, prepayment speeds which may be
adjusted for the underlying collateral or current price data, the U.S. treasury curve and swap curve as well
as cash settlement. The model utilizes a single cash flow stream and computes both a yield to call and
weighted average effective yield. The model generates a derived price for the bond by applying the most
likely scenario.

Short term investments

Short term investments are considered Level 2 and fair values are generally determined using amortized
cost which approximates fair value and, in certain cases, in a manner similar to the Company’s fixed
maturity investments noted above.

Equity investments, classified as trading

Equity investments are considered Level 1 by the Company and fair values are primarily priced by pricing
services, reflecting the closing price quoted for the final trading day of the period. When pricing these
securities, the pricing services utilize daily data from many real time market sources, including active broker
dealers and applicable securities exchanges. All data sources are regularly reviewed for accuracy to
ensure the most reliable price source is used for each issue.

Other investments

Private equity partnerships

Included in the Company’s investments in private equity partnerships at December 31, 2011 are alternative
asset limited partnerships (or similar corporate structures) that invest in certain private equity asset classes
including U.S. and global leveraged buyouts; mezzanine investments; distressed securities; real estate; and
oil, gas and power. The fair value of private equity partnership investments is based on net asset values
obtained from the investment manager or general partner of the respective entity. The type of underlying
investments held by the investee which form the basis of the net asset valuation include assets such as
private business ventures, for which the Company does not have access to financial information, and as a
result is unable to corroborate the fair value measurement and therefore requires significant management
judgment to determine the underlying value of the private equity partnership and accordingly the fair value
of the Company’s investment in each private equity partnership is considered Level 3. The Company also

F-34

considers factors such as recent financial information, the value of capital transactions with the partnership
and management’s judgment regarding whether any adjustments should be made to the net asset value.
The Company regularly reviews the performance of its private equity partnerships directly with the fund
managers.

Senior secured bank loan funds

At December 31, 2011, the Company’s investments in senior secured bank loan funds include funds that
invest primarily in bank loans and other senior debt instruments. The fair value of the Company’s senior
secured bank loan funds are estimated using the net asset value per share of the funds. Investments of
$237.8 million are redeemable, in part on a monthly basis, or in whole over a three month period. These
investments are valued at the net asset value of the fund and are considered Level 2.

The Company also has a $20.1 million investment in a closed end fund which invests primarily in loans.
The Company has no right to redeem its investment in this fund. The Company’s investment in this fund is
valued using monthly net asset valuations received from the investment manager. The lock up provisions in
this fund result in a lack of current observable market transactions between the fund participants and the
fund, and therefore, the Company considers the fair value of its investment in this fund to be determined
using Level 3 inputs.

Catastrophe bonds

The Company's other investments include investments in catastrophe bonds which are recorded at fair
value. The fair value of the Company's investments in catastrophe bonds considered Level 2 are based on
quoted market prices, or when such prices are not available, by reference to broker or underwriter bid
indications.

Non-U.S. fixed income funds

The Company considers its investments in non-U.S. fixed income funds Level 2. The Company’s non-U.S.
fixed income funds invest primarily in non-U.S. convertible securities. The fair values of the investments in
this category have been estimated using the net asset value per share of the investments which are
provided by third parties such as the relevant investment manager or administrator, recent financial
information issued by the applicable investee entity or available market data.

Hedge funds

The Company has investments in hedge funds that pursue multiple strategies. The fair values of the
Company’s hedge funds have been estimated using the net asset value per share of the investments which
are provided by third parties such as the relevant investment manager or administrator, recent financial
information issued by the applicable investee entity or available market data to estimate fair value. The
Company considers its hedge fund investments Level 2. However, in certain instances, a portion of the
Company's hedge fund investment may be invested in so called "side pockets" or illiquid investments. In
these instances, the Company has generally lost its ability to redeem its interest, and as such, the Company
classifies this portion of its investment as Level 3.

Other secured assets

Other secured assets represented contractual rights under a purchase agreement, contingent purchase
agreement and credit derivatives agreement with a major bank to sell certain securities within the
Company’s catastrophe-linked securities portfolio. The Company’s other secured assets were accounted
for at fair value based on quoted market prices, or when such prices are not available, by reference to
broker or underwriter bid indications. As such, the Company considered its other secured assets Level 2.

Other assets and liabilities

Included in other assets and liabilities measured at fair value at December 31, 2011 are certain derivative-
based risk management products primarily to address weather and energy risks, and hedging and trading
activities related to these risks. The trading markets for these derivatives are generally linked to energy and
agriculture commodities, weather and other natural phenomena and the fair value of these contracts is

F-35

obtained through the use of exchange traded market prices, or in the absence of such market prices,
industry or internal valuation models, as such, these products are considered Level 1 and Level 3,
respectively. The Company considers assumed and ceded insurance contracts accounted for at fair value
as Level 3, as the fair value of these contracts is obtained through the use of internal valuation models with
the inputs to the internal valuation model based on proprietary data as observable market inputs are not
available. In addition, other assets and liabilities include certain other derivatives entered into by the
Company; the fair value of these transactions include the fair value of certain exchange traded foreign
currency forward contracts which are considered Level 1, and the fair value of certain credit derivatives,
determined using industry valuation models and considered Level 2, as the inputs to the valuation model
are based on observable market inputs.

Below is a reconciliation of the beginning and ending balances, for the periods shown, of assets and
liabilities measured at fair value on a recurring basis using Level 3 inputs. Interest and dividend income are
included in net investment income and are excluded from the reconciliation.

Balance – January 1, 2011

Total unrealized gains (losses)

Included in net investment income
Included in other loss

Total realized gains

Included in net investment income
Included in other loss

Total foreign exchange losses
Purchases
Sales
Settlements
Net transfers into Level 3

Balance – December 31, 2011

Fair Value Measurements Using Significant Unobservable Inputs
(Level 3)

Fixed maturity
investments,
trading

21,785

Other
investments
362,102
$

Other assets
and
(liabilities)

16,499

Total
400,386

5,976
—

—
—
—
—
—
—
—
27,761

23,473
—

—
(4,528)

29,449
(4,528)

(223)
—
(1,635)
74,293
—
(68,046)
6,562
396,526

—
38,318
(95)
56,543
(44,562)
(33,649)
—
28,526

(223)
38,318
(1,730)
130,836
(44,562)
(101,695)
6,562
452,813

Fair Value Measurements Using Significant Unobservable Inputs
(Level 3)

Fixed maturity
investments
trading

Balance – January 1, 2010

Total unrealized gains (losses)

Included in net investment income
Included in other income

Total realized gains

Included in net investment income
Included in other income
Total foreign exchange losses
Purchases
Sales
Settlements
Net transfers into Level 3

Balance – December 31, 2010

—

574
—

—
—
—
21,211
—
—
—
21,785

Other
investments
393,913
$

Other assets
and
(liabilities)

17,026

Total
410,939

29,659
—

—
(3,001)

30,233
(3,001)

(2,963)
—
(1,391)
74,027
(30,978)
(100,165)
—
362,102

—
47,137
(861)
19,262
(53,927)
(9,137)
—
16,499

(2,963)
47,137
(2,252)
114,500
(84,905)
(109,302)
—
400,386

F-36

Senior Notes

In January 2003, RenaissanceRe issued $100.0 million, which represents the carrying amount on the
Company’s consolidated balance sheet, of 5.875% Senior Notes due February 15, 2013, with interest on
the notes payable on February 15 and August 15 of each year. At December 31, 2011, the fair value of the
5.875% Senior Notes was $103.4 million (2010 – $105.9 million).

In March 2010, RenRe North America Holdings Inc. (“RRNAH”) issued $250.0 million of 5.75% Senior
Notes due March 15, 2020, with interest on the notes payable on March 15 and September 15 of each year.
At December 31, 2011, the fair value of the 5.75% Senior Notes was $263.0 million (2010 - $252.4 million).

The fair value of RenaissanceRe’s 5.875% Senior Notes and RRNAH’s 5.75% Senior Notes is determined
using indicative market pricing obtained from third-party service providers.

The Fair Value Option for Financial Assets and Financial Liabilities

The Company has elected to account for certain assets and liabilities at fair value under FASB ASC Topic
Financial Instruments. The Company has elected to use the guidance under FASB ASC Topic Financial
Instruments, as the Company believes it represents the most meaningful measurement basis for these
assets and liabilities. Below is a summary of the balances the Company has elected to account for at fair
value:

At December 31,
Other investments
Other secured assets
Other assets

2011
748,984
—
19,628

$
$
$

2010
787,548
14,250
20,000

$
$
$

Included in net investment income for 2011 was $12.7 million of net unrealized gains related to the changes
in fair value of other investments (2010 – $57.5 million, 2009 – $88.5 million). Net unrealized losses related
to the changes in the fair value of other secured assets recorded in other (loss) income was $0.1 million for
2011 (2010 – unrealized gains of $41 thousand, 2009 – unrealized gains of $1.4 million). Net unrealized
losses related to the changes in the fair value of other assets and liabilities recorded in other (loss) income
was $2.8 million for 2011 (2010 – $2.2 million, 2009 – $0.8 million).

Reinsurance Contracts Accounted for at Fair Value

The Company assumes and cedes certain reinsurance contracts that are accounted for at fair value under
the fair value option. As noted above, the Company has elected to use the guidance under FASB ASC
Topic Financial Instruments to account for certain assets and liabilities as it believes it represents the most
meaningful measurement basis for these assets and liabilities. The fair value of these contracts is obtained
through the use of internal valuation models. These contracts are recorded on the Company’s balance
sheet in other assets and other liabilities and totaled $2.1 million and $0.0 million at December 31, 2011,
respectively (2010 – $1.8 million and $0.0 million, respectively). During 2011, the Company recorded
income of $37.6 million (2010 – losses of $2.9 million, 2009 – losses of $31.9 million) which are included in
other income and represent changes in the fair value of these contracts.

F-37

Measuring the Fair Value of Other Investments Using Net Asset Valuations

The table below shows the Company’s portfolio of other investments measured using net asset valuations:

December 31, 2011
Private equity partnerships

Fair Value

367,909

Unfunded
Commitments
139,454
$

Redemption
Frequency
See below

Redemption
Notice Period
(Minimum
Days)
See below

Redemption
Notice Period
(Maximum
Days)
See below

Senior secured bank loan funds

257,870

5,099

See below

Non-U.S. fixed income funds

Hedge funds

Total other investments

measured using net asset
valuations

28,862

21,344

Monthly, Bi-
monthly

Annually,
Bi-annually

—

675,985

144,553

Private equity partnerships – Included in the Company’s investments in private equity partnerships are
alternative asset limited partnerships (or similar corporate structures) that invest in certain private equity
asset classes including U.S. and global leveraged buyouts; mezzanine investments; distressed securities;
real estate; and oil, gas and power. The fair values of the investments in this category have been estimated
using the net asset value per share of the investments. The Company generally has no right to redeem its
interest in any of these private equity partnerships in advance of dissolution of the applicable partnership.
Instead, the nature of these investments is that distributions are received by the Company in connection
with the liquidation of the underlying assets of the applicable limited partnership. It is estimated that the
majority of the underlying assets of the limited partnerships would liquidate over 7 to 10 years from
inception of the limited partnership.

Senior secured bank loan funds – The Company’s investment in senior secured bank loan funds includes
funds that invest primarily in bank loans and other senior debt instruments. The fair values of the
investments in this category have been estimated using the net asset value per share of the funds.
Investments of $237.8 million are redeemable, in part on a monthly basis, or in whole over a three month
period.

The Company also has a $20.1 million investment in a closed end fund which invests in loans. The
Company has no right to redeem its investment in this fund.

Non-U.S. fixed income funds – The Company’s non-U.S. fixed income funds invest primarily in non-U.S.
convertible securities. The fair values of the investments in this category have been estimated using the net
asset value per share of the funds. Investments of $28.9 million are redeemable, in whole or in part, on a
bi-monthly basis.

Hedge funds – The Company invests in hedge funds that pursue multiple strategies. The fair values of the
investments in this category have been estimated using the net asset value per share of the funds.
Included in the Company's investments in hedge funds at December 31, 2011, are $6.6 million of so called
“side pocket” investments which are not redeemable at the option of the shareholder. As to each
investment in a hedge fund that includes side pocket investments, if the investment is otherwise fully
redeemed, the Company will still retain its interest in the side pocket investments until the underlying
investments attributable to such side pockets are liquidated, realized or deemed realized at the discretion of
the fund manager.

F-38

NOTE 7. CEDED REINSURANCE

The Company purchases reinsurance and other protection to manage its risk portfolio and to reduce its
exposure to large losses. The Company currently has in place contracts that provide for recovery of a
portion of certain claims and claim expenses, generally in excess of various retentions or on a proportional
basis. In addition to loss recoveries, certain of the Company’s ceded reinsurance contracts provide for
recoveries of additional premiums, reinstatement premiums and for lost no-claims bonuses, which are
incurred when losses are ceded to other reinsurance contracts. The Company remains liable to the extent
that any reinsurance company fails to meet its obligations.

The following tables set forth the effect of reinsurance and retrocessional activity on premiums written and
earned and on net claims and claim expenses incurred:

Year ended December 31,
Premiums written
Direct
Assumed
Ceded

Net premiums written

Premiums earned
Direct
Assumed
Ceded

Net premiums earned

Claims and claim expenses
Gross claims and claim expenses incurred
Claims and claim expenses recovered

Net claims and claim expenses incurred

2011

2010

2009

29,725
1,405,251
(422,203)
$ 1,012,773

17,794
1,356,205
(422,950)
951,049

$ 1,270,487
(409,308)
861,179

9,133
1,156,162
(316,330)
848,965

5,329
1,191,375
(331,783)
864,921

178,422
(49,077)
129,345

469
1,228,412
(390,548)
838,333

1,419
1,270,553
(389,768)
882,204

(81,233)
10,535
(70,698)

The reinsurers with the three largest balances accounted for 27.3%, 14.9% and 12.4%, respectively, of the
Company’s reinsurance recoverable balance at December 31, 2011 (2010 – 31.7%, 13.7% and 12.7%,
respectively). At December 31, 2011, the Company had a $7.3 million valuation allowance against
reinsurance recoverable (2010 – $3.5 million). The three largest company-specific components of the
valuation allowance represented 34.2%, 27.3% and 12.0%, respectively, of the Company’s total valuation
allowance at December 31, 2011 (2010 – 57.0%, 24.9% and 3.7%, respectively).

NOTE 8. RESERVE FOR CLAIMS AND CLAIM EXPENSES

The Company uses statistical and actuarial methods to estimate ultimate expected claims and claim
expenses. The period of time from the reporting of a claim to the Company and the settlement of the
Company's liability may be many years. During this period, additional facts and trends will be revealed. As
these factors become apparent, case reserves will be adjusted, sometimes requiring an increase or
decrease in the overall reserve for claims and claim expenses of the Company, and at other times requiring
a reallocation of incurred but not reported (“IBNR”) reserves to specific case reserves or additional case
reserves. These estimates are reviewed regularly, and such adjustments, if any, are reflected in the results
of operations in the period in which they become known and are accounted for as changes in estimates.
Adjustments to the Company's reserve for claims and claim expenses can impact current year net income
(loss) by increasing net income or decreasing net loss if the estimates of prior year claims and claim
expense reserves prove to be overstated or by decreasing net income or increasing net loss if the estimates
of prior year claims and claim expense reserves prove to be insufficient.

The Company's estimates of claims and claim expenses are also based in part upon the estimation of
claims resulting from natural and man-made disasters such as hurricanes, earthquakes, tsunamis, winter
storms, terrorist attacks and other catastrophic events. Estimation by the Company of claims resulting from
catastrophic events is inherently difficult because of the potential severity of property catastrophe claims.
Additionally, the Company has recently increased its specialty reinsurance business but does not have the

F-39

benefit of a significant amount of its own historical experience in certain of these lines. Therefore, the
Company uses both proprietary and commercially available models, as well as historical (re)insurance
industry claims experience, for purposes of evaluating future trends and providing an estimate of ultimate
claims costs.

Activity in the liability for unpaid claims and claim expenses is summarized as follows:

Year ended December 31,
Net reserves as of January 1
Net incurred related to:

Current year
Prior years

Total net incurred
Net paid related to:

Current year
Prior years
Total net paid
Total net reserves as of December 31
Reinsurance recoverable as of December 31
Total gross reserves as of December 31

2011
$ 1,156,132

2010
$ 1,260,334

2009
$ 1,565,230

993,168
(131,989)
861,179

431,476
(302,131)
129,345

195,518
(266,216)
(70,698)

299,299
129,687
428,986
1,588,325
404,029
$ 1,992,354

50,793
182,754
233,547
1,156,132
101,711
$ 1,257,843

42,712
191,486
234,198
1,260,334
84,099
$ 1,344,433

The following table details the Company's prior year development by segment of its liability for unpaid
claims and claim expenses:

Year ended December 31,
Reinsurance
Lloyd's
Insurance
Total

2011
$ (136,898)
478
4,431
$ (131,989)

2010
$ (286,019)
(197)
(15,915)
$ (302,131)

2009
$ (249,507)
—
(16,709)
$ (266,216)

For the year ended December 31, 2011, the prior year net favorable development of $132.0 million included
favorable development of $136.9 million, adverse development of $0.5 million and adverse development of
$4.4 million attributable to the Company's Reinsurance, Lloyd's and Insurance segments, respectively.
Within the Company's Reinsurance segment, the catastrophe unit experienced $59.1 million of favorable
development on prior years claims and claim expense reserves and the specialty reinsurance unit
experienced $77.8 million of favorable development on prior years claims and claim expense reserves.

For the year ended December 31, 2010, the prior year favorable development of $302.1 million included
favorable development of $286.0 million, $0.2 million and $15.9 million attributable to the Company's
Reinsurance, Lloyd's and Insurance segments, respectively. Within the Company's Reinsurance segment,
the catastrophe unit experienced $157.5 million of favorable development on prior years claims and claim
expense reserves and the specialty reinsurance unit experienced $128.6 million of favorable development
on prior years claims and claim expense reserves.

For the year ended December 31, 2009, the prior year favorable development of $266.2 million included
favorable development of $249.5 million and $16.7 million attributable to the Company's Reinsurance and
Insurance segments, respectively. Within the Company's Reinsurance segment, the Company's
catastrophe unit experienced $184.4 million of favorable development on prior years claims and claim
expense reserves and its specialty reinsurance unit experienced $65.1 million of favorable development on
prior years claims and claim expense reserves.

F-40

Reinsurance Segment

The Company reviews substantially all of its catastrophe reinsurance claims and claim expense reserves
quarterly. The Company's quarterly review procedures include identifying events that have occurred up to
the latest balance sheet date, determining its best estimate of the ultimate expected cost to settle all claims
and administrative costs associated with those new events which have arisen during the reporting period,
reviewing the ultimate expected cost to settle claims and administrative costs associated with those events
which occurred during previous periods, and considering new estimation techniques, such as additional
actuarial methods or other statistical techniques, that can assist the Company in developing its best
estimate. This process is judgmental in that it involves reviewing changes in paid and reported claims each
period and adjusting the Company's estimates of the ultimate expected claims for each event where there
are developments that are different from its previous expectations. If the Company determines that
adjustments to an earlier estimate are appropriate, such adjustments are recorded in the period in which
they are identified. It should be noted that the level of the Company's claims associated with certain
catastrophes can be very large. For example, within the Company's Reinsurance segment, initial estimated
ultimate claims associated with 2005 hurricanes, Katrina, Rita and Wilma, were over $1.5 billion, and the
initial estimated ultimate claims associated with the 2008 hurricanes, Gustav and Ike, were over $530
million. As a result, small percentage changes in the estimated ultimate claims of large catastrophic events
can significantly impact the Company's reserves for claims and claim expenses in subsequent periods.

When initially developing the Company's reserving techniques for its specialty reinsurance coverages, the
Company considered estimating reserves utilizing several actuarial techniques such as paid and reported
claims development methods. The Company elected to use the Bornhuetter-Ferguson actuarial method
because this method is appropriate for lines of business, such as the Company's specialty reinsurance
business, where there is a lack of historical claims experience. This method allows for greater weight to be
applied to expected results in periods where little or no actual experience is available, and, hence, is less
susceptible to the potential pitfall of being excessively impacted by one particular year or quarter of actual
paid and/or reported claims data. This method uses initial expected claims ratio expectations to the extent
that claims are not paid or reported, and it assumes that past experience is not fully representative of the
future. As the Company's reserves for claims and claim expenses age, and actual claims experience
becomes available, this method places less weight on expected experience and places more weight on
actual experience. This experience, which represents the difference between expected reported claims and
actual reported claims is reflected in the respective reporting period as a change in estimate. The Company
reevaluates its actuarial reserving techniques on a periodic basis.

The Company reviews substantially all of its specialty reinsurance claims and claim expense reserves
quarterly. Typically, the quarterly review procedures include reviewing paid and reported claims in the most
recent reporting period, reviewing the development of paid and reported claims from prior periods, and
reviewing the Company's overall experience by underwriting year and in the aggregate. The Company
monitors its expected ultimate claims and claim expense ratios and expected claims reporting assumptions
on a quarterly basis and compares them to its actual experience. These actuarial assumptions are
generally reviewed annually, based on input from the Company's actuaries, underwriters, claims personnel
and finance professionals, although adjustments may be made more frequently if needed. Assumption
changes are made to adjust for changes in the pricing and terms of coverage the Company provides,
changes in industry standards, as well as its actual experience, to the extent the Company has enough data
to rely on its own experience. If the Company determines that adjustments to an earlier estimate are
appropriate, such adjustments are recorded in the period in which they are identified.

F-41

The following table details the development of the Company's liability for unpaid claims and claim expenses
for its Reinsurance segment for the year ended December 31, 2011 split between its catastrophe
reinsurance unit and its specialty reinsurance unit and then further split between catastrophe claims and
claim expenses and attritional claims and claim expenses:

Year ended December 31, 2011

Catastrophe claims and claim expenses

Large catastrophe events

Tropical Cyclone Tasha (2010)

Hurricanes Katrina, Rita and Wilma (2005)

Chilean Earthquake (2010)

World Trade Center (2001)

Hurricanes Charley, Francis, Ivan and Jeanne (2004)

U.K. Floods (2007)

Windstorm Kyrill (2007)
New Zealand Earthquake (2010)

Total large catastrophe events

Small catastrophe events

U.S. PCS 21 Wildland Fire (2007)

U.S. PCS 33 Great Midwest Storm (2010)

U.S. PCS 31 Wind and Thunderstorm (2010)

U.S. PCS 96 Wind and Thunderstorm (2010)

Other

Total small catastrophe events

Catastrophe
Reinsurance
Unit

Specialty
Reinsurance
Unit

Reinsurance
Segment

13,922

3,000

10,008

8,455

4,701

4,076

3,635

2,494
(15,179)

32,112

4,554

3,125

3,039

2,288

14,019

27,025

6,215

4,688

—

—
—

13,903

—

16,922

16,223

13,143

4,701

4,076

3,635

2,494
(15,179)

46,015

4,554

3,125

3,039

2,288

14,019

27,025

73,040

Total catastrophe claims and claim expenses

59,137

13,903

Attritional claims and claim expenses

Bornhuetter-Ferguson actuarial method - actual reported

claims less than expected claims

Actuarial assumption changes

Total attritional claims and claim expenses

Total favorable development of prior accident years

claims and claim expenses

—

59,137

37,058

26,800

63,858

77,761

37,058

26,800

63,858

136,898

Catastrophe Reinsurance Unit

The favorable development of prior accident years claims and claim expenses within the Company's
catastrophe reinsurance unit in 2011 of $59.1 million was due to net reductions of $32.1 million arising from
the estimated ultimate claims of large catastrophe events, including the 2005 hurricanes and the World
Trade Center, for which the claims are principally paid and the amount of additional reported claims had
slowed considerably and therefore the ultimate claims were reduced, and tropical cyclone Tasha and the
Chilean earthquake, as reported claims came in better than expected in 2011. Partially offsetting the above
reductions in estimated ultimate claims during 2011, the Company increased its estimated ultimate claims
for the September 2010 New Zealand earthquake due to additional claims reporting information being
available to the Company. The remainder of the favorable development of prior accident years claims and
claim expenses was due to a reduction in ultimate claims on a large number of relatively small
catastrophes, all principally the result of reported claims coming in less than expected, resulting in formulaic
decreases to the ultimate claims for these events.

F-42

Specialty Reinsurance Unit

The favorable development of prior accident years claims and claim expenses within the Company's
specialty reinsurance unit in 2011 of $77.8 million includes: $26.8 million associated with actuarial
assumption changes, principally in the Company's workers’ compensation quota share and per risk and
property risk and energy lines of business, and primarily as a result of revised initial expected claims ratios
and claim development factors due to actual experience coming in better than expected; $13.9 million due
to reductions in case reserves and additional case reserves for certain large catastrophe events; and the
remainder of $37.1 million due to reported claims coming in better than expected in 2011 on prior accident
years events, as a result of the application of the Company's formulaic actuarial reserving methodology.

F-43

The following table details the development of the Company's liability for unpaid claims and claim expenses
for its Reinsurance segment for the year ended December 31, 2010 split between its catastrophe
reinsurance unit and its specialty reinsurance unit and then further split between catastrophe claims and
claim expenses and attritional claims and claim expenses:

Year ended December 31, 2010

Catastrophe claims and claim expenses

Large catastrophe events

Mature, large catastrophe events

European Windstorm Erwin (2005)

World Trade Center (2001)

Hurricanes Martin and Floyd (1999)

European Floods (2002)

U.S. PCS 88 Wind and Thunderstorm (2003)

Hurricane Isabel (2003)
U.S. PCS 97 Wildland Fire (2003)

Northridge Earthquake (1993)

Windstorm Anatol (1999)

Total mature, large catastrophe events

Buncefield Oil Depot (2005)

Hurricanes Katrina, Rita and Wilma (2005)

Hurricanes Gustav and Ike (2008)

Hurricanes Charley, Francis, Ivan and Jeanne (2004)

European Windstorm Klaus (2009)

Total large catastrophe events

Small catastrophe events

U.S. PCS 78 Wind and Thunderstorm (2009)

U.S. PCS 66 Wind and Thunderstorm (2009)

U.S. Winter Storm (2009)

Hurricane Bill (2009)

U.S. PCS 82 Wind and Thunderstorm (2009)

Austrian Floods (2009)

Other

Total small catastrophe events

Catastrophe
Reinsurance
Unit

Specialty
Reinsurance
Unit

Reinsurance
Segment

10,593

9,914

4,822

4,361

2,873

1,995
1,231

1,094

971

37,854

27,418

25,482

10,878

8,149

8,000

—

—
—

—

2,073

5,350

—

10,593

9,914

4,822

4,361

2,873

1,995
1,231

1,094

971

37,854

29,491

30,832

10,878

8,149

8,000

117,781

7,423

125,204

3,215

3,149

3,000

2,500

2,429

2,356

23,028

39,677

—

3,215

3,149

3,000

2,500

2,429

2,356

23,028

39,677

Total catastrophe claims and claim expenses

157,458

7,423

164,881

Attritional claims and claim expenses

Bornhuetter-Ferguson actuarial method - actual reported

claims less than expected claims

Actuarial assumption changes

Reductions in specific events

Total attritional claims and claim expenses

Total favorable development of prior accident years

claims and claim expenses

—

157,458

71,261

31,400

18,477

121,138

128,561

71,261

31,400

18,477

121,138

286,019

F-44

Catastrophe Reinsurance Unit

The favorable development of prior accident years claims and claim expenses within the Company's
catastrophe reinsurance unit in 2010 of $157.5 million was due to reductions of $37.9 million to the
estimated ultimate claims of mature, large catastrophe events, such as the 2001 World Trade Center,
European windstorm Erwin and the large European windstorms of 1999, for which the claims are principally
paid and the amount of additional reported claims had slowed considerably and therefore the ultimate
claims were reduced. In addition, the 2005 Buncefield Oil Depot claim was reduced by $27.4 million in
2010, principally due to the underlying insured subrogating its liability and subsequently reimbursing the
Company for claims the Company had previously paid to the insured. The ultimate claims associated with
the 2005 hurricanes, Katrina, Rita and Wilma, and the 2004 hurricanes, Charley, Frances, Ivan and Jeanne,
were reduced by $25.5 million and $8.1 million, respectively, as reported claims came in better than
expected in 2010. As discussed below, the Company adopted a new actuarial technique in 2009 to reserve
for these hurricanes and the level of reported claims in 2010 was less than the actuarial technique would
have indicated, resulting in formulaic decreases to the ultimate claims for these large hurricanes. The
ultimate claims associated with the 2008 hurricanes, Gustav and Ike, were reduced by $10.9 million and the
2009 European windstorm Klaus were reduced by $8.0 million in 2010, due to better than expected
reported claims activity. The remainder of the favorable development of prior accident years claims and
claim expenses was due to a reduction in ultimate claims on a large number of relatively small
catastrophes, all principally the result of reported claims coming in less than expected, resulting in formulaic
decreases to the ultimate claims for these events.

Specialty Reinsurance Unit

F-45

The following table details the development of the Company's liability for unpaid claims and claim expenses
for its Reinsurance segment for the year ended December 31, 2009 split between its property catastrophe
reinsurance unit and its specialty reinsurance unit and then further split between catastrophe claims and
claim expenses and attritional claims and claim expenses:

Year ended December 31, 2009

Catastrophe claims and claim expenses

Large catastrophe events

Catastrophe
Reinsurance
Unit

Specialty
Reinsurance
Unit

Reinsurance
Segment

Hurricanes Gustav and Ike (2008)

44,664

—

Hurricanes Katrina, Rita and Wilma (2005)

Windstorm Kyrill (2007)

U.K. Floods (2007)

U.S. PCS 21 California Wildland Fire (2007)

Hurricanes Charley, Francis, Ivan and Jeanne (2004)

25,456

16,719

14,589

14,085

11,302

10,000

—

44,664

35,456

16,719

14,589

14,085

11,302

Total large catastrophe events

Small catastrophe events

Windstorm Emma (2008)

U.S. PCS 27 Wind and Thunderstorm (2008)

Hurricane Dean (2007)

U.S. PCS 42 Wind and Thunderstorm (2008)

U.S. PCS 43 Wind and Thunderstorm (2008)

Other

Total small catastrophe events

126,815

10,000

136,815

8,910

4,237

3,889

3,862

3,171

33,511

57,580

—

8,910

4,237

3,889

3,862

3,171

33,511

57,580

Total catastrophe claims and claim expenses

184,395

10,000

194,395

Attritional claims and claim expenses

Bornhuetter-Ferguson actuarial method - actual reported

claims less than expected claims

Madoff

Subprime

Total attritional claims and claim expenses

Total favorable development of prior accident years

claims and claim expenses

—

184,395

92,115

(32,500)

(4,503)

55,112

65,112

(4,503)

55,112

249,507

Catastrophe Reinsurance Unit

F-46

reserves associated with these mature, large U.S. hurricanes and available industry claims information on
the same or similar events. The Company determined that the use of the reported claim development
factor methodology for these mature, large U.S. hurricanes would provide the Company with the best
estimate of ultimate claims in respect of these events. Currently, the Company believes this approach is
only applicable for the 2004 and 2005 large hurricanes as it believes that (i) these events have a large
enough number of reported claims to be statistically sound, (ii) these events have available industry
reported claims information to supplement the Company's own historical reported claim information, and (iii)
a sufficient amount of time has passed from the date of claim that the use of an actuarial method could
assist in estimating the ultimate costs. The Company implemented this actuarial methodology in 2009 with
respect to its 2004 and 2005 hurricane claims. In implementing this actuarial technique, the Company
adjusted its ultimate claims at December 31, 2009 on the 2004 hurricanes from 96.6% reported to 98.1%
reported and from 93.6% reported to 95.8% reported for the 2005 hurricanes. The impact of these changes
within the Company's catastrophe reinsurance unit was a decrease in ultimate claims on the 2004
hurricanes by $12.3 million and by $28.1 million for the Company's 2005 hurricane claims, prior to the
impact of changes in the Company's reinsurance recoveries. At December 31, 2010, the Company
estimated its reported claims were 99.3% and 98.1% reported for the 2004 and 2005 hurricanes,
respectively. The remainder of the reduction in ultimate claims in 2009 was due to the 2007 European
windstorm Kyrill of $16.7 million; the 2007 California wildfires of $14.1 million; the 2007 flooding in the U.K.
of $14.6 million; and $57.6 million related to reductions in the ultimate net claims on a variety of smaller
catastrophes such as hail storms, winter freezes, floods, fires and tornadoes which occurred during the
2006 through 2008 accident years.

Specialty Reinsurance Unit

Lloyd's Segment

The Company uses the Bornhuetter-Ferguson actuarial method to estimate claims and claim expenses
within its Lloyd's segment for its property and casualty (re)insurance contracts and quota share reinsurance
business. The comments discussed above relating to the Company's reserving techniques and processes
for the Company's specialty reinsurance unit within the Company's Reinsurance segment also apply to the
Company's Lloyd's segment. In addition, certain of the Company's coverages may be impacted by natural
and man-made catastrophes. The Company estimates claim reserves for these claims after the event
giving rise to these claims occurs, following a process that is similar to the Company's catastrophe
reinsurance unit discussed above.

The following table details the development of the Company's liability for unpaid claims and claim expenses
for its Lloyd's segment for the years ended December 31, 2011, 2010 and 2009:

Year ended December 31,
Lloyd's

2011

2010

2009

478

(197)

—

The Company commenced its Lloyd's operations in mid-2009 and the reserve development in this segment
since that time has not been significant.

F-47

Insurance Segment

The Company uses the Bornhuetter-Ferguson actuarial method to estimate claims and claim expenses
within its Insurance segment for its property and casualty insurance contracts and quota share reinsurance
business. The comments discussed above relating to the Company's reserving techniques and processes
for its specialty reinsurance unit within the Company's Reinsurance segment also apply to the Company's
Insurance segment. In addition, certain of the Company's coverages may be impacted by natural and man-
made catastrophes. The Company estimates claim reserves for these claims after the event giving rise to
these claims occurs, following a process that is similar to the Company's catastrophe reinsurance unit
discussed above. The following table details the development of the Company's liability for unpaid claims
and claim expenses for its Insurance segment for the years ended December 31, 2011, 2010 and 2009:

Year ended December 31,
Large catastrophe events
Attritional claims and claim expenses
Actuarial assumption changes

Total

2011

2010

2009

4,243
1,389
(10,063)
(4,431)

300
15,615
—
15,915

1,603
15,106
—
16,709

The adverse development on prior accident years of $4.4 million in 2011 within the Company's Insurance
segment was principally due to the construction defect book of business, which experienced higher than
expected reported losses, and was subsequently subject to a comprehensive actuarial review during the
fourth quarter of 2011, which review resulted in an increase of $10.1 million to the estimated ultimate claims
and claim expenses related to this book of business due to changes in the actuarial assumptions. The total
gross reserve for claims and claim expenses for the construction defect book of business at December 31,
2011 is $58.8 million. Partially offsetting the adverse development on prior accident years within the
construction defect book of business, noted above, was favorable development of $4.2 million related to
large catastrophe events, of which $4.6 million related to the 2005 hurricanes, and $1.4 million related to
the application of the Company's formulaic actuarial reserving methodology with the reductions being due to
actual paid and reported claim activity being more favorable to date than what was originally anticipated
when setting the initial reserves.

The favorable development within the Company's Insurance segment of $16.7 million in 2009 was
principally driven by the application of the Company's formulaic actuarial reserving methodology for this
business with the reductions being due to actual paid and reported claim activity being more favorable to
date than what was originally anticipated when setting the initial reserves. During 2009, there were no
significant changes made to the actuarial assumptions used as part of the Company's formulaic actuarial
reserving methodology noted above. The Company's Insurance segment experienced a $2.1 million
decrease in the net ultimate claims and claim expenses associated with the 2004 and 2005 large hurricanes
during 2009, including the adoption of the actuarial technique noted above for these hurricanes. The total
decrease in net ultimate claims and claim expenses associated with large catastrophes in 2009 was $1.6
million.

Assumed Reinsurance Contracts Classified As Deposit Contracts

Net claims and claim expenses incurred were reduced by $0.2 million during 2011 (2010 – $0.2 million,
2009 – $3.3 million) related to income earned on assumed reinsurance contracts that were classified as
deposit contracts with underwriting risk only. Other loss was increased by $0.1 million during 2011 (2010 –
other income increased by $8.1 million, 2009 – other income reduced by $0.7 million) related to premiums
and losses incurred on assumed reinsurance contracts that were classified as deposit contracts with timing
risk only. Aggregate deposit liabilities of $50.0 million are included in reinsurance balances payable at
December 31, 2011 (2010 – $52.1 million) and aggregate deposit assets of $0.0 million are included in
other assets at December 31, 2011 (2010 – $0.0 million) associated with these contracts.

F-48

NOTE 9. DEBT

5.875% Senior Notes

In January 2003, the Company issued $100.0 million, which represents the carrying amount on the
Company’s consolidated balance sheet, of 5.875% Senior Notes due February 15, 2013, with interest on
the notes payable on February 15 and August 15 of each year. The notes can be redeemed by the
Company prior to maturity, subject to payment of a “make-whole” premium. The notes, which are senior
obligations, contain various covenants, including limitations on mergers and consolidations, restrictions as
to the disposition of the stock of designated subsidiaries and limitations on liens of the stock of designated
subsidiaries.

5.75% Senior Notes

RenaissanceRe Revolving Credit Facility (the “Credit Agreement”)

Effective April 22, 2010, RenaissanceRe entered into a revolving credit agreement with various financial
institutions parties thereto, Bank of America, N.A., as fronting bank, letter of credit administrator and
administrative agent for the lenders thereunder, and Wells Fargo Bank, National Association, as syndication
agent. The Credit Agreement provides for a revolving commitment to RenaissanceRe of $150.0 million,
including the issuance of letters of credit for the account of RenaissanceRe and RenaissanceRe’s
insurance subsidiaries of up to $150.0 million and the issuance of letters of credit for the account of
RenaissanceRe’s non-insurance subsidiaries of up to $50.0 million. RenaissanceRe has the right, subject
to satisfying certain conditions, to increase the size of the facility to $250.0 million. The scheduled
commitment maturity date of the Credit Agreement is April 22, 2013. At December 31, 2011, the revolving
commitment of $150.0 million remained unused and available to RenaissanceRe.

DaVinciRe Revolving Credit Facility

F-49

Principal Letter of Credit Facility

Effective April 22, 2010, RenaissanceRe and its affiliates, Renaissance Reinsurance, Renaissance
Reinsurance of Europe, Glencoe Insurance Ltd. and DaVinci (such affiliates, collectively, the “Account
Parties”), entered into a Third Amended and Restated Reimbursement Agreement with various banks and
financial institutions parties thereto (collectively, the “Lenders”), with Wells Fargo Bank, National
Association, as issuing bank, administrative agent and collateral agent for the Lenders, and certain other
agents (the “Reimbursement Agreement”).

The Reimbursement Agreement serves as the Company’s principal secured letter of credit facility and the
commitments thereunder expire on April 22, 2013. As of December 31, 2010, the Reimbursement
Agreement provided commitments from the Lenders in an aggregate amount of $1.0 billion. Effective
February 15, 2011, the Company reduced the commitments under the Reimbursement Agreement from
$1.0 billion to $700.0 million. Effective March 7, 2011, the Company further reduced the commitments under
the Reimbursement Agreement from $700.0 million to $600.0 million. The reductions were implemented in
connection with a reassessment of the future collateral needs of the Account Parties, taking into account,
amount other things, their access to alternative sources of credit enhancement. Prior to the expiration date
set forth above and after giving effect to the full $400.0 million reduction, the commitments of the Lenders
under the Reimbursement Agreement may be increased from time to time up to an aggregate amount not to
exceed $1.1 billion, subject to the satisfaction of certain conditions. At December 31, 2011, the Company
had $420.5 million of letters of credit with effective dates on or before December 31, 2011 outstanding
under the Reimbursement Agreement.

Bilateral Letter of Credit Facility (“Bilateral Facility”)

F-50

Funds at Lloyd’s Letter of Credit Facility

Letters of Credit

At December 31, 2011, we had total letters of credit outstanding under all facilities of $576.8 million.

Renaissance Trading Margin Facility

Renaissance Trading maintains a brokerage facility with a leading prime broker, which has an associated
margin facility. This margin facility is supported by a $10.0 million guarantee issued by RenaissanceRe.
Interest on amounts outstanding under this facility is at overnight LIBOR plus 75 basis points. At
December 31, 2011, $4.4 million was outstanding under the facility.

Guarantees

At December 31, 2011, RenaissanceRe had provided guarantees in the amount of $371.2 million to certain
counterparties of the weather and energy risk operations of Renaissance Trading. In the future,
RenaissanceRe may issue guarantees for other purposes or increase the amount of guarantees issued to
counterparties of Renaissance Trading.

Interest paid on the above debt totaled $23.8 million for the year ended December 31, 2011 (2010 – $17.7
million, 2009 – $18.7 million).

F-51

The following table sets forth the Company’s aggregate amount of maturities related to the Company’s debt
obligations reflected on its consolidated balance sheet at December 31, 2011:

Year ended December 31, 2011
2012
2013
2014
2015
2016
After 2016
Unamortized debt issuance expenses

4,373
100,000
—
—
—
250,000
(753)
353,620

NOTE 10. NONCONTROLLING INTERESTS

Redeemable Noncontrolling Interest – DaVinciRe

In October 2001, the Company formed DaVinciRe and DaVinci with other equity investors. RenaissanceRe
owns a noncontrolling economic interest in DaVinciRe; however, because RenaissanceRe controls a
majority of DaVinciRe’s outstanding voting rights, the consolidated financial statements of DaVinciRe are
included in the consolidated financial statements of the Company. The portion of DaVinciRe’s earnings
owned by third parties for the years ended December 31, 2011, 2010 and 2009 is recorded in the
consolidated statements of operations as net (loss) income attributable to noncontrolling interests. The
Company's ownership in DaVinciRe was 42.8% at December 31, 2011 (2010 - 41.2%, 2009 - 38.2%).

DaVinciRe shareholders are party to a shareholders agreement (the “Shareholders Agreement”) which
provides DaVinciRe shareholders, excluding RenaissanceRe, with certain redemption rights that enable
each shareholder to notify DaVinciRe of such shareholder’s desire for DaVinciRe to repurchase up to half of
such shareholder’s initial aggregate number of shares held, subject to certain limitations, such as limiting
the aggregate of all share repurchase requests to 25% of DaVinciRe’s capital in any given year and
satisfying all applicable regulatory requirements. If total shareholder requests exceed 25% of DaVinciRe’s
capital, the number of shares repurchased will be reduced among the requesting shareholders pro-rata,
based on the amounts desired to be repurchased. Shareholders desiring to have DaVinci repurchase their
shares must notify DaVinciRe before March 1 of each year. The repurchase price will be based on GAAP
book value as of the end of the year in which the shareholder notice is given, and the repurchase will be
effective as of such date. Payment will be made by April 1 of the following year, following delivery of the
audited financial statements for the year in which the repurchase was effective. The repurchase price is
subject to a true-up for development on outstanding loss reserves after settlement of all claims relating to
the applicable years.

F-52

Certain third party shareholders of DaVinciRe submitted repurchase notices on or before the required
annual redemption notice date of March 1, 2009, in accordance with the Shareholders Agreement. The
repurchase notices submitted on or before March 1, 2009 were for shares of DaVinciRe with a GAAP book
value of $173.6 million at December 31, 2009. Effective January 1, 2010, DaVinciRe redeemed the shares
for $173.6 million, less a $17.6 million reserve holdback and, in a separate transaction, the Company sold a
portion of its shares in DaVinciRe to a third party shareholder. Subsequent to the above transactions, the
Company’s ownership interest in DaVinciRe increased to 41.2% effective January 1, 2010.

Certain third party shareholders of DaVinciRe submitted repurchase notices on or before the required
annual redemption notice date of March 1, 2010, in accordance with the Shareholders Agreement. The
repurchase notices submitted on or before March 1, 2010, were for shares of DaVinciRe with a GAAP book
value of $88.4 million at December 31, 2010. Furthermore, DaVinciRe resolved to return additional capital
of $86.6 million to the remaining shareholders, including the Company, after the receipt of the repurchase
notices described above. Effective January 1, 2011, DaVinciRe redeemed the shares and returned
additional capital for an aggregate of $175.0 million, less a $17.5 million reserve holdback. As a result of
the above transactions, the Company’s ownership interest in DaVinciRe increased to 44.0% effective
January 1, 2011.

In advance of the March 1, 2011 redemption notice date, certain third party shareholders of DaVinciRe have
submitted repurchase notices, in accordance with the Shareholders Agreement, for shares of DaVinciRe
with a GAAP book value of $9.2 million at December 31, 2011. Effective January 1, 2012, DaVinciRe
redeemed the shares for $9.2 million, less a $1.8 million reserve holdback.

On June 1, 2011, DaVinciRe completed an equity raise of $100.0 million from new and existing
shareholders, including $30.0 million contributed by the Company. As a result of the equity raise, the
Company's ownership in DaVinciRe decreased to 42.8% effective June 1, 2011.

Effective January 1, 2012, an existing third party shareholder sold a portion of its shares in DaVinciRe to a
new third party shareholder. In connection with the sale by the existing third party shareholder, DaVinciRe
retained a $4.9 million holdback. In addition, effective January 1, 2012, the Company sold a portion of its
shares of DaVinciRe to a separate new third party shareholder. The Company sold these shares for $98.9
million, net of a $10.0 million reserve holdback due from DaVinciRe. The Company's ownership in
DaVinciRe was 42.8% at December 31, 2011 and subsequent to the above transactions, its ownership
interest in DaVinciRe decreased to 34.7% effective January 1, 2012.

The Company expects its ownership in DaVinciRe to fluctuate over time.

The activity in redeemable noncontrolling interest – DaVinciRe is detailed in the table below:

Year ended December 31,
Balance – January 1

Purchase of shares from redeemable noncontrolling interest

Sale of shares to redeemable noncontrolling interests

Comprehensive income:

2011
757,655

2010
786,647

(136,225)

(142,097)

70,000

—

Net (loss) income attributable to redeemable noncontrolling interest

(33,697)

116,532

Other comprehensive loss attributable to redeemable noncontrolling

interest

Balance – December 31

(6)

(3,427)

657,727

757,655

F-53

Noncontrolling Interest - Angus Fund L.P. (the “Angus Fund”)

In December 2010, REAL and RenRe Commodity Advisors Inc. (“RRCA”), both wholly owned subsidiaries
of the Company, formed the Angus Fund with other equity investors. REAL, the general partner of the
Angus Fund, invested $41 thousand in the Angus Fund, representing a 1.0% ownership interest at
December 31, 2011 (2010 - $40 thousand and 1.0%, respectively), and RRCA, a limited partner, invested
$1.0 million in the Angus Fund, representing a 24.2% ownership interest at December 31, 2011 (2010 - $1.0
million and 24.8%, respectively). The Angus Fund was formed to provide capital to and make investments
in companies primarily in the heating oil and propane distribution industries to supplement the Company’s
weather and energy risk management operations. The Angus Fund meets the definition of a VIE, therefore
the Company evaluated its ownership in the Angus Fund to determine if it is the primary beneficiary. The
Company has concluded it is the primary beneficiary of the Angus Fund as it has the power to direct, and
has a more than insignificant economic interest in, the activities of the Angus Fund and as such, the
financial position and results of operations of the Angus Fund are consolidated. The Company expects its
ownership in the Angus Fund to fluctuate over time. The portion of the Angus Fund's earnings owned by
third parties for the year ended December 31, 2011 and 2010, is recorded in the consolidated statements of
operations as noncontrolling interest. The Company expects its ownership in the Angus Fund to fluctuate
over time.

The activity in noncontrolling interest is detailed in the table below:

Year ended December 31,
Balance – January 1

Purchase of shares by noncontrolling interest

Comprehensive income:

Net income (loss) attributable to noncontrolling interest
Dividends on common shares
Other comprehensive income attributable to noncontrolling interest

Balance – December 31

2011

2010

2,889
100

—
3,000

540
(189)
—
3,340

(111)
—
—
2,889

NOTE 11. SHAREHOLDERS’ EQUITY

The aggregate authorized capital of the Company is 325 million shares consisting of 225 million common
shares and 100 million preference shares. The following table is a summary of changes in common shares
issued and outstanding:

Year ended December 31,
(thousands of shares)
Issued and outstanding shares – January 1
Shares repurchased
Exercise of options and issuance of restricted stock awards

Issued and outstanding shares – December 31

2011

2010

2009

54,110
(2,889)
322
51,543

61,745
(8,198)
563
54,110

61,503
(951)
1,193
61,745

The Company’s share repurchase program may be effected from time to time, depending on market
conditions and other factors, through open market purchases and privately negotiated transactions. Unless
terminated earlier by resolution of the Company’s Board of Directors, the program will expire when the
Company has repurchased the full value of the shares authorized. The Company’s decision to repurchase
common shares will depend on, among other matters, the market price of the common shares and the
capital requirements of the Company. During 2011, $191.6 million of shares (2010 – $460.4 million, 2009 –
$51.0 million) were repurchased under this program. Common shares repurchased by the Company are
normally canceled and retired. At December 31, 2011, $483.2 million remained available for repurchase
under the Board authorized share repurchase program. On February 22, 2012, the Company approved an
increase in its authorized share repurchase program to an aggregate amount of $500.0 million. Dividends
declared and paid on common shares amounted to $1.04, $1.00 and $0.96 per common share for the years
ended December 31, 2011, 2010 and 2009, respectively, or $53.5 million, $55.9 million and $59.7 million,
respectively, on all common shares outstanding.

F-54

In December 2006, the Company raised $300.0 million through the issuance of 12 million Series D
Preference Shares at $25 per share; in March 2004, the Company raised $250.0 million through the
issuance of 10 million Series C Preference Shares at $25 per share; and in February 2003 the Company
raised $100.0 million through the issuance of 4 million Series B Preference Shares at $25 per share. On
November 17, 2010, the Company gave redemption notices to the holders of the 7.30% Series B
Preference Shares to redeem such shares for $25 per share. On December 20, 2010, the Company
redeemed all of the issued and outstanding 7.30% Series B Preference Shares for $100.0 million plus
accrued and unpaid dividends thereon. The Series D and Series C Preference Shares may be redeemed
at $25 per share at the Company’s option on or after December 1, 2011 and March 23, 2009, respectively.
Dividends on the Series D and Series C Preference Shares are cumulative from the date of original
issuance and are payable quarterly in arrears at 6.60% and 6.08%, respectively, when, if, and as declared
by the Board of Directors. The preference shares have no stated maturity and are not convertible into any
other securities of the Company. Generally, the preference shares have no voting rights. Whenever
dividends payable on the preference shares are in arrears (whether or not such dividends have been
earned or declared) in an amount equivalent to dividends for six full dividend periods (whether or not
consecutive), the holders of the preference shares, voting as a single class regardless of class or series,
will have the right to elect two directors to the Board of Directors of the Company.

During 2011, the Company declared and paid $35.0 million in preference share dividends (2010 – $42.1
million, 2009 – $42.3 million).

NOTE 12. EARNINGS PER SHARE

The Company accounts for its weighted average shares in accordance with FASB ASC Topic Earnings per
Share. Basic earnings per common share is based on weighted average common shares and excludes any
dilutive effects of stock options and restricted stock. Diluted earnings per common share assumes the
exercise of all dilutive stock options and restricted stock grants. In accordance with FASB ASC Topic
Earnings per Share, earnings per share calculations use average common shares outstanding - basic,
when the Company is in a net loss position for the period.

The following table sets forth the computation of basic and diluted earnings per common share:

Year ended December 31,

(thousands of shares)
Numerator:

2011

2010

2009

Net (loss) income (attributable) available to RenaissanceRe

common shareholders

(92,235)

$ 702,613

$ 838,858

Amount allocated to participating common shareholders (1)

(990)

(17,765)

(18,473)

Net (loss) income allocated to RenaissanceRe common

shareholders

Denominator:

(93,225)

$ 684,848

$ 820,385

Denominator for basic (loss) income per RenaissanceRe
common share - weighted average common shares

Per common share equivalents of employee stock options

and restricted shares

Denominator for diluted (loss) income per RenaissanceRe
common share - adjusted weighted average common
shares and assumed conversions

Basic (loss) income per RenaissanceRe common share

Diluted (loss) income per RenaissanceRe common share

50,747

55,145

60,775

—

496

435

50,747

55,641

(1.84)

12.42

12.31

61,210

13.50

13.40

(1) Represents earnings attributable to holders of unvested restricted shares issued under the Company’s

2001 Stock Incentive Plan and Non-Employee Director Stock Incentive Plan.

F-55

NOTE 13. RELATED PARTY TRANSACTIONS AND MAJOR CUSTOMERS

During 2010, the Company issued a $5.0 million promissory note to Tower Hill Insurance Group, LLC
(“THIG”). Interest is due quarterly and is accrued on the unpaid principal balance at LIBOR plus 6.0%.
THIG can voluntarily prepay the loan in whole, or in part, plus accrued interest, without premium or penalty
at any time. Included in other assets on the Company’s consolidated balance sheet at December 31, 2011
is the promissory note principal balance of $4.5 million (2010 - $5.0 million). Interest income earned on the
promissory note of $0.3 million (2010 - $0.0 million) is included in other income on the Company's
consolidated statements of operations.

The Company has entered into reinsurance agreements with certain subsidiaries and affiliates of Tower Hill
and has also entered into reinsurance agreements with respect to business produced by the Tower Hill
Companies. For the year ended December 31, 2011, the Company recorded $29.8 million (2010 - $29.7
million, 2009 - $28.1 million) of gross premium written assumed from Tower Hill and its subsidiaries and
affiliates. Gross premiums earned totaled $28.9 million (2010 - $38.4 million, 2009 - $58.5 million) and
expenses incurred were $3.3 million (2010 - $4.1 million, 2009 - $14.3 million) for the year ended
December 31, 2011. The Company had a net related outstanding receivable balance of $12.2 million as of
December 31, 2011 (2010 – $14.9 million). During 2011, the Company recovered net claims and claims
expenses of $8.0 million (2010 - assumed $15.5 million, 2009 - assumed $10.0 million) and, as of
December 31, 2011, had a net reserve for claims and claim expenses of $11.6 million (2010 - $13.9 million).
In addition, the Company received distributions of $9.5 million from THIG during 2011.

During 2008, the Company invested $6.0 million in Angus Partners LLC (“Angus”), representing a 40%
equity interest, which is accounted for under the equity method of accounting. Angus provides commodity
related risk management products to third party customers. The Company had an outstanding net asset
position of $3.8 million at December 31, 2011 (2010 - net liability position of $0.9 million) related to certain
derivative trades with Angus. For the year ended December 31, 2011, the Company generated other
income of $3.4 million (2010 - $8.3 million, 2009 - $1.2 million) related to these trades.

During 2011, the Company received distributions from Top Layer Re of $0.0 million (2010 – $12.9 million,
2009 – $11.5 million), and a management fee of $3.7 million (2010 – $3.3 million, 2009 – $3.3 million). The
management fee reimburses the Company for services it provides to Top Layer Re. In addition, during
2011, the Company contributed additional paid in capital of $38.5 million to Top Layer Re (2010 - $13.8
million).

During 2011, the Company received 90.7% of its Reinsurance segment gross premiums written (2010 –
88.2%, 2009 – 90.1%) from three brokers. Subsidiaries and affiliates of AON Benfield, Marsh Inc., and the
Willis Group accounted for approximately 56.1%, 21.9% and 12.7%, respectively, of gross premiums written
for the Reinsurance segment in 2011 (2010 – 53.5%, 23.1% and 11.6%, respectively, 2009 – 58.7%, 20.9%
and 10.5%, respectively).

NOTE 14. TAXATION

Under current Bermuda law, the Company and its Bermuda subsidiaries are not subject to any income or
capital gains taxes. In the event that such taxes are imposed, the Company and its Bermuda subsidiaries
would be exempted from any such tax until March 2035 pursuant to the Bermuda Exempted Undertakings
Tax Protection Act 1966, and Amended Acts of 1987 and 2011, respectively.

RenRe North America Holdings Inc. (“RenRe North America”) and its subsidiaries are subject to income
taxes imposed by U.S. federal and state authorities and file a consolidated U.S. federal income tax return.
Should the U.S. subsidiaries pay a dividend to the Company, withholding taxes would apply to the extent of
current year or accumulated earnings and profits. The Company also has operations in Ireland and the
U.K. which are also subject to income taxes imposed by the respective jurisdictions in which they operate.

The Company is not subject to income taxation other than as stated above. There can be no assurance
that there will not be changes in applicable laws, regulations or treaties, which might require the Company
to change the way it operates or become subject to taxation.

F-56

The following is a summary of the Company’s income from continuing operations before taxes allocated
between U.S. and non-U.S. jurisdictions:

Year ended December 31,
U.S. (domestic)

Non-U.S. (foreign)

(Loss) income from continuing operations before taxes

Income tax benefit (expense) is comprised as follows:

Year ended December 31, 2011
Total income tax benefit

Year ended December 31, 2010
Total income tax benefit

Year ended December 31, 2009
Total income tax expense

2011
(81,549)

2010
(10,938)

2009
17,692

6,732

803,296

1,038,298

(74,817)

792,358

$ 1,055,990

Current

Deferred

Total

13,467

(13,152)

315

(1,384)

7,508

6,124

139

(10,170)

(10,031)

The Company’s expected income tax provision computed on pre-tax income at the weighted average tax
rate has been calculated as the sum of the pre-tax income in each jurisdiction multiplied by that
jurisdiction’s applicable statutory tax rate. Statutory tax rates of 0.0%, 35.0%, 12.5% and 26.0%, have been
used for the Bermuda, U.S., Ireland and the U.K., respectively. A reconciliation of the difference between
the provision for income taxes and the expected tax provision at the weighted average tax rate is as follows:

Year ended December 31,
Expected income tax benefit (expense)
Transfer pricing adjustments
Change in valuation allowance
Non-deductible expenses
State income tax expense, net of federal benefit
Other
Income tax benefit (expense)

2011
30,589
(306)
(27,601)
(941)
(871)
(555)
315

2010

2009

5,647
37
(1,175)
(28)
(67)
1,710
6,124

(5,834)
(2,830)
(979)
(65)
(223)
(100)
(10,031)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and
deferred tax liabilities are presented below:

At December 31,
Deferred tax assets

Tax loss and credit carryforwards
Accrued expenses
Investments
Deferred interest expense
Amortization and depreciation

Deferred tax liabilities

Tax sharing obligation
Amortization and depreciation

Net deferred tax asset before valuation allowance
Valuation allowance
Net deferred tax liability

F-57

2011

2010

19,230
2,983
7,744
4,011
1,256
35,224

—
(649)
(649)
34,575
(34,983)
(408)

3,471
4,427
4,209
—
217
12,324

(8,744)
(635)
(9,379)
2,945
(3,537)
(592)

During 2011, the Company recorded a net increase to the valuation allowance of $31.4 million (2010 – $1.2
million, 2009 – $1.0 million). The Company’s net deferred tax asset relates primarily to net operating loss
carryforwards, deferred interest expense, tax sharing obligations and GAAP versus tax basis accounting
differences relating to accrued expenses and investments. The Company’s U.S. operations generated a
cumulative GAAP taxable loss for the three year period ended December 31, 2011. Accordingly, the
Company believes that it is more likely than not that the U.S. net deferred tax asset will not be realized and
as a result has provided a full valuation allowance against its U.S. net deferred tax asset. In addition, a
valuation allowance has been provided against deferred tax assets in Ireland and the U.K. These deferred
tax assets relate principally to net operating loss carryforwards.

In the U.S., the Company has net operating loss carryforwards of $25.6 million. Under applicable law, the
U.S. net operating loss carryforwards will expire in 2032. In Ireland, the Company has net operating loss
carryforwards of $14.0 million. Under applicable law, the Irish net operating loss can be carried forward for
an indefinite period. In the U.K., the Company has net operating loss carryforwards of $27.1 million. Under
applicable law, the U.K. net operating loss can be carried forward for an indefinite period.

The Company made net payments for U.S. federal, Irish and U.K. income taxes of $11.0 million for the year
ended 2011 (2010 – net payments of $3.5 million, 2009 – net refund of $0.4 million).

NOTE 15. SEGMENT REPORTING

The Company has three reportable segments: Reinsurance, Lloyd's and Insurance.

The Company's Reinsurance operations are comprised of: 1) property catastrophe reinsurance, primarily
written through Renaissance Reinsurance and DaVinci; 2) specialty reinsurance, primarily written through
Renaissance Reinsurance and DaVinci; and 3) certain property catastrophe and specialty joint ventures, as
described herein. The Reinsurance segment is managed by the Global Chief Underwriting Officer, who
leads a team of underwriters, risk modelers and other industry professionals, who have access to the
Company's proprietary risk management, underwriting and modeling resources and tools.

The Company's Lloyd's segment includes reinsurance and insurance business written through Syndicate
1458. Syndicate 1458 started writing certain lines of insurance and reinsurance business incepting on or
after June 1, 2009. The syndicate was established to enhance the Company's underwriting platform by
providing access to Lloyd's extensive distribution network and worldwide licenses and is managed by the
Chief Underwriting Officer Lloyd's. RenaissanceRe Corporate Capital (UK) Limited (“RenaissanceRe
CCL”), an indirect wholly owned subsidiary of the Company, is the sole corporate member of Syndicate
1458.

The Company's Insurance segment includes the operations of the Company's former Insurance segment
that were not sold pursuant to the Stock Purchase Agreement with QBE, as discussed in “Note 1.
Organization”. The Insurance segment is managed by the Global Chief Underwriting Officer. The
Insurance business is written by Glencoe Insurance Ltd. (“Glencoe”). Glencoe is a Bermuda domiciled
excess and surplus lines insurance company that is currently eligible to do business on an excess and
surplus lines basis in 49 U.S. states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.

The financial results of the Company's strategic investments, weather and energy risk management
operations and noncontrolling interests are included in the Other category of the Company's segment
results. Also included in the Other category of the Company's segment results are the Company's
investments in other ventures, investments unit, corporate expenses and capital servicing costs.

F-58

The Company does not manage its assets by segment; accordingly, net investment income (loss) and total
assets are not allocated to the segments.

A summary of the significant components of the Company's revenues and expenses is as follows:

Year ended December 31, 2011

Reinsurance

Lloyd’s

Insurance

Gross premiums written

Net premiums written

Net premiums earned

$ 1,323,187

$ 913,499

$ 873,088

111,584

98,617

76,386

Net claims and claim expenses

incurred

Acquisition expenses

Operational expenses

783,704

82,978

131,251

73,259

14,031

36,732

282

657

1,575

4,216

367

1,683

Underwriting loss

$ (124,845)

(47,636)

(4,691)

Eliminations
(1)

(77)

Net investment income

Net foreign exchange losses

Equity in losses of other ventures

Other loss

Net realized and unrealized
gains on investments

Net other-than-temporary

impairments

Corporate expenses

Interest expense

Loss from continuing

operations before taxes

Income tax benefit

Loss from discontinued

operations

Net loss attributable to

noncontrolling interests

Dividends on preference shares

Net loss attributable to

RenaissanceRe common
shareholders

Net claims and claim expenses
incurred – current accident
year

Net claims and claim expenses

incurred – prior accident years

Net claims and claim expenses

incurred – total

Net claims and claim expense
ratio – current accident year

Net claims and claim expense
ratio – prior accident years

Net claims and claim expense

ratio – calendar year

Underwriting expense ratio

Combined ratio

$ 920,602

72,781

(215)

(136,898)

478

4,431

$ 783,704

73,259

4,216

105.4 %

95.3%

(13.7)%

(15.6)%

0.6%

281.4 %

89.8 %

24.5 %

114.3 %

95.9%

66.5%

162.4%

267.7 %

130.1 %

397.8 %

Other

Total

—

$ 1,434,976

$ 1,012,773

$ 951,049

861,179

97,376

169,666

(177,172)

118,000

(6,911)

(36,533)

(685)

70,668

(552)

(18,264)

(23,368)

315

(552)

(18,264)

(23,368)

(74,817)

315

(15,890)

33,157

(35,000)

(92,235)

$ 993,168

(131,989)

$ 861,179

104.4 %

(13.8)%

90.6 %

28.0 %

118.6 %

(1) Represents $0.1 million of gross premiums ceded from the Reinsurance segment to the Lloyd’s segment.

F-59

Year ended December 31, 2010

Reinsurance

Lloyd’s

Insurance

Eliminations
(1)

Other

Total

Gross premiums written

Net premiums written

Net premiums earned

$ 1,123,619

$ 809,719

$ 838,790

Net claims and claim expenses

incurred

Acquisition expenses

Operational expenses

113,804

77,954

129,990

66,209

61,189

50,204

25,676

10,784

24,837

2,585

(27,118)

(21,943)

(24,073)

(10,135)

6,223

11,215

Underwriting income (loss)

$ 517,042

(11,093)

(31,376)

Net investment income

Net foreign exchange losses

Equity in losses of other ventures

Other income

Net realized and unrealized
gains on investments

Net other-than-temporary

impairments

Corporate expenses

Interest expense

Income from continuing

operations before taxes

Income tax benefit

Income from discontinued

operations

Income attributable to

redeemable noncontrolling
interest – DaVinciRe

Dividends on preference shares

Net income available to

RenaissanceRe common
shareholders

Net claims and claim expenses
incurred – current accident
year

Net claims and claim expenses

incurred – prior accident years

Net claims and claim expenses

incurred – total

Net claims and claim expense
ratio – current accident year

Net claims and claim expense
ratio – prior accident years

Net claims and claim expense

ratio – calendar year

Underwriting expense ratio

Combined ratio

$ 399,823

25,873

5,780

(286,019)

(197)

(15,915)

$ 113,804

25,676

(10,135)

47.7 %

51.5 %

(24.0)%

(34.1)%

(0.4)%

66.1 %

13.6 %

24.8 %

38.4 %

51.1 %

71.0 %

122.1 %

42.1 %

(72.4)%

(30.3)%

—

203,955

(17,126)

(11,814)

41,120

$ 1,165,295

$ 848,965

$ 864,921

129,345

94,961

166,042

474,573

203,955

(17,126)

(11,814)

41,120

144,444

(829)

(20,136)

(21,829)

6,124

(829)

(20,136)

(21,829)

792,358

6,124

62,670

(116,421)

(42,118)

$ 702,613

$ 431,476

(302,131)

$ 129,345

49.9 %

(34.9)%

15.0 %

30.1 %

45.1 %

(1) Represents $9.5 million, $17.4 million and $0.2 million of gross premiums ceded from the Insurance segment to the Reinsurance
segment, from the Insurance segment to the Lloyd’s segment and from the Reinsurance segment to the Lloyd’s segment,
respectively.

F-60

Year ended December 31, 2009

Reinsurance

Insurance

Eliminations
(1)

Other

Total

$ 1,210,795

$ 839,023

$ 849,725

(87,639)

78,848

139,328

30,736

(12,650)

(690)

32,479

16,941

25,302

14,224

$ 719,188

(23,988)

Gross premiums written

Net premiums written

Net premiums earned

Net claims and claim expenses incurred

Acquisition expenses

Operational expenses

Underwriting income (loss)

Net investment income

Net foreign exchange losses

Equity in earnings of other ventures

Other income

Net realized and unrealized gains on fixed

maturity investments

Net other-than-temporary impairments

Corporate expenses

Interest expense

Income from continuing operations before

taxes

Income tax expense

Income from discontinued operations

Income attributable to redeemable

noncontrolling interest – DaVinciRe

Dividends on preference shares

Net income available to RenaissanceRe

common shareholders

Net claims and claim expenses incurred –

current accident year

Net claims and claim expenses incurred – prior

accident years

$ 161,868

33,650

(249,507)

(16,709)

Net claims and claim expenses incurred – total

(87,639)

16,941

Net claims and claim expense ratio – current

accident year

Net claims and claim expense ratio – prior

accident years

Net claims and claim expense ratio – calendar

year

Underwriting expense ratio

Combined ratio

19.0 %

103.6 %

(29.3)%

(51.4)%

(10.3)%

25.7 %

15.4 %

52.2 %

121.7 %

173.9 %

(1) Represents gross premiums ceded from the Insurance segment to the Reinsurance segment.

—

318,179

(13,623)

10,976

1,798

93,679

(22,450)

(12,658)

(15,111)

$ 1,228,881

$ 838,333

$ 882,204

(70,698)

104,150

153,552

695,200

318,179

(13,623)

10,976

1,798

93,679

(22,450)

(12,658)

(15,111)

1,055,990

(10,031)

6,700

(171,501)

(42,300)

$ 838,858

$ 195,518

(266,216)

(70,698)

22.2 %

(30.2)%

(8.0)%

29.2 %

21.2 %

F-61

The following is a summary of the Company’s gross premiums written allocated to the territory of coverage
exposure:

Year ended December 31,
Catastrophe

U.S. and Caribbean
Worldwide (excluding U.S.) (1)
Worldwide
Japan
Europe
Australia and New Zealand
Other

Total catastrophe
Specialty

Worldwide
U.S. and Caribbean
Europe
Australia and New Zealand
Other

Total specialty
Total Reinsurance
Lloyd’s

U.S. and Caribbean
Worldwide
Europe
Australia and New Zealand
Worldwide (excluding U.S.) (1)
Other

Total Lloyd’s
Insurance (2)
Eliminations (3)

Total gross premiums written

2011

2010

2009

786,721
164,112
124,797
49,021
31,888
16,818
3,939
1,177,296

91,032
49,832
3,595
792
640
145,891
1,323,187

720,250
113,270
65,500
26,188
59,480
6,269
3,276
994,233

59,636
57,461
2,786
8,934
569
129,386
1,123,619

828,490
78,222
92,586
29,436
60,363
5,293
2,059
1,096,449

68,704
39,712
5,037
51
842
114,346
1,210,795

48,435
47,605
8,044
2,060
238
5,202
111,584
282
(77)
$ 1,434,976

43,178
16,207
3,174
91
1,049
2,510
66,209
2,585
(27,118)
$ 1,165,295

—
—
—
—
—
—
—
30,736
(12,650)
$ 1,228,881

(2) The category Insurance consists of contracts that are primarily exposed to U.S. risks.

(3) Represents $0.1 million of gross premiums ceded from the Reinsurance segment to the Lloyd’s

segment for the year ended December 31, 2011 (2010 - $9.5 million, $17.4 million and $0.2 million of
gross premiums ceded from the Insurance segment to the Reinsurance segment, from the Insurance
segment to the Lloyd’s segment and from the Reinsurance segment to the Lloyd’s segment,
respectively, 2009 - $12.7 million gross premiums ceded from the Insurance segment to the
Reinsurance segment).

F-62

NOTE 16. STOCK INCENTIVE COMPENSATION AND EMPLOYEE BENEFIT PLANS

2001 Stock Incentive Plan and Non-Employee Director Stock Incentive Plan

The Company has a stock incentive plan (the “2001 Stock Incentive Plan”) under which employees of the
Company and its subsidiaries may be granted stock options and restricted stock awards. A stock option
award under the Company’s 2001 Stock Incentive Plan allows for the purchase of the Company’s common
shares at a price that is equal to the fair market value of the Company’s common shares as of the grant
effective date. Options to purchase common shares are granted periodically by the Board of Directors,
generally vest over four years and generally expire ten years from the date of grant. Restricted common
shares are granted periodically by the Board of Directors and generally vest ratably over a four year period.
In addition, awards granted under the Company’s prior 1993 stock incentive plan remain outstanding, with
terms similar to the 2001 Stock Incentive Plan. The Company has also established a Non-Employee
Director Stock Incentive Plan to issue stock options and shares of restricted stock to the Company’s non-
employee directors.

The Company’s 2001 Stock Incentive Plan also allows for the issuance of share-based awards, the
issuance of restricted common shares and shares tendered in connection with option exercises. For
purposes of determining the number of shares reserved for issuance under the 2001 Stock Plan, shares
tendered to or withheld by the Company in connection with certain option exercises will again be available
for issuance.

Premium Option Plan

In August 2004, the Company’s shareholders approved the RenaissanceRe Holdings Ltd. 2004 Stock
Option Incentive Plan (the “Premium Option Plan”) under which 6.0 million common shares were reserved
for issuance upon the exercise of options granted under the Premium Option Plan. On August 15, 2007,
the Company terminated the Premium Option Plan, such that no further option grants will be made
thereunder. However, options outstanding at the time of the termination will, unless otherwise subsequently
amended pursuant to the terms of the Premium Option Plan, remain outstanding and unmodified until they
expire, subject to the terms of the Premium Option Plan and any applicable award agreement. The
Premium Option Plan provides for, among other things, mandatory premium pricing such that options can
generally only be issued thereunder with a strike price at a minimum of 150% of the fair market value on the
date of grant, minimum 5-year cliff vesting (subject to waiver by the compensation committee of the Board
of Directors), and no discretionary repricing. The Premium Option Plan includes a dividend protection
feature that reduces the strike price for extraordinary dividends and a change in control feature that reduces
the strike price based on a pre-established formula in the event of a change in control. Other terms are
substantially similar to the 2001 Stock Incentive Plan.

2010 Cash Settled Restricted Stock Unit Plan

In 2010, the Company instituted a restricted stock unit plan (the “2010 Cash Settled Restricted Stock Unit
Plan”) allowing for the issuance of equity awards in the form of restricted stock units which will, subject to
vesting requirements consistent with those utilized by the Company in respect of restricted shares, be
settled in cash. Restricted stock units are liability awards with fair value measurement based on the market
price of RenaissanceRe common stock at the end of each reporting period. Restricted share units are
granted periodically by the Board of Directors and generally vest ratably over a four year period. During
2010, there were 900,000 restricted stock units reserved under the 2010 Restricted Stock Unit Plan.

2010 Performance-Based Equity Incentive Plan

In May 2010, the Company’s shareholders approved the 2010 Performance-Based Equity Incentive Plan
(“2010 Performance Plan”) under which 750,000 shares have been reserved (the “Performance Shares”).
The Compensation Committee determined that, beginning in 2010 with the Company’s annual target-level
incentive award grant cycle, 25% of the annual equity incentive award grants to each member of the
Company’s Executive Committee, which includes our Named Executive Officers excluding the Chief
Executive Officer (“CEO”), will be subject to vesting conditions based on both continued service and the
attainment of pre-established performance goals. If performance goals are achieved, the performance
shares will vest up to a maximum of 250% of target. These grants vest ratably over a period of three years

F-63

and are based on annual performance periods. The Performance Shares have a market condition which is
the Company’s total shareholder return relative to its peer group. Total shareholder return is based on the
average closing share price over the 20 trading days preceding and including the start and end of the
performance period.

The CEO received 100% of a special retention award in the form of Performance Shares in 2010. If
performance goals are achieved, the Performance Shares for the CEO will vest up to a maximum of 175%
of target. This grant vests over a period of four years and is based on annual performance periods.

The fair value of the Performance Shares is measured on the date of grant using a Monte Carlo simulation
model which requires the same inputs underlying the Black-Scholes methodology, that being: share price;
expected volatility; expected dividend yield; and risk-free interest rates, as shown in the table below. The
total cost of the Performance Shares is determined on the grant date based on the fair value calculated by
the Monte Carlo simulation model. The Company recognizes cost equal to fair value per Performance
Share multiplied by the target number of Performance Shares on the grant date. The cost is then
recognized over the requisite service period.

Valuation Assumptions

The fair value of each performance share is valued on the date of grant using the Monte-Carlo Simulation
model with the following weighted average-assumptions for all shares issued in each respective year:

Year ended December 31,
Expected volatility

Expected term (in years)

Expected dividend yield

Risk-free interest rate (1)

Performance Shares

2011
35%

n/a

2010
36%

n/a

0.16% - 2.11%

0.19% - 2.47%

(1) The risk-free interest rate applied is specific to each tranche of Performance Shares.

Expected volatility: The expected volatility is estimated by the Company based on the Company’s historical
stock volatility.

Expected term: The expected term is estimated by looking at historical experience of similar awards, giving
consideration to the contractual terms of the award, vesting schedules and expectations of future employee
behavior as influenced by changes to the terms of their performance shares.

Expected dividend yield: The expected dividend yield is estimated by reviewing the most recent dividend
declared by the Board of Directors.

Risk-free interest rate: The risk free rate is estimated based on the yield on a U.S. treasury zero-coupon
issue with a remaining term equal to the expected term of the performance shares.

The fair value of restricted shares is determined based on the market value of the Company’s shares on the
grant date. Under the fair value recognition provisions of FASB ASC Topic Compensation – Stock
Compensation, the estimated fair value of employee stock options and other share-based payments, net of
estimated forfeitures, is amortized as an expense over the requisite service period. When estimating
forfeitures, the Company considers its historical forfeitures as well as expectations about employee
behavior. The Company currently uses an 8% forfeiture rate.

F-64

Summary of Stock Compensation Activity

The following is a summary of activity under the Company’s existing stock compensation plans for the years
ending December 31, 2009, 2010 and 2011, respectively:

2001 Stock Incentive and Non-Employee Director Stock Incentive Plans

Weighted
options
outstanding

Weighted
average
exercise
price

Fair
value of
options

Weighted
average
remaining
contractual
life

Aggregate
intrinsic
value

Range of
exercise prices

Balance, December 31, 2008

4,006,733

$ 44.79

6.6

$ 29,583

$11.92 – $59.66

Options granted

Options forfeited

Options expired

Options exercised

—

(7,616)

51.26

—

(426,138)

31.03

8,284

Balance, December 31, 2009

3,572,979

$ 46.42

5.9

$ 24,891

$12.40 – $59.66

Options granted

Options forfeited

Options expired

Options exercised

—

(35,942)

(42,029)

(653,673)

—

54.11

53.86

41.77

Balance, December 31, 2010

2,841,335

$ 47.28

Options granted

Options forfeited

Options expired

Options exercised

Balance, December 31, 2011
Total options exercisable at

December 31, 2011

—

(40,010)

(4,404)

(823,614)

—

52.68

53.86

46.88

—

$ 10,491

4.8

$ 46,616

$33.85 – $59.66

—

$ 18,155

1,973,307

$ 47.33

4.6

$ 53,363

$37.51 - $59.66

1,862,111

$ 46.94

4.5

$ 51,071

$37.75 - $59.66

F-65

Premium Option Plan

Weighted
options
outstanding

Weighted
average
exercise
price

Fair
value
of
options

Weighted
average
remaining
contractual
life

Balance, December 31, 2008 (1)

3,774,000

$ 82.34

Options granted

Options forfeited

Options expired

Options exercised

—

(2,500,000)

86.61

—

Aggregate
intrinsic
value

Range of
exercise
prices

—

$73.06 – $98.98

Balance, December 31, 2009 (1)

1,274,000

$ 73.96

—

$73.06 – $74.24

Options granted

Options forfeited

Options expired

Options exercised

—

(82,000)

74.24

—

Balance, December 31, 2010 (1)

1,192,000

$ 73.94

—

$73.06 – $74.24

Options granted

Options forfeited

Options expired

Options exercised

—

Balance, December 31, 2011 (1)

1,192,000

$ 73.94

Total options exercisable at
December 31, 2011 (1)

1,192,000

$ 73.94

2.2

509

$73.06 - $74.24

509

$73.06 - $74.24

(1) The Premium Option Plan was terminated, as to new issuances, at the August 2007 Board of Directors

meeting and consequently, the shares available for grant under the plan are zero.

2010 Cash Settled Restricted Stock Unit Plan and 2010 Performance-Based Equity Incentive Plan

Nonvested at December 31, 2009

Awards granted

Awards vested

Awards forfeited

Nonvested at December 31, 2010

Awards granted

Awards vested

Awards forfeited

Cash Settled
Restricted
Stock
Unit Plan

Performance Shares

Number of
shares

—

386,235

275,813

—

(14,447)

371,788

215,711

(98,676)

(65,850)

—

275,813

89,037

(63,562)

(11,421)

Weighted
average
grant-dated
fair value

—

29.47

—

29.47

31.91

—

Nonvested at December 31, 2011

422,973

289,867

30.06

F-66

Restricted Stock

Nonvested at
December 31, 2008

Awards granted

Awards vested

Awards forfeited

Nonvested at
December 31, 2009

Awards granted

Awards vested

Awards forfeited

Nonvested at
December 31, 2010

Awards granted

Awards vested

Awards forfeited

Nonvested at
December 31, 2011

Employee
restricted stock

Non-employee director
restricted stock

Total
restricted stock

Weighted
average
grant-
dated fair
value

Number of
shares

Weighted
average
grant-
dated fair
value

Number of
shares

Weighted
average
grant-
dated fair
value

Number of
shares

899,291

919,481
(447,614)
(22,364)

$ 49.17
44.67

47.53

49.25

38,309

$ 51.33

937,600

$ 49.26

24,981

(18,675)

44.03

49.98

944,462

(466,289)

—

(22,364)

44.65

47.63

49.25

1,348,794

284,873
(561,086)
(68,155)

$ 46.64
55.80

46.81

49.89

44,615

$ 47.81

1,393,409

$ 46.68

23,327

(25,134)

56.15

49.46

308,200

(586,220)

—

(68,155)

55.83

46.92

49.89

1,004,426

200,745
(362,234)
(78,176)

$ 48.93
66.21

48.74

47.71

42,808

$ 51.38

1,047,234

$ 49.03

18,272

(21,495)

66.21

50.66

219,017

(383,729)

—

(78,176)

66.21

48.84

47.71

764,761

$ 53.68

39,585

$ 58.43

804,346

$ 53.91

Shares available for issuance under the Company’s 2001 Stock Incentive Plan, Non-Employee Director
Stock Incentive Plan, 2010 Performance Share Plan and 2010 Restricted Stock Unit Plan totaled 3.1 million
at December 31, 2011. The total fair value of shares vested during the year ended December 31, 2011 was
$36.5 million (2010 – $32.5 million, 2009 – $21.5 million). Cash in the amount of $0.1 million was received
from employees as a result of employee stock option exercises during the year ended December 31, 2011
(2010 – $1.1 million, 2009 – $5.0 million). In connection with these exercises, there was no tax benefit
realized by the Company. The Company issues new shares upon the exercise of an option.

The total stock compensation expense recognized in the Company’s consolidated statements of operations
for the year ended December 31, 2011 was $33.1 million (2010 – $33.8 million, 2009 – $35.6 million). As of
December 31, 2011, there was $38.0 million of total unrecognized compensation cost related to restricted
stock awards, $26.1 million related to restricted stock units and $0.1 million related to stock options
expense which will be recognized during the next 1.8, 2.6 and 0.2 years, respectively.

All of the Company’s employees are eligible for defined contribution pension plans. Contributions are
primarily based upon a percentage of eligible compensation. The Company contributed $3.2 million to its
defined contribution pension plans in 2011 (2010 – $3.2 million, 2009 – $2.3 million).

NOTE 17. STATUTORY REQUIREMENTS

Bermuda-Based Insurance Entities

Under the Insurance Act 1978, amendments thereto and Related Regulations of Bermuda (the “Insurance
Act”), certain subsidiaries of the Company are required to prepare statutory financial statements and to file
in Bermuda a statutory financial return. The Insurance Act also requires these Bermuda insurance
subsidiaries of the Company to maintain certain measures of solvency and liquidity. At December 31, 2011,
the statutory capital and surplus of our Bermuda insurance subsidiaries was $2.7 billion (2010 – $3.3 billion)
and the minimum amount required to be maintained under Bermuda law, the Minimum Solvency Margin,
was $552.9 million (2010 – $483.3 million). In addition, Renaissance Reinsurance and DaVinci are
restricted as to the payment of dividends in the amount of 25% of the prior year’s statutory capital and

F-67

surplus, unless at least two members of the Board of Directors attest that a dividend in excess of this
amount would not cause the company to fail to meet its relevant margins. During 2011, Renaissance
Reinsurance and DaVinci declared aggregate cash dividends of $180.7 million (2010 – $513.1 million) and
$6.8 million (2010 – $3.1 million), respectively.

Under the Insurance Act, Renaissance Reinsurance and DaVinci are classified as Class 4 insurers, and
therefore must maintain capital at a level equal to its enhanced capital requirement (“ECR”) which is
established by reference to the Bermuda Solvency Capital Requirement ("BSCR") model. The BSCR is a
standard mathematical model designed to give the Bermuda Monetary Authority ("BMA") more advanced
methods for determining an insurer’s capital adequacy. Underlying the BSCR is the belief that all insurers
should operate on an ongoing basis with a view to maintaining their capital at a prudent level in excess of
the minimum solvency margin otherwise prescribed under the Insurance Act. Alternatively, under the
Insurance Act, insurers may, subject to the terms of the Insurance Act and to the BMA’s oversight, elect to
utilize an approved internal capital model to determine regulatory capital. In either case, the ECR shall at all
times equal or exceed the Class 4 insurer’s Minimum Solvency Margin and may be adjusted in
circumstances where the BMA concludes that the insurer’s risk profile deviates significantly from the
assumptions underlying its ECR or the insurer’s assessment of its risk management policies and practices
used to calculate the ECR applicable to it. While not specifically referred to in the Insurance Act, the BMA
has also established a target capital level ("TCL") for each Class 4 insurer equal to 120% of its ECR. While
a Class 4 insurer is not currently required to maintain its statutory capital and surplus at this level, the TCL
serves as an early warning tool for the BMA and failure to maintain statutory capital at least equal to the
TCL will likely result in increased BMA regulatory oversight. The Company is currently completing the 2011
BSCR for Renaissance Reinsurance and DaVinci which must be filed with the BMA on or before April 30,
2012, and at this time believes both companies will exceed the target level of required capital.

Under the Act, Glencoe is classified as a Class 3A insurer and Glencoe is also eligible as an excess and
surplus lines insurer in a number of states in the U.S. Under the various capital and surplus requirements in
Bermuda and in these states, Glencoe is required to maintain a minimum amount of capital and surplus. In
this regard, the declaration of dividends from retained earnings and distributions from additional paid-in
capital are limited to the extent that the above requirement is met. During 2011, Glencoe declared
aggregate cash dividends and returned capital of $15.9 million and $234.1 million, respectively (2010 – $0.0
million and $0.0 million, respectively).

Syndicate 1458

The statutory capital of Syndicate 1458, known as Funds at Lloyd’s (the “FAL”), is currently calculated using
the internal Lloyd’s risk-based capital model. In addition, if the FAL are not sufficient to cover all losses, the
Lloyd’s Central Fund provides an additional level of security for policyholders. At December 31, 2011, the
FAL requirement set by Lloyd’s for Syndicate 1458 is $145.5 million based on its business plan, approved in
November 2011 (2010 – $93.9 million based on its business plan, approved November 2010). Actual FAL
posted for Syndicate 1458 at December 31, 2011 by RenaissanceRe CCL, is $156.4 million, supported
100% by letters of credit (2010 – $99.9 million). Effective January 1, 2013, Syndicate 1458’s capital
requirements are expected to be driven by Solvency II requirements.

Multi-Beneficiary Reinsurance Trusts

Effective March 15, 2011, each of Renaissance Reinsurance and DaVinci was approved as a Trusteed
Reinsurer in the state of New York and established a multi-beneficiary reinsurance trust ("MBRT") to
collateralize its (re)insurance liabilities associated with U.S. domiciled cedants. The MBRTs are subject to
the rules and regulations of the state of New York and the respective deed of trust, including but not limited
to certain minimum capital funding requirements, investment guidelines, capital distribution restrictions and
regulatory reporting requirements. Assets held under trust at December 31, 2011 with respect to the
MBRTs totaled $450.8 million and $101.9 million for Renaissance Reinsurance and DaVinci, respectively,
compared to the minimum amount required under U.S. state regulations of $254.5 million and $53.9 million,
respectively.

F-68

NOTE 18. DERIVATIVE INSTRUMENTS

The Company enters into derivative instruments such as futures, options, swaps, forward contracts and
other derivative contracts primarily to manage its foreign currency exposure, obtain exposure to a particular
financial market, for yield enhancement, or for trading and speculation. The Company accounts for its
derivatives in accordance with FASB ASC Topic Derivatives and Hedging, which requires all derivatives to
be recorded at fair value on the Company's balance sheet as either assets or liabilities, depending on the
rights or obligations of the derivatives, with changes in fair value reflected in current earnings. The
Company does not currently apply hedge accounting in respect of any positions reflected in its consolidated
financial statements. Where the Company has entered into master netting agreements with counterparties,
or the Company has the legal and contractual right to offset positions, the derivative positions are generally
netted by counterparty and are reported accordingly in other assets and other liabilities.

The table below shows the location on the consolidated balance sheets and fair value of the Company’s
principal derivative instruments:

At December 31,

Interest rate futures

Foreign currency forward contracts (1)

Foreign currency forward contracts (2)

Foreign currency forward contracts (3)

Credit default swaps

Energy and weather contracts (4)

Platinum warrant

Total

At December 31,

Interest rate futures

Derivative Assets

2011

2010

Balance Sheet
Location
Other assets

Other assets

Fair Value
612

Balance Sheet
Location
Other assets

Fair Value
2,459

—

Other assets

6,341

7,219

Other assets

387

—

Other assets

52,721

Other assets

—

Other assets

—

3,064

17,925

44,925

60,939

74,714

Derivative Liabilities

2011

2010

Balance Sheet
Location
Other liabilities

Fair Value
339

Balance Sheet
Location
Other liabilities

Fair Value
719

Foreign currency forward contracts (1)

Other liabilities

11,754

Other liabilities

Foreign currency forward contracts (2)

Foreign currency forward contracts (3)

Credit default swaps

Other liabilities

1,606

Other liabilities

—

Other liabilities

539

Other liabilities

—

3,141

—

Energy and weather contracts (4)

Other liabilities

43,389

Other liabilities

15,013

Total

57,627

18,917

(1) Contracts used to manage foreign currency risks in underwriting and non-investment operations.

(2) Contracts used to manage foreign currency risks in investment operations.

(3) Contracts used to manage foreign currency risks in energy and risk operations.

(4) Included in other assets is $104.6 million of derivative assets (2010 – $21.7 million) and $51.9 million of
derivative liabilities (2010 – $3.7 million). Included in other liabilities is $8.8 million of derivative assets
(2010 – $9.9 million) and $52.2 million of derivative liabilities (2010 – $24.9 million).

F-69

The location and amount of the gain (loss) recognized in the Company’s consolidated statements of
operations related to its derivative instruments is shown in the following table:

Year ended December 31,
Interest rate futures

Foreign currency forward

contracts (1)

Foreign currency forward

contracts (2)

Foreign currency forward

contracts (3)

Credit default swaps

Energy and weather contracts

Platinum warrant

Total

Location of gain (loss)
recognized on derivatives

Amount of gain (loss) recognized on
derivatives

Net investment income

2011
$ (25,256)

2010
(9,124)

2009

5,173

Net foreign exchange losses

(5,443)

4,242

(86)

Net foreign exchange losses

(4,335)

20,111

(6,400)

Net foreign exchange losses

Net investment income

Other (loss) income

620

(1,467)

(22,978)

2,975

498

1,265

28,976

10,054

(485)

312

52,294

4,958

$ (55,884)

56,022

55,766

(1) Contracts used to manage foreign currency risks in underwriting and non-investment operations.

(2) Contracts used to manage foreign currency risks in investment operations.

(3) Contracts used to manage foreign currency risks in energy and risk operations.

The Company is not aware of the existence of any credit-risk related contingent features that it believes
would be triggered in its derivative instruments that are in a net liability position at December 31, 2011.

Interest Rate Futures

The Company uses interest rate futures within its portfolio of fixed maturity investments to manage its
exposure to interest rate risk, which can include increasing or decreasing its exposure to this risk. At
December 31, 2011, the Company had $3.2 billion of notional long positions and $285.7 million of notional
short positions of primarily Eurodollar and U.S. Treasury and non-U.S. dollar futures contracts (2010 – $2.2
billion and $209.1 million, respectively). The fair value of these derivatives is determined using exchange
traded prices.

Foreign Currency Derivatives

The Company’s functional currency is the U.S. dollar. The Company writes a portion of its business in
currencies other than U.S. dollars and may, from time to time, experience foreign exchange gains and
losses in the Company’s consolidated financial statements. All changes in exchange rates, with the
exception of non-U.S. dollar denominated investments classified as available for sale and non-monetary
assets and liabilities, are recognized currently in the Company’s consolidated statements of operations.

Underwriting Operations Related Foreign Currency Contracts

The Company’s foreign currency policy with regard to its underwriting operations is generally to hold foreign
currency assets, including cash, investments and receivables that approximate the foreign currency
liabilities, including claims and claim expense reserves and reinsurance balances payable. When
necessary, the Company may use foreign currency forward and option contracts to minimize the effect of
fluctuating foreign currencies on the value of non-U.S. dollar denominated assets and liabilities associated
with its underwriting operations. The fair value of the Company's underwriting operations related foreign
currency contracts is determined using indicative pricing obtained from counterparties or broker quotes. At
December 31, 2011, the Company had outstanding underwriting related foreign currency contracts of
$160.5 million in notional long positions and $700.8 million notional in short positions, denominated in U.S.
dollars (2010 – $42.0 million and $188.1 million, respectively).

F-70

Investment Portfolio Related Foreign Currency Forward Contracts

The Company’s investment operations are exposed to currency fluctuations through its investments in non-
U.S. dollar fixed maturity investments, short term investments and other investments. To economically
hedge its exposure to currency fluctuations from these investments, the Company has entered into foreign
currency forward contracts. Foreign exchange gains (losses) associated with the Company’s hedging of
these non-U.S. dollar investments are recorded in net foreign exchange losses in its consolidated
statements of operations. The fair value of the Company's investment portfolio related foreign currency
forward contracts is determined using an interpolated rate based on closing forward market rates. At
December 31, 2011, the Company had outstanding investment portfolio related foreign currency contracts
of $48.1 million in notional long positions and $211.6 million in notional short positions, denominated in U.S.
dollars (2010 – $69.2 million and $281.0 million, respectively).

Energy and Risk Operations Related Foreign Currency Contracts

The Company’s energy and risk operations are exposed to currency fluctuations through certain derivative
transactions it enters into that are denominated in non-U.S. dollars. The Company may, from time to time,
use foreign currency forward and option contracts to minimize the effect of fluctuating foreign currencies on
the value of non-U.S. dollar denominated assets and liabilities associated with these operations. The fair
value of the Company's energy and risk operations related foreign currency contracts is based on exchange
traded prices. At December 31, 2011, the Company’s energy and risk operations had foreign currency
contracts of $7.8 million in notional long positions and $12.7 million in notional short positions (2010 – $0.0
million and $10.0 million, respectively).

Credit Derivatives

The Company’s exposure to credit risk is primarily due to its fixed maturity investments, short term
investments, premiums receivable and reinsurance recoverable. From time to time, the Company
purchases credit derivatives to hedge its exposures in the insurance industry, and to assist in managing the
credit risk associated with ceded reinsurance. The Company also employs credit derivatives in its
investment portfolio to either assume credit risk or hedge its credit exposure. The fair value of the credit
derivatives is determined using industry valuation models, broker bid indications or internal pricing valuation
techniques. The fair value of these credit derivatives can change based on a variety of factors including
changes in credit spreads, default rates and recovery rates, the correlation of credit risk between the
referenced credit and the counterparty, and market rate inputs such as interest rates. At December 31,
2011, the Company had outstanding credit derivatives of $15.0 million in notional long positions and $38.1
million in notional short positions, denominated in U.S. dollars (2010 – $15.0 million and $118.0 million,
respectively).

Energy and Weather-Related Derivatives

The Company regularly transacts in certain derivative-based risk management products primarily to
address weather and energy risks and engages in hedging and trading activities related to these risks. The
trading markets for these derivatives are generally linked to energy and agriculture commodities, weather
and other natural phenomena. Currently, a significant percentage of the Company’s derivative-based risk
management products are transacted on a dual-trigger basis combining weather or other natural
phenomenon, with prices for commodities or securities related to energy or agriculture. The fair value of
these contracts is obtained through the use of quoted market prices, or in the absence of such quoted
prices, industry or internal valuation models. Generally, the Company’s current portfolio of such derivative
contracts is of comparably short duration and such contracts are predominantly seasonal in nature. Over
time, the Company currently expects that its participation in these markets, and the impact of these
operations on its financial results, is likely to increase on both an absolute and relative basis.

F-71

The Company had the following gross derivative contract positions outstanding relating to its energy and
weather derivatives trading activities.

Year ended December 31,
Energy

Temperature

Agriculture

Precipitation

Wind

Quantity (1)

2011

2010

Unit of measurement

240,363,364

136,767,119

One million British thermal units (“MMBTUs")

14,917,438

5,419,846

$ per Degree Day Fahrenheit

6,098,000

260,000

65,000

712

—

Bushels

$ per Inch

$ per Meters per Second Hour

(1) Represents the sum of gross long and gross short derivative contracts.

Platinum Warrant

The Company held a warrant to purchase up to 2.5 million common shares of Platinum for $27.00 per
share. The Company recorded its investment in the Platinum warrant at fair value. The fair value of the
warrant was estimated using either the Black-Scholes option pricing model or the in-the-money value, the
greater of which the Company considered the best estimate of the exit value of the warrant. On
January 20, 2011, the Company sold its warrant to Platinum for an aggregate of $47.9 million, and
recognized a $3.0 million gain on the sale, which is included in other (loss) income for 2011.

NOTE 19. COMMITMENTS AND CONTINGENCIES

CONCENTRATION OF CREDIT RISK

Instruments which potentially subject the Company to concentration of credit risk consist principally of
investments, including the Company’s equity method investments, cash, premiums receivable and
reinsurance balances. The Company limits the amount of credit exposure to any one financial institution
and, except for U.S. Government securities, none of the Company’s investments exceeded 10% of
shareholders’ equity at December 31, 2011. See “Note 7. Ceded Reinsurance”, for information with respect
to reinsurance recoverable.

EMPLOYMENT AGREEMENTS

The Board of Directors has authorized the execution of employment agreements between the Company
and certain officers. These agreements provide for, among other things, severance payments under certain
circumstances, as well as accelerated vesting of options and restricted stock grants, upon a change in
control, as defined therein and under the terms of the Company’s 2001 Stock Incentive Plan, Premium
Option Plan and 2010 Performance-Based Equity Incentive Plan.

STOCK PURCHASE AGREEMENT

Pursuant to the Stock Purchase Agreement, as discussed in “Note. 3 Discontinued Operations”, the
Company is subject to a post-closing review following December 31, 2011 of the net reserve for claims and
claim expenses for loss events occurring on or prior to December 31, 2010. Subsequent to the post-closing
review, the Company is liable to pay, or otherwise reimburse QBE amounts up to $10.0 million for net
adverse development on prior accident years net claims and claim expenses. Conversely, if prior accident
years net claims and claim expenses experience net favorable development, QBE is liable to pay, or
otherwise reimburse the Company amounts up to $10.0 million.

F-72

LETTERS OF CREDIT AND OTHER COMMITMENTS

At December 31, 2011, the Company’s banks have issued letters of credit of approximately $576.8 million in
favor of certain ceding companies. In connection with the Company’s Top Layer Re joint venture, the
Company has committed $37.5 million of collateral to support a letter of credit and is obligated to make a
mandatory capital contribution of up to $50.0 million in the event that a loss reduces Top Layer Re’s capital
and surplus below a specified level. The letters of credit are secured by cash and investments of similar
amounts. The Company’s principal letter of credit facility contains certain financial covenants.

At December 31, 2011, RenaissanceRe has provided guarantees in the amount of $371.2 million to certain
counterparties of the weather and energy risk operations of Renaissance Trading. In the future,
RenaissanceRe may issue guarantees for other purposes or increase the amount of guarantees issued to
counterparties of Renaissance Trading. In addition, the Company's weather and energy risk operations
have entered into certain service contract commitments at December 31, 2011 of $7.1 million.

On April 29, 2009, Renaissance Reinsurance entered into a Master Reimbursement Agreement (the
“Reimbursement Agreement”) and a Pledge Agreement (the “Pledge Agreement”) with Citibank Europe PLC
(“CEP”). The Reimbursement Agreement provides for the issuance and renewal of letters of credit by CEP
from time to time in its sole discretion, which are used to support business written by Syndicate 1458,
described above. Letter of credit fees will be payable pursuant to the terms of the Reimbursement
Agreement. Two letters of credit in the amount of $109.5 million and £25.0 million, respectively, were
issued by CEP on April 29, 2009, having an expiration date of December 31, 2013. At December 31, 2011,
these letters of credit amounted to $118.5 million and £24.5 million, respectively. Pursuant to the Pledge
Agreement, Renaissance Reinsurance has agreed to pledge and maintain certain securities with a
collateral value equal to 75% of the aggregate amount of the then outstanding letters of credit. In respect of
the 25% unsecured portion, Renaissance Reinsurance is required to comply with certain financial
covenants, including maintaining a certain minimum financial strength rating, minimum net worth, and a
maximum consolidated debt to capital ratio for the consolidated group. In the event Renaissance
Reinsurance is unable to satisfy any of these financial covenants, it will be required to pledge additional
collateral in respect of the unsecured portion.

PRIVATE EQUITY AND INVESTMENT COMMITMENTS

The Company has committed capital to private equity partnerships and other entities of $684.0 million, of
which $540.6 million has been contributed at December 31, 2011. The Company’s remaining commitments
to these funds at December 31, 2011 totaled $144.6 million. These commitments do not have a defined
contractual commitment date.

INDEMNIFICATIONS AND WARRANTIES

In the ordinary course of its business, the Company may enter into contracts or agreements that contain
indemnifications or warranties. Future events could occur that lead to the execution of these provisions
against the Company. Based on past experience, management currently believes that the likelihood of such
an event is remote.

F-73

OPERATING LEASES

The Company and its subsidiaries lease office space under operating leases which expire at various dates
through 2019. Future minimum lease payments under existing operating leases are expected to be as
follows:

Year ended December 31, 2011
2012

2013

2014

2015

2016

After 2016

CAPITAL LEASES

Minimum
lease
payments

6,242

4,752

3,608

3,215

2,424

20,310

The Company’s capital leases primarily relate to office space in Bermuda. The initial lease term is for 20
years, with a bargain renewal option for an additional 30 years. The future minimum lease payments of the
Company’s capital leases are detailed below, and relate principally to the transaction noted above,
excluding the bargain renewal option.

Year ended December 31, 2011
2012
2013
2014
2015
2016
After 2016

LITIGATION

Minimum
lease
payments

2,892
2,892
2,892
2,735
2,417
31,043
44,871

The Company and its subsidiaries are subject to lawsuits and regulatory actions in the normal course of
business that do not arise from or directly relate to claims on reinsurance treaties or contracts or direct
surplus lines insurance policies. This category of business litigation may involve allegations of underwriting
or claims-handling errors or misconduct, employment claims, regulatory actions or disputes arising from the
Company's business ventures. The Company's operating subsidiaries are subject to claims litigation
involving disputed interpretations of policy coverages. Generally, the Company's direct surplus lines
insurance operations are subject to greater frequency and diversity of claims and claims-related litigation
than its reinsurance operations and, in some jurisdictions, may be subject to direct actions by allegedly
injured persons or entities seeking damages from policyholders. These lawsuits, involving claims on
policies issued by the Company's subsidiaries which are typical to the insurance industry in general and in
the normal course of business, are considered in its loss and loss expense reserves which are discussed in
its loss reserves discussion. In addition, the Company may from time to time engage in litigation or
arbitration related to its claims for payment in respect of ceded reinsurance. Any such litigation or
arbitration contains an element of uncertainty, and the Company believes the inherent uncertainty in such
matters may have increased recently and will likely continue to increase. Currently, the Company believes
that no individual litigation or arbitration to which it is presently a party is likely to have a material adverse
effect on its financial condition, business or operations.

F-74

NOTE 20. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Revenues

Gross premiums written
Net premiums written
(Increase) decrease in unearned

premiums

Net premiums earned
Net investment income (loss)
Net foreign exchange gains (losses)
Equity in (losses) earnings of other

ventures

Other income (loss)
Net realized and unrealized (losses)

gains on investments
Total other-than-temporary

impairments

Portion recognized in other

comprehensive income, before
Net other-than-temporary

impairments

Total revenues

Expenses

Net claims and claim expenses

incurred

Acquisition costs
Operational expenses
Corporate expenses
Interest expense
Total expenses
(Loss) income from continuing
operations before taxes
Income tax benefit (expense)
(Loss) income from continuing

operations

Net (loss) income from discontinued

operations

Net (loss) income
Net loss (income) attributable to

noncontrolling interests

Net (loss) income (attributable)
available to RenaissanceRe
Dividends on preference shares
Net (loss) income (attributable)
available to RenaissanceRe
common shareholders

(Loss) income from continuing

operations (attributable) available
to RenaissanceRe common
shareholders per common share –
basic

(Loss) income from discontinued

operations (attributable) available
to RenaissanceRe common
shareholders per common share –
basic

Net (loss) income (attributable)
available to RenaissanceRe
common shareholders per
common share – basic
(Loss) income from continuing

operations (attributable) available
to RenaissanceRe common
shareholders per common share –
diluted

(Loss) income from discontinued

operations (attributable) available
to RenaissanceRe common
shareholders per common share –
diluted

Net (loss) income (attributable)
available to RenaissanceRe
common shareholders per
common share – diluted

Average shares outstanding – basic
Average shares outstanding – diluted
Net claims and claim expense ratio
Underwriting expense ratio
Combined ratio

Quarter Ended
March 31,

Quarter Ended
June 30,

Quarter Ended
September 30,

Quarter Ended
December 31,

2011

2010

2011

2010

2011

2010

2011

2010

$ 610,505
$ 452,575

$ 516,011
$ 407,159

$ 641,563
$ 427,995

$506,540
$329,334

$ 139,938
$ 103,010

$ 111,543
$ 82,307

$ 42,970
$ 29,193

$ 31,201
$ 30,165

(147,034)

(156,506)

(210,820)

(117,163)

126,214

130,048

169,916

159,577

305,541
60,281
660

(23,753)

50,145

250,653
65,709
(11,342)

2,156

(6,191)

217,175
33,328
(4,521)

5,128

(5,167)

212,171
26,173
(609)

3,160

(3,742)

229,224
(27,940)
(2,650)

4,794

(2,015)

212,355
59,570
(529)

199,109
52,331
(400)

189,742
52,503
(4,646)

(6,740)

(22,702)

(10,390)

25,021

(43,648)

26,032

(5,214)

48,200

34,979

70,051

16,983

92,342

23,920

(66,149)

—

(33)

—

(33)

—

(798)

(796)

(498)

(449)

—

(132)

(103)

—

387,660

349,152

280,922

306,408

217,947

382,019

208,507

187,092

628,537

32,335
41,830
2,064
6,195
710,961

97,340

26,435
45,150
5,309
3,156
177,390

151,261

13,883
42,299
4,011
5,730
217,184

(18,803)

23,580
38,040
4,493
6,206
53,516

(323,301)

171,762

63,738

252,892

2,963

1,773

958

77,830

26,057
42,169
3,582
5,722
155,360

62,587

1,435

77,936

26,143
36,970
5,590
6,164
152,803

3,551

(27,128)

25,101
43,368
8,607
5,721
86,348

18,803
45,882
4,744
6,303
48,604

229,216

122,159

138,488

2,399

(2,945)

(196)

(323,249)

174,725

65,511

253,850

64,022

231,615

119,214

138,292

(1,526)

11,447

(10,094)

18,881

(965)

21,234

(3,305)

11,108

(324,775)

186,172

55,417

272,731

63,057

252,849

115,909

149,400

85,492

(10,550)

(21,903)

(51,915)

(5,044)

(37,524)

(25,388)

(16,432)

(239,283)

175,622

33,514

220,816

58,013

215,325

90,521

132,968

(8,750)

(10,575)

(8,750)

(10,575)

(8,750)

(10,575)

(8,750)

(10,393)

$(248,033)

$ 165,047

$ 24,764

$210,241

$ 49,263

$ 204,750

$ 81,771

$122,575

(4.66)

2.55

0.68

3.35

0.98

3.33

1.66

2.04

(0.03)

0.20

(0.20)

0.34

(0.02)

0.40

(0.07)

0.21

(4.69)

2.75

0.48

3.69

0.96

3.73

1.59

2.25

(4.66)

2.54

0.68

3.32

0.97

3.31

1.64

2.02

(0.03)

0.19

(0.20)

0.34

(0.02)

0.39

(0.06)

0.21

(4.69)

2.73

0.48

3.66

0.95

3.70

1.58

2.23

51,504
51,504

205.7%
24.3%
230.0%

58,407
58,887

50,493
51,050

55,538
56,044

50,501
50,973

53,467
53,965

50,501
50,860

53,166
53,667

38.8%
28.6%
67.4%

69.6%
25.9%
95.5%

F-75

(8.9)%
29.1 %
20.2 %

34.0%
29.7%
63.7%

36.7%
29.7%
66.4%

1.8%
34.4%
36.2%

(14.3)%
34.1 %
19.8 %

NOTE 21. CONDENSED CONSOLIDATING FINANCIAL INFORMATION PROVIDED IN CONNECTION
WITH OUTSTANDING DEBT OF SUBSIDIARIES

The following tables present condensed consolidating balance sheets at December 31, 2011 and 2010,
condensed consolidating statements of operations for the years ended December 31, 2011, 2010 and 2009,
and condensed consolidating statements of cash flows for the years ended December 31, 2011, 2010, and
2009, respectively, for RenaissanceRe, RRNAH and RenaissanceRe’s other subsidiaries. RRNAH is a
wholly owned subsidiary of RenaissanceRe.

On March 17, 2010, RRNAH issued, and RenaissanceRe guaranteed, $250.0 million of 5.75% Senior
Notes due March 15, 2020, with interest on the notes payable on March 15 and September 15. The notes
can be redeemed by RRNAH prior to maturity, subject to payment of a “make-whole” premium. The notes,
which are senior obligations, contain various covenants, including limitations on mergers and
consolidations, restrictions as to the disposition of the stock of designated subsidiaries and limitations on
liens of the stock of designated subsidiaries.

F-76

RenaissanceRe
Holdings Ltd.
(Parent
Guarantor)

RenRe North
America
Holdings Inc.
(Subsidiary
Issuer)

Other
RenaissanceRe
Holdings Ltd.
Subsidiaries
and
Eliminations
(Non-guarantor
Subsidiaries)
(1)

Consolidating
Adjustments
(2)

RenaissanceRe
Consolidated

593,973

$ 104,869

$ 5,510,410

10,606
2,776,997

172,069

—

—
4,106

—
206,171
$ 3,763,922

4,920
83,031

846

—

311
—
27,198

201,458

—

$ 6,209,252

216,984

—

(2,860,028)

(172,915)

471,878

58,522

404,029

29,106
43,721

—

—
—

—

471,878

58,522

404,029

33,523
43,721

275,092

(201,458)

307,003

$ 221,175

$ 6,994,216

$(3,234,401)

$ 7,744,912

—

—
100,000

30,519

—

28,210

—

249,247

6,081

—

3,755

—
158,729

13,507

272,590

$ 1,992,354

347,655

4,373

—

(36,600)

256,883

482,668

—

$ 1,992,354

347,655

353,620

—

256,883

514,633

13,507

3,083,933

(36,600)

3,478,652

—

657,727

—

657,727

Condensed Consolidating Balance
Sheet December 31, 2011
Assets
Total investments

Cash and cash equivalents

Investments in subsidiaries

Due from subsidiaries and

affiliates

Premiums receivable

Prepaid reinsurance premiums

Reinsurance recoverable

Accrued investment income
Deferred acquisition costs

Other assets

Total assets

Liabilities, Noncontrolling

Interests and
Shareholders’ Equity

Liabilities
Reserve for claims and claim

expenses

Unearned premiums

Debt

Amounts due to subsidiaries

and affiliates

Reinsurance balances payable

Other liabilities

Liabilities of discontinued
operations held for sale

Total liabilities

Redeemable noncontrolling

interest – DaVinciRe

Shareholders’ Equity

Total shareholders’ equity

3,605,193

(51,415)

3,252,556

(3,197,801)

3,608,533

Total liabilities,

noncontrolling interests
and shareholders’ equity

$ 3,763,922

$ 221,175

$ 6,994,216

$(3,234,401)

$ 7,744,912

(1) Includes all other subsidiaries of RenaissanceRe Holdings Ltd. and eliminations.
(2) Includes Parent Guarantor and Subsidiary Issuer consolidating adjustments.

F-77

RenaissanceRe
Holdings Ltd.
(Parent
Guarantor)

RenRe North
America
Holdings Inc.
(Subsidiary
Issuer)

Other
RenaissanceRe
Holdings Ltd.
Subsidiaries
and
Eliminations
(Non-guarantor
Subsidiaries)
(1)

Consolidating
Adjustments
(2)

RenaissanceRe
Consolidated

517,640

12,560

$ 5,570,012

3,414

3,940

270,384

—

$ 6,100,212

277,738

Condensed Consolidating Balance
Sheet December 31, 2010
Assets
Total investments

Cash and cash equivalents

Investments in subsidiaries

3,533,266

140,923

Due from subsidiaries and

affiliates

Premiums receivable

Prepaid reinsurance premiums

Reinsurance recoverable

Accrued investment income
Deferred acquisition costs

Other assets

Assets of discontinued

operations held for sale

Total assets

Liabilities, Redeemable

Noncontrolling Interest
and Shareholders’ Equity

Liabilities
Reserve for claims and claim

expenses

Unearned premiums

Debt

Amounts due to subsidiaries

and affiliates

Reinsurance balances payable

Other liabilities

Liabilities of discontinued
operations held for sale

Total liabilities

Redeemable noncontrolling

interest – DaVinciRe

Shareholders’ Equity

—

(3,674,189)

(145,298)

322,080

60,643

101,711

30,835
35,648

—

—
—

—

322,080

60,643

101,711

34,560
35,648

—

—
5

—

2,307

318,077

(126,499)

333,539

145,298

—

—
3,720

—
139,654

—
$ 4,342,992

872,147
$ 1,031,882

—

872,147

$ 6,709,390

$(3,945,986)

$ 8,138,278

—

—
377,512

—

29,155

—
406,667

—

374,196

843

—
22,623

598,511

996,173

$ 1,257,843

286,183

200,000

—

(402,553)

—

(843)

318,024

379,915

—

$ 1,257,843

286,183

549,155

—

318,024

431,693

598,511

2,441,965

(403,396)

3,441,409

—

757,655

—

757,655

Total shareholders’ equity

3,936,325

35,709

3,509,770

(3,542,590)

3,939,214

Total liabilities, redeemable
noncontrolling interest
and shareholders’ equity

$ 4,342,992

$ 1,031,882

$ 6,709,390

$(3,945,986)

$ 8,138,278

(1) Includes all other subsidiaries of RenaissanceRe Holdings Ltd. and eliminations.
(2) Includes Parent Guarantor and Subsidiary Issuer consolidating adjustments.

F-78

Condensed Consolidating
Statement of Operations for the year
ended December 31, 2011
Revenues

Net premiums earned

Net investment income

Net foreign exchange gains

(losses)

Equity in losses of other

ventures

Other loss

Net realized and unrealized
gains on investments

Net other-than-temporary

impairments

Total revenues

Expenses

Net claims and claim
expenses incurred

Acquisition expenses

Operational expenses

Corporate expenses

Interest expense

Total expenses

Income (loss) before equity in

net (loss) income of
subsidiaries and taxes

Equity in net loss of

subsidiaries

Loss from continuing

operations before taxes

Income tax benefit (expense)

Loss from continuing

operations

Income from discontinued

operations

Net loss

Net loss attributable to

noncontrolling interests

Net loss attributable to

RenaissanceRe
Dividends on preference
shares

Net loss attributable to

RenaissanceRe common
shareholders

RenaissanceRe
Holdings Ltd.
(Parent
Guarantor)

RenRe North
America
Holdings Inc.
(Subsidiary
Issuer)

Other
RenaissanceRe
Holdings Ltd.
Subsidiaries
and
Eliminations
(Non-guarantor
Subsidiaries)
(1)

Consolidating
Adjustments
(2)

RenaissanceRe
Consolidated

—

951,049

—

951,049

20,845

944

102,023

(5,812)

118,000

112

—

(11)

—

(7,023)

(36,533)

(674)

11,377

1,217

58,074

—

(6,911)

(36,533)

(685)

70,668

(552)

—

32,323

—

—
(4,842)
11,486

10,472

17,116

—

(552)

2,161

1,066,364

(5,812)

1,095,036

—

7,910

229
14,568

22,707

861,179

97,376

166,598

6,549

3,026

1,134,728

—

(4,698)

861,179

97,376

169,666

18,264

23,368

1,169,853

15,207

(20,546)

(68,364)

(1,114)

(74,817)

(73,066)

(52,358)

—

125,424

—

(57,859)

(72,904)

624

1,677

(68,364)

(1,986)

124,310

(74,817)

—

315

(57,235)

(71,227)

(70,350)

124,310

(74,502)

—

(57,235)

(15,890)

(87,117)

—

(70,350)

124,310

(15,890)

(90,392)

—

33,157

—

33,157

(57,235)

(87,117)

(37,193)

124,310

(57,235)

(35,000)

—

(35,000)

(92,235)

(87,117)

(37,193)

124,310

(92,235)

(1) Includes all other subsidiaries of RenaissanceRe Holdings Ltd. and eliminations.
(2) Includes Parent Guarantor and Subsidiary Issuer consolidating adjustments.

F-79

Condensed Consolidating
Statement of Operations for the year
ended December 31, 2010
Revenues

Net premiums earned

Net investment income

Net foreign exchange losses

Equity in losses of other

ventures
Other income

Net realized and unrealized

gains (losses) on
investments

Net other-than-temporary

impairments
Total revenues

Expenses

Net claims and claim
expenses incurred
Acquisition expenses

Operational expenses

Corporate expenses

Interest expense

Total expenses

Income (loss) before equity in

net income (loss) of
subsidiaries and taxes

Equity in net income (loss) of

subsidiaries

Income (loss) from continuing
operations before taxes
Income tax (expense) benefit

Income (loss) from

continuing operations

Income from discontinued

operations
Net income (loss)

Net income attributable to

redeemable noncontrolling
interest – DaVinciRe

Net income (loss)
attributable to
RenaissanceRe
Dividends on preference
shares

Net income (loss) available

(attributable) to
RenaissanceRe common
shareholders

RenaissanceRe
Holdings Ltd.
(Parent
Guarantor)

RenRe North
America
Holdings Inc.
(Subsidiary
Issuer)

Other
RenaissanceRe
Holdings Ltd.
Subsidiaries
and
Eliminations
(Non-guarantor
Subsidiaries)
(1)

Consolidating
Adjustments
(2)

RenaissanceRe
Consolidated

—

864,921

—

864,921

16,101
(523)

—

631

914

—

186,981

(16,603)

(11,814)

40,489

10,107

(2,432)

136,769

—

(829)

(41)

—

203,955

(17,126)

(11,814)

41,120

144,444

(829)

26,316

(1,518)

1,199,914

(41)

1,224,671

—

—
(3,819)
13,022

15,464

24,667

—

5,014

199
14,518

19,731

129,345

94,961

164,847

6,915

1,510

397,578

—

(9,663)

129,345

94,961

166,042

20,136

21,829

432,313

1,649

(21,249)

802,336

9,622

792,358

744,492

(66,323)

—

(678,169)

—

746,141
(1,410)

(87,572)
20,733

802,336

(668,547)

(13,199)

—

792,358

6,124

744,731

(66,839)

789,137

(668,547)

798,482

—
744,731

62,670

(4,169)

—

789,137

(668,547)

62,670

861,152

—

(116,421)

—

(116,421)

744,731

(4,169)

672,716

(668,547)

744,731

(42,118)

—

(42,118)

702,613

(4,169)

672,716

$ (668,547)

702,613

(1) Includes all other subsidiaries of RenaissanceRe Holdings Ltd. and eliminations.
(2) Includes Parent Guarantor and Subsidiary Issuer consolidating adjustments.

F-80

Condensed Consolidating
Statement of Operations for the year
ended December 31, 2009
Revenues

RenaissanceRe
Holdings Ltd.
(Parent
Guarantor)

RenRe North
America
Holdings Inc.
(Subsidiary
Issuer)

Other
RenaissanceRe
Holdings Ltd.
Subsidiaries
and
Eliminations
(Non-guarantor
Subsidiaries)
(1)

Consolidating
Adjustments
(2)

RenaissanceRe
Consolidated

Net premiums earned

—

Net investment income

Net foreign exchange losses

Equity in earnings of other

ventures

Other income

Net realized and unrealized
gains on investments

Net other-than-temporary

impairments

Total revenues

Expenses

Net claims and claim
expenses incurred

Acquisition expenses

Operational expenses

Corporate expenses

Interest expense

Total expenses

Income (loss) before equity in
net income of subsidiaries
and taxes

Equity in net income of

subsidiaries

Income (loss) from continuing
operations before taxes

Income tax benefit (expense)

Income (loss) from

continuing operations

Income from discontinued

operations

Net income

Net income attributable to

redeemable noncontrolling
interest – DaVinciRe

Net income attributable to

RenaissanceRe
Dividends on preference
shares

Net income available to

RenaissanceRe common
shareholders

11,360
(120)

—

516

3,010

(904)
13,862

—

—
(6,962)
8,090

9,306

10,434

—

233

9,073

9,358

882,204

306,805

(13,503)

10,976

1,282

90,669

(21,546)

1,256,887

(70,698)

104,150

153,319

4,516

(3,268)

—

6,962

—

188,019

6,962

882,204

318,179

(13,623)

10,976

1,798

93,679

(22,450)

1,270,763

(70,698)

104,150

153,552

12,658

15,111

214,773

3,428

(9,344)

1,068,868

(6,962)

1,055,990

877,730

157

—

(877,887)

—

881,158

(9,187)

1,068,868

(884,849)

1,055,990

—

3,634

(13,665)

—

(10,031)

881,158

(5,553)

1,055,203

(884,849)

1,045,959

—
881,158

6,700

1,147

—

6,700

1,055,203

(884,849)

1,052,659

—

(171,501)

—

(171,501)

881,158

1,147

883,702

(884,849)

881,158

(42,300)

—

(42,300)

838,858

1,147

883,702

$ (884,849)

838,858

(1) Includes all other subsidiaries of RenaissanceRe Holdings Ltd. and eliminations.
(2) Includes Parent Guarantor and Subsidiary Issuer consolidating adjustments.

F-81

Condensed Consolidating Statement of Cash Flows
for the year ended December 31, 2011
Cash flows (used in) provided by

operating activities

Net cash (used in) provided by

operating activities

Cash flows provided by (used in)

investing activities
Proceeds from sales and maturities of fixed

maturity investments trading

Purchases of fixed maturity investments

trading

Proceeds from sales and maturities of fixed
maturity investments available for sale
Purchases of fixed maturity investments

available for sale

Purchases of equity investments trading
Net (purchases) sales of short term

investments

Net sales of other investments
Net purchases of investments in other

ventures

Net sales of other assets
Dividends and return of capital from

subsidiaries

Contributions to subsidiaries
Due to (from) subsidiary
Net proceeds from sale of discontinued

operations
Net cash provided by (used in)

investing activities

Cash flows (used in) provided by

financing activities
Dividends paid – RenaissanceRe common

Dividends paid – preference shares
RenaissanceRe common share

repurchases

Net repayment of debt
Third party DaVinciRe share repurchases

Net cash (used in) provided by

financing activities

Effect of exchange rate changes on foreign

currency cash

Net increase (decrease) in cash and cash

equivalents

Cash and cash equivalents, beginning of

year

RenaissanceRe
Holdings Ltd.
(Parent
Guarantor)

RenRe North
America
Holdings Inc.
(Subsidiary
Issuer)

Other
RenaissanceRe
Holdings Ltd.
Subsidiaries
and
Eliminations
(Non-guarantor
Subsidiaries)
(1)

RenaissanceRe
Consolidated

(58,721)

(56,438)

281,092

165,933

532,864

221,189

5,335,415

6,089,468

(684,951)

(322,318)

(5,264,354)

(6,271,623)

—

—
—

(6,014)
102,717

—
—

945,195
(272,366)
6,059

—

—
—

9,184
—

—
—

9,306
(8,294)
3,780

106,362

(4,107)
(47,995)

99,978
(51,777)

(39,000)
58,318

(954,501)
280,660
(9,839)

(4,107)
(47,995)

103,148
50,940

(39,000)
58,318

—
—
—

—

269,520

—

269,520

623,504

182,367

(490,840)

315,031

(53,460)
(35,000)

(191,619)
(277,512)
—

—
—

—
(124,949)
—

—
202,461
(62,157)

(53,460)
(35,000)

(191,619)
(200,000)
(62,157)

(557,591)

(124,949)

140,304

(542,236)

—

7,192

—

980

518

(68,926)

(60,754)

3,414
10,606

3,940
4,920

270,384
201,458

277,738
216,984

Cash and cash equivalents, end of year

(1) Includes all other subsidiaries of RenaissanceRe Holdings Ltd. and eliminations.

F-82

RenaissanceRe
Holdings Ltd.
(Parent
Guarantor)

RenRe North
America
Holdings Inc.
(Subsidiary
Issuer)

Other
RenaissanceRe
Holdings Ltd.
Subsidiaries
and
Eliminations
(Non-guarantor
Subsidiaries)
(1)

RenaissanceRe
Consolidated

(112,852)

(7,561)

615,133

494,720

37,457
(240)

244,147
(246,570)

3,470,065
(156,850)

3,751,669
(403,660)

528,662
(610,276)

—
—

7,266,925
(10,512,547)

7,795,587
(11,122,823)

16,339
(3,814)

(12,150)
—

—
—

941,878
(301,555)
23,329

11,676
(47,493)
(312)

(30,941)
125,879

(1,915)
(5,561)

(953,554)
349,048
(23,017)

(26,752)
122,065

(1,915)
(5,561)

—
—
—

631,780

(50,702)

(472,468)

108,610

(55,936)
(42,118)

(448,882)

—
—

—

—
—

—

—
253,512

(239,599)
294,196

239,599
(298,662)

(55,936)
(42,118)

(448,882)

—
249,046

(100,000)

—
(136,702)

—

—
—

—

(100,000)

3,000
—

3,000
(136,702)

(530,126)

54,597

(56,063)

(531,592)

(594)

—

(409)

(1,003)

(11,792)

(3,666)

86,193

70,735

—

3,891

Condensed Consolidating Statement of Cash Flows
for the year ended December 31, 2010
Cash flows (used in) provided by

operating activities

Net cash (used in) provided by

operating activities

Cash flows provided by (used in)

investing activities
Proceeds from sales and maturities of

investments available for sale

Purchases of investments available for sale
Proceeds from sales and maturities of

investments trading

Purchases of investments trading
Net sales (purchases) of short term

investments

Net (purchases) sales of other investments
Net purchases of investments in other

ventures

Net purchases of other assets
Dividends and return of capital from

subsidiaries

Contributions to subsidiaries
Due to (from) subsidiary

Net cash provided by (used in)

investing activities

Cash flows (used in) provided by

financing activities
Dividends paid – RenaissanceRe common

Dividends paid – preference shares
RenaissanceRe common share

repurchases

Return of additional paid in capital to parent

company

Net issuance (repayment) of debt
Redemption of 7.30% Series B preference

Third party investment in noncontrolling

interest

Third party DaVinciRe share repurchases

Net cash (used in) provided by

financing activities

Effect of exchange rate changes on foreign

currency cash

Net (decrease) increase in cash and cash

equivalents

Net decrease in cash and cash

equivalents of discontinued operations
Cash and cash equivalents, beginning of

year

Cash and cash equivalents, end of year
(1) Includes all other subsidiaries of RenaissanceRe Holdings Ltd. and eliminations.

15,206
3,414

7,606
3,940

180,300
270,384

203,112
277,738

F-83

RenaissanceRe
Holdings Ltd.
(Parent
Guarantor)

RenRe North
America
Holdings Inc.
(Subsidiary
Issuer)

Other
RenaissanceRe
Holdings Ltd.
Subsidiaries
and
Eliminations
(Non-guarantor
Subsidiaries)
(1)

RenaissanceRe
Consolidated

32,589

2,887

553,413

588,889

518,941
(477,412)

22,308
(216,676)
61,842
(81,519)

—
—
—

—
—

—
—
2
—

—
—
—

838,809
(248,589)
(28,373)

9,304
(8,752)
388

9,517,493
(10,039,496)

10,036,434
(10,516,908)

38,910
(628,790)
1,108,193
85,513

(3,000)
(19,385)
(2,741)

(848,113)
257,341
27,985

61,218
(845,466)
1,170,037
3,994

(3,000)
(19,385)
(2,741)

—
—
—

389,331

942

(506,090)

(115,817)

(59,740)
(42,300)

(50,972)
—
(126,000)
—
(132,718)
(411,730)

—
—

—
4,215
(6,000)
—
—
(1,785)

—
—

—
(4,215)
(18,000)
(50,042)
—
(72,257)

(59,740)
(42,300)

(50,972)
—
(150,000)
(50,042)
(132,718)
(485,772)

(106)

—

(1,170)

(1,276)

10,084

2,044

(26,104)

(13,976)

—

31,961

Condensed Consolidating Statement of Cash Flows
for the year ended December 31, 2009
Cash flows provided by operating

activities

Net cash provided by operating

activities

Cash flows provided by (used in)

investing activities
Proceeds from sales and maturities of

investments available for sale

Purchases of investments available for sale
Proceeds from sales and maturities of

investments trading

Purchases of investments trading
Net sales of short term investments
Net (purchases) sales of other investments
Net purchases of investments in other

ventures

Net purchases of other assets
Net purchases of subsidiaries
Dividends and return of capital from

subsidiaries

Contributions to subsidiaries
Due (from) to subsidiary

Net cash provided by (used in)

investing activities

Cash flows used in financing activities

Dividends paid – common shares
Dividends paid – preference shares
RenaissanceRe common share

repurchases

Capital contributions
Net repayment of debt
Reverse repurchase agreement
Third party DaVinciRe share repurchases
Net cash used in financing activities
Effect of exchange rate changes on foreign

currency cash

Net increase (decrease) in cash and cash

equivalents

Net decrease in cash and cash

equivalents of discontinued operations
Cash and cash equivalents, beginning of

year

Cash and cash equivalents, end of year
(1) Includes all other subsidiaries of RenaissanceRe Holdings Ltd. and eliminations.

5,122
15,206

5,562
7,606

174,443
180,300

185,127
203,112

F-84

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES

INDEX TO SCHEDULES TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm on Schedules . . . . . . . . . . . . . . . . . . . .

I .

II .

III

Summary of Investments other than Investments in Related Parties . . . . . . . . . . . . . . . . . . . .

Condensed Financial Information of Registrant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary Insurance Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reinsurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary Insurance Information Concerning Property-Casualty Insurance Operations. .

Schedules other than those listed above are omitted for the reason that they are not applicable.

Page

S-2

S-3

S-4

S-7

S-8

S-9

S-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF RENAISSANCERE HOLDINGS LTD.

We have audited the consolidated financial statements of RenaissanceRe Holdings Ltd. as of
December 31, 2011 and 2010, and for each of the three years in the period ended December 31, 2011, and
have issued our report thereon dated February 23, 2012 included elsewhere in this Annual Report on Form
10-K. Our audits also included the financial statement schedules listed in Item 15(a) (2) of this Annual
Report on Form 10-K for the year ended December 31, 2011. These schedules are the responsibility of the
Company’s management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedules referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects the information set forth therein.

/s/ Ernst & Young Ltd.

Hamilton, Bermuda
February 23, 2012

S-2

SCHEDULE I

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES

SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES
(THOUSANDS OF UNITED STATES DOLLARS)

Type of investment:
Fixed maturity investments

U.S. treasuries
Agencies
Non-U.S. government (Sovereign debt)
FDIC guaranteed corporate
Non-U.S. government-backed corporate
Corporate
Agency mortgage-backed
Non-agency mortgage-backed
Commercial mortgage-backed
Asset-backed

Total fixed maturity investments

Short term investments
Equity investments
Other investments
Investments in other ventures, under equity method

Total investments

December 31, 2011

Amortized
Cost

Market Value

874,969
156,986
225,335
422,505
640,892
1,201,715
433,158
109,876
313,327
17,835
$ 4,396,598

885,152
158,561
227,912
423,630
641,082
1,206,904
441,749
104,771
325,729
18,027
4,433,517
905,477
50,560
748,984
70,714
$ 6,209,252

Amount at
which shown
in the
Balance Sheet

885,152
158,561
227,912
423,630
641,082
1,206,904
441,749
104,771
325,729
18,027
4,433,517
905,477
50,560
748,984
70,714
$ 6,209,252

S-3

SCHEDULE II

RENAISSANCERE HOLDINGS LTD.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

RENAISSANCERE HOLDINGS LTD.
BALANCE SHEETS
AT DECEMBER 31, 2011 AND 2010
(PARENT COMPANY)
(THOUSANDS OF UNITED STATES DOLLARS)

Assets
Fixed maturity investments trading, at fair value (Amortized cost $421,278 and

$254,317 at December 31, 2011 and 2010, respectively)

Short term investments, at fair value

Other investments

Total investments

Cash and cash equivalents

Investments in subsidiaries

Due from subsidiaries

Dividends due from subsidiaries

Accrued investment income

Other assets

Total Assets

Liabilities and Shareholders’ Equity

Liabilities
Notes and bank loans payable

Contributions due to subsidiaries

Other liabilities

Total Liabilities

Shareholders’ Equity
Preference Shares: $1.00 par value – 22,000,000 shares issued and
outstanding at December 31, 2011 (2010 – 22,000,000 shares)

Common Shares: $1.00 par value – 51,542,955 shares issued and
outstanding at December 31, 2011 (2010 – 54,109,840 shares)

Accumulated other comprehensive income

Retained earnings

Total Shareholders’ Equity

Total Liabilities and Shareholders’ Equity

At December 31,

2011

2010

430,007

258,093

163,966

—

593,973

10,606

157,952

101,595

517,640

3,414

2,776,997

3,533,266

17,108

154,961

4,106

23,167

122,131

3,720

206,171

139,654

$ 3,763,922

$ 4,342,992

100,000

377,512

30,519

28,210

158,729

—

29,155

406,667

550,000

51,543

11,760

54,110

19,823

2,991,890

3,312,392

3,605,193

3,936,325

$ 3,763,922

$ 4,342,992

S-4

RENAISSANCERE HOLDINGS LTD.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT – CONTINUED

SCHEDULE II

RENAISSANCERE HOLDINGS LTD.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009
(PARENT COMPANY)
(THOUSANDS OF UNITED STATES DOLLARS)

Year ended December 31,

2011

2010

2009

20,845

16,101

11,360

112

(11)

(523)

631

Revenues
Net investment income

Net foreign exchange gains (losses)

Other (loss) income

(120)

516

3,010

(1,041)

137

(904)

Net realized and unrealized gains on investments

11,377

10,107

Total other-than-temporary impairments

Portion recognized in other comprehensive income, before

taxes

Net other-than-temporary impairments

—

Total revenues

Expenses
Interest expense

Operating and corporate expenses

Total expenses

Income before equity in net (losses) income of subsidiaries

and taxes

Equity in net (losses) income of subsidiaries

(Loss) income before taxes

Income tax benefit (expense)

Net (loss) income

Dividends on preference shares

32,323

26,316

13,862

10,472

6,644

17,116

15,207

(73,066)

(57,859)

624

(57,235)

(35,000)

15,464

9,203

24,667

1,649

744,492

746,141

(1,410)

744,731

(42,118)

9,306

1,128

10,434

3,428

877,730

881,158

—

881,158

(42,300)

Net (loss) income (attributable) available to
RenaissanceRe common shareholders

(92,235)

702,613

838,858

S-5

RENAISSANCERE HOLDINGS LTD.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT – CONTINUED

SCHEDULE II

RENAISSANCERE HOLDINGS LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 AND 2009
(PARENT COMPANY)
(THOUSANDS OF UNITED STATES DOLLARS)

Cash flows provided by (used in) operating activities:

Net (loss) income

Less: equity in net (losses) income of subsidiaries

Adjustments to reconcile net (loss) income to net cash (used in)

provided by operating activities

Net unrealized gains included in net investment income

Net unrealized losses (gains) included in other (loss) income

Net realized and unrealized gains on investments

Net other-than-temporary impairments

Other

Net cash (used in) provided by operating activities

Cash flows provided by investing activities:

Proceeds from maturities and sales of fixed maturity investments

trading

Purchases of fixed maturity investments trading

Proceeds from maturities and sales of fixed maturity investments

available for sale

Purchases of fixed maturity investments available for sale

Contributions to subsidiaries

Dividends and return of capital from subsidiaries

Net (purchases) sales of short term investments

Net sales (purchases) of other investments

Due to (from) subsidiary

Net cash provided by investing activities

Cash flows used in financing activities:

Dividends paid – RenaissanceRe common shares

Dividends paid – preference shares

RenaissanceRe common share repurchases

Redemption of 7.30% Series B preference shares

Net (repayment) issuance of debt

Third party DaVinciRe share repurchases

Net cash used in financing activities

Effect of exchange rate changes on foreign currency cash

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

S-6

Year ended December 31,

2011

2010

2009

(57,235)

744,731

881,158

(73,066)

15,831

744,492

239

877,730

3,428

(1,696)

304

(4,462)

(267)

(11,377)

(10,107)

—

(61,783)

(58,721)

—

(98,255)

(112,852)

(190)

(577)

(3,010)

904

32,034

32,589

532,864

528,662

22,308

(684,951)

(610,276)

(216,676)

—

37,457

(240)

(272,366)

(301,555)

945,195

(6,014)

102,717

6,059

623,504

(53,460)

(35,000)

(191,619)

—

(277,512)

—

(557,591)

—

7,192

3,414

941,878

16,339

(3,814)

23,329

631,780

(55,936)

(42,118)

(448,882)

(100,000)

253,512

(136,702)

(530,126)

(594)

(11,792)

15,206

10,606

3,414

518,941

(477,412)

(248,589)

838,809

61,842

(81,519)

(28,373)

389,331

(59,740)

(42,300)

(50,972)

—

(126,000)

(132,718)

(411,730)

(106)

10,084

5,122

15,206

SCHEDULE III

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES

SUPPLEMENTARY INSURANCE INFORMATION
(THOUSANDS OF UNITED STATES DOLLARS)

December 31, 2011

Year ended December 31, 2011

Future
Policy
Benefits,
Losses,
Claims
and
Loss
Expenses

Deferred
Policy
Acquisition
Costs

Unearned
Premiums

Premium
Revenue

Net
Investment
Income

Reinsurance

34,923

$ 1,813,526

$ 301,845

$ 873,088

8,039

759

—

87,495

91,333

—

43,367

2,443

—

76,386

1,575

—

118,000

Benefits,
Claims,
Losses
and
Settlement
Expenses

Amortization
of Deferred
Policy
Acquisition
Costs

Other
Operating
Expenses

Net
Written
Premiums

$ 783,704

82,978

$ 131,251

$ 913,499

73,259

4,216

—

14,031

367

—

36,732

1,683

—

98,617

657

—

43,721

$ 1,992,354

$ 347,655

$ 951,049

118,000

$ 861,179

97,376

$ 169,666

$1,012,773

December 31, 2010

Year ended December 31, 2010

Future
Policy
Benefits,
Losses,
Claims
and
Loss
Expenses

Deferred
Policy
Acquisition
Costs

Unearned
Premiums

Premium
Revenue

Net
Investment
Income

Reinsurance

31,685

$ 1,130,670

$ 264,113

$ 838,790

3,585

378

—

20,031

107,142

—

21,162

908

—

50,204

(24,073)

—

203,955

Benefits,
Claims,
Losses
and
Settlement
Expenses

Amortization
of Deferred
Policy
Acquisition
Costs

Other
Operating
Expenses

Net
Written
Premiums

$ 113,804

77,954

$ 129,990

$ 809,719

25,676

(10,135)

—

10,784

6,223

—

24,837

11,215

—

61,189

(21,943)

—

Lloyd’s

Insurance

Other

Total

Lloyd’s

Insurance

Other

Total

35,648

$ 1,257,843

$ 286,183

$ 864,921

203,955

$ 129,345

94,961

$ 166,042

$ 848,965

December 31, 2009

Year ended December 31, 2009

Future
Policy
Benefits,
Losses,
Claims
and
Loss
Expenses

Deferred
Policy
Acquisition
Costs

Unearned
Premiums

Premium
Revenue

Net
Investment
Income

Reinsurance

34,638

$ 1,175,960

$ 302,915

$ 849,725

Insurance

4,430

168,473

14,677

32,479

—

318,179

Other

Total

Benefits,
Claims,
Losses
and
Settlement
Expenses

Amortization
of Deferred
Policy
Acquisition
Costs

Other
Operating
Expenses

Net
Written
Premiums

(87,639)

78,848

$ 139,328

$ 839,023

16,941

—

25,302

14,224

—

(690)

—

39,068

$ 1,344,433

$ 317,592

$ 882,204

318,179

(70,698)

104,150

$ 153,552

$ 838,333

S-7

SCHEDULE IV

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES

REINSURANCE
(THOUSANDS OF UNITED STATES DOLLARS)

Year ended December 31, 2011

Property and liability premiums

earned

Year ended December 31, 2010

Property and liability premiums

earned

Year ended December 31, 2009

Property and liability premiums

earned

Gross
Amounts

Ceded to
Other
Companies

Assumed
From Other
Companies

Net Amount

Percentage
of Amount
Assumed
to Net

17,794

$ 422,950

$ 1,356,205

$ 951,049

143%

5,329

$ 331,783

$ 1,191,375

$ 864,921

138%

1,419

$ 389,768

$ 1,270,553

$ 882,204

144%

S-8

SCHEDULE VI

RENAISSANCERE HOLDINGS LTD. AND SUBSIDIARIES

SUPPLEMENTARY INSURANCE INFORMATION CONCERNING
PROPERTY-CASUALTY INSURANCE OPERATIONS
(THOUSANDS OF UNITED STATES DOLLARS)

Reserves
for
Unpaid
Claims
and Claim
Adjustment
Expenses

Deferred
Policy
Acquisition
Costs

Discount, if
any,
Deducted

Unearned
Premiums

Earned
Premiums

Net
Investment
Income

Affiliation with Registrant
Consolidated Subsidiaries

Year ended December 31, 2011

Year ended December 31, 2010

Year ended December 31, 2009

43,721

$ 1,992,354

35,648

$ 1,257,843

39,068

$ 1,344,433

—

$ 347,655

$ 951,049

$ 118,000

$ 286,183

$ 864,921

$ 203,955

$ 317,592

$ 882,204

$ 318,179

Affiliation with Registrant
Consolidated Subsidiaries

Claims and Claim
Adjustment Expenses
Incurred Related to

Current
Year

Prior Year

Amortization
of Deferred
Policy
Acquisition
Costs

Paid
Claims
and Claim
Adjustment
Expenses

Net
Premiums
Written

Year ended December 31, 2011

$ 993,168

$ (131,989)

Year ended December 31, 2010

$ 431,476

$ (302,131)

Year ended December 31, 2009

$ 195,518

$ (266,216)

97,376

$ 428,986

$1,012,773

94,961

$ 233,547

$ 848,965

104,150

$ 234,198

$ 838,333

S-9

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

EXHIBITS

FORM 10-K

Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year
ended December 31, 2011.

RenaissanceRe Holdings Ltd.

Exhibits

(a)

Financial Statements, Financial Statement Schedules and Exhibits.

Financial Statements

Financial Statement Schedules

3.1

3.2

3.3

3.4

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

10.21

Exhibits

Memorandum of Association. (1)

Amended and Restated Bye-Laws. (2)

Memorandum of Increase in Share Capital of RenaissanceRe Holdings Ltd. (3)

Specimen Common Share certificate. (1)