Acquisition of Tokio Millennium Re (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Acquisition Purchase Price and Financial Results

The Company's total purchase price for TMR was calculated as follows:




Special Dividend
Special Dividend paid to common shareholders of Tokio and holders of Tokio equity awards			$	500,000
RenaissanceRe common shares
Common shares issued by RenaissanceRe to Tokio	1,739,071
Common share price of RenaissanceRe (1)	$	143.75
Market value of RenaissanceRe common shares issued by RenaissanceRe to Tokio			249,998
Cash consideration
Cash consideration paid by RenaissanceRe as acquisition consideration			813,595
Total purchase price			1,563,593
Less: Special Dividend paid to Tokio			(500,000		)
Net purchase price			$	1,063,593

(1)

RenaissanceRe common share price was based on the 30-day trailing volume weighted average price of $143.7539 as of market close on March 15, 2019, which approximates fair value.

The following table summarizes the net contribution from the acquisition of TMR since March 22, 2019 that has been included in the Company's consolidated statements of operations and comprehensive income for the year ended December 31, 2019. Operating activities of TMR from the acquisition date, March 22, 2019, through December 31, 2019 are included in the Company’s consolidated statements of operations for the year ended December 31, 2019.

The unaudited net contribution of the acquisition and integration of TMR is provided for informational purposes only and is not necessarily, and should not be assumed to be, an indication of the results that may be achieved in the future. These results are not used as a part of management analysis of the financial performance of the Company’s business. These results primarily reflect items recorded directly by TMR, including: 1) net earned premium and net underwriting income on the in-force portfolio acquired with the acquisition of TMR and currently retained on TMR entities’ balance sheets; 2) net earned premium and net underwriting income for those contracts which have renewed post-acquisition on one of the acquired TMR

entities’ balance sheets; 3) net investment income and net realized and unrealized gains recorded directly by TMR; and 4) certain direct costs incurred directly by TMR. In addition, these results, where possible, are adjusted for transaction and integration related costs incurred by the Company. However, these results do not reflect on-going operating costs incurred by the Company in supporting TMR unless such costs are incurred directly by TMR. These results also do not give consideration to the impact of possible revenue enhancements, expense efficiencies, synergies or asset dispositions that may be achieved in the future. These results involve significant estimates and are not indicative of the future results of the acquired TMR entities which will be further impacted by potential changes in targeted business mix, investment management strategies, and synergies recognized from changes in the combined entity’s operating structure, as well as the impact of changes in other business and capital management strategies.

Since the acquisition date, a growing number of underlying policies have been underwritten onto different legal entities, staffing has been allocated to new activities, and reinsurance has been purchased to cover combined risks, only some of which would have been reflected in the underlying legacy TMR results. In future quarters, the summary results of TMR will become increasingly impracticable to produce, and even less indicative of the results of the acquired TMR entities, given the significant estimates involved and the nature and pace of our integration activities, which are intended to integrate TMR as quickly as possible.




	Year ended December 31, 2019 (1)
Total revenues	$	922,727
Net income available to RenaissanceRe common shareholders (2)	$	99,169


(1)	Includes the net contribution from the acquisition of TMR since March 22, 2019 that has been included in the Company’s consolidated statements of operations and comprehensive income through December 31, 2019.

(2)

Includes $49.7 million of corporate expenses associated with the acquisition and integration of TMR for the year ended December 31, 2019.

Schedule of Fair Value of Net Assets Acquired and Liabilities Assumed

The purchase price was allocated to the acquired assets and liabilities of the Company based on estimated fair values on March 22, 2019, the date the transaction closed, as detailed below. During the quarter ended March 31, 2019, the Company recognized goodwill of $13.1 million, based on foreign exchange rates on March 22, 2019, attributable to the excess of the purchase price over the fair value of the net assets of TMR. The Company recognized identifiable finite lived intangible assets of $11.2 million, which will be amortized over a weighted average period of 10.5 years, identifiable indefinite lived intangible assets of $6.8 million, and certain other adjustments to the fair values of the assets acquired, liabilities assumed and shareholders’ equity of TMR at March 22, 2019, based on foreign exchange rates on March 22, 2019, as summarized in the table below:




Shareholders’ equity of TMR at March 22, 2019	$	1,032,961
Adjustments for fair value, by applicable balance sheet caption:
Net deferred acquisition costs and value of business acquired	(56,788		)
Net reserve for claims and claim expenses	67,782
Goodwill and intangible assets at March 22, 2019 of TMR	(6,569		)
Total adjustments for fair value by applicable balance sheet caption before tax impact	4,425
Other assets - net deferred tax liability related to fair value adjustments and value of business acquired	(2,606		)
Total adjustments for fair value by applicable balance sheet caption, net of tax	1,819
Adjustments for fair value of the identifiable intangible assets:
Identifiable indefinite lived intangible assets (insurance licenses)	6,800
Identifiable finite lived intangible assets (top broker relationships and renewal rights)	11,200
Identifiable intangible assets before tax impact	18,000
Other assets - deferred tax liability on identifiable intangible assets	(2,281		)
Total adjustments for fair value of the identifiable intangible assets and value of business acquired, net of tax	15,719
Total adjustments for fair value by applicable balance sheet caption, identifiable intangible assets and value of business acquired, net of tax	17,538
Shareholders’ equity of TMR at fair value	1,050,499
Total net purchase price paid by RenaissanceRe	1,063,593
Excess purchase price over the fair value of net assets acquired assigned to goodwill	$	13,094

Schedule of Identifiable Intangible Assets Acquired

Identifiable intangible assets and accumulated amortization at December 31, 2019, consisted of the following, based on foreign exchange rates on March 22, 2019, and are included in goodwill and other intangible assets on the Company’s consolidated balance sheet:




	Amount		Economic Useful Life
Top broker relationships	$	10,000	10.0 years
Renewal rights	1,200		15.0 years
Insurance licenses	6,800		Indefinite
Gross identifiable intangible assets related to the acquisition of TMR, at March 22, 2019	18,000
Accumulated amortization (from March 22, 2019 through December 31, 2019)	810
Net identifiable intangible assets related to the acquisition of TMR at December 31, 2019	$	17,190

Schedule of Pro Forma Information

The following table presents unaudited pro forma consolidated financial information for the years ended December 31, 2019 and 2018, respectively, and assumes the acquisition of TMR occurred on January 1, 2018. The unaudited pro forma consolidated financial information is provided for informational purposes only and is not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the transaction been completed as of January 1, 2018 or that may be achieved in the future. The unaudited pro forma consolidated financial information does not give consideration to the impact of possible revenue enhancements, expense efficiencies, synergies or asset dispositions that may result from the acquisition of TMR. In addition, unaudited pro forma consolidated financial information does not include the effects of costs associated with any restructuring or integration activities resulting from the acquisition of TMR, as they are nonrecurring.




Year ended December 31,	2019		2018
Total revenues	$	4,542,979	$	3,338,903
Net income available to RenaissanceRe common shareholders	$	768,719	$	281,974