February 22, 2005 by Canadian Underwriter
Bermuda-based RenaissanceRe Holdings Ltd. says it will restate its financial results for the years 2001, 2002 and 2003, but the net result will be an increase in shareholders’ equity.
The restatement will increase earnings for 2001 by US$20.6 million, and increase 2003 earnings by US$1.3 million, offset by a US$21.9 million decrease in 2002’s net income.
The main reason for the restatement is a change in the timing of recognition of reinsurance recoverables, while a change in the timing of premium ceded on multi-year contracts also affected earnings.
The company has also uncovered a mistake affecting results for the first three quarters of 2004, relative to premium ceded on multi-year contracts. The result will be a US$12.5 million increase in shareholders’ equity as of the end of third-quarter 2004, the company states.
“The accounting errors noted above were discovered in connection with a review initiated by the company, which is ongoing,” a statement notes. “It is possible that such review could delay the issuance of the company’s audited financial results.” 2004 yearend results are set to be released after close of market on Wednesday.
Rating agencies have already reacted to the news, with A.M. Best and Standard & Poor’s both placing RenaissanceRe under review with negative implications.