RRNRRenaissanceRe Holdings Ltd.

RenaissanceRe reinsures natural catastrophe risk — taking on what insurers fear.

The specialisation is narrow and deliberate: hurricanes, earthquakes, floods. A year's result is determined not by skill but by whether a catastrophe happened — so profitable years alternate with very loss-making ones. The point of the business is to collect more premium than is paid out over a decade.

The key tool is proprietary models of event probability: the company prices risk more accurately than the market and therefore takes on what others mispriced. Part of the capital is raised from outside investors wanting exposure to that risk, and the company manages their money for a fee. Risks: the catastrophe season and reserve adequacy. A dividend is paid.