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RenaissanceRe Reports Q2 2022 Net Loss Attributable to Common Shareholders of $324.9 Million; Operating Income Available to Common Shareholders of $238.1 Million. Combined Ratio of 78.3% With Strong Performance Across Both Segments.

  • 93.8% Casualty and Specialty combined ratio, an improvement of 4 percentage points from Q2 2021.
  • 32.5% growth in net investment income.
  • 23.2% growth in net premiums written; 37.6% growth in Casualty and Specialty and 10.5% in Property.
  • Annualized return on average common equity of (25.1)% driven by significant mark-to-market losses in the investment portfolio.
  • 18.4% annualized operating return on average common equity showing strong underwriting performance and increased net investment income.

PEMBROKE, Bermuda–(BUSINESS WIRE)–RenaissanceRe Holdings Ltd. (NYSE: RNR) (“RenaissanceRe” or the “Company”) today announced its financial results for the second quarter of 2022.

Net Loss Attributable to Common Shareholders per Diluted Common Share: $(7.53)

Operating Income Available to Common Shareholders per Diluted Common Share*: $5.51

Underwriting Income

$316.4M

Fee Income

$34.3M

Net Investment Income

$107.2M

Change in Book Value per Common Share: (6.4)%

Change in Tangible Book Value per Common Share Plus Change in Accum. Dividends*: (6.4)%

* Operating Return on Average Common Equity, Operating Income (Loss) Available (Attributable) to Common Shareholders, Operating Income (Loss) Available (Attributable) to Common Shareholders per Diluted Common Share and Change in Tangible Book Value per Common Share Plus Change in Accumulated Dividends are non-GAAP financial measures; see “Comments on Regulation G” for a reconciliation of non-GAAP financial measures.

Kevin J. O’Donnell, President and Chief Executive Officer, said, We reported a strong quarter, with continuing top line growth and solid operating profitability demonstrating the power of our diversified platform. Our financial results were driven by strong performance across both underwriting segments, a significant increase in net investment income and an expanding Capital Partners business. We are pleased with our 18.4% annualized operating return on average common equity during the quarter, and are confident that our consistent strategy, leadership in a strengthening market and robust capital position will enable us to continue maximizing shareholder value.”

Consolidated Financial Results

 

Consolidated Highlights

 

 

 

 

 

Three months ended June 30

 

(in thousands, except per share amounts and percentages)

 

2022

 

 

2021

 

Gross premiums written

$

2,464,639

 

$

2,094,158

 

Net premiums written

 

1,863,616

 

 

1,512,292

 

Underwriting income (loss)

 

316,386

 

 

328,976

 

Combined ratio

 

78.3 %

 

 

72.4 %

 

 

 

 

 

 

Net Income (Loss)

 

 

 

 

Available (Attributable) to common shareholders

 

(324,913)

 

 

456,818

 

Available (Attributable) to common shareholders per diluted common share

$

(7.53)

 

$

9.35

 

Operating Income (Loss) (1)

 

 

 

 

Available (Attributable) to common shareholders

 

238,132

 

 

278,050

 

Available (Attributable) to common shareholders per diluted common share

$

5.51

 

$

5.64

 

Book value per common share

$

113.69

 

$

139.35

 

Change in book value per share

 

(6.4) %

 

 

6.3 %

 

Tangible book value per common share plus accumulated dividends (1)

$

132.05

 

$

156.55

 

Change in tangible book value per common share plus change in accumulated dividends (1)

 

(6.4) %

 

 

6.7 %

 

 

 

 

 

 

Return on average common equity – annualized

 

(25.1) %

 

 

27.6 %

 

Operating return on average common equity – annualized (1)

 

18.4 %

 

 

16.8 %

  1. See “Comments on Regulation G” for a reconciliation of non-GAAP financial measures.

Three Drivers of Profit: Underwriting, Fee and Investment Income

Underwriting Results – Property Segment: Combined ratio of 57.6% and growth in net premiums written of 10.5%

 

Property Segment

 

 

 

 

 

 

 

Three months ended June 30

 

Q/Q Change

 

(in thousands, except percentages)

 

2022

 

 

2021

 

 

Gross premiums written

$

1,218,321

 

$

1,183,556

 

2.9 %

 

Net premiums written

 

887,975

 

 

803,335

 

10.5 %

 

Underwriting income (loss)

 

264,463

 

 

315,122

 

 

 

 

 

 

 

 

 

 

Underwriting Ratios

 

 

 

 

 

 

Net claims and claim expense ratio – current accident year

 

33.2 %

 

 

26.4 %

 

6.8 pts

 

Net claims and claim expense ratio – prior accident years

 

(5.6) %

 

 

(9.1) %

 

3.5 pts

 

Net claims and claim expense ratio – calendar year

 

27.6 %

 

 

17.3 %

 

10.3 pts

 

Underwriting expense ratio

 

30.0 %

 

 

26.5 %

 

3.5 pts

 

Combined ratio

 

57.6 %

 

 

43.8 %

 

13.8 pts

Gross premiums written increased by $34.8 million, or 2.9%, driven by an improving rate environment, in addition to new opportunities, notably within the property catastrophe class of business.

  • Net premiums written increased by $84.6 million, or 10.5%, driven by the increase in gross premiums written, as well as a reduction in ceded premiums written of $49.9 million due to lower levels of retrocessional purchases as a part of the Company’s gross-to-net strategy.

  • The net claims and claim expense ratio – current accident year reflects the relatively low level of catastrophe activity in the quarter. The increase from the second quarter of 2021 was driven by:

    – the continued impact of the other property class of business on the segment which has a relatively higher attritional loss ratio than the property catastrophe class of business; and

    – catastrophe activity, which was relatively low in both periods, but slightly higher in the second quarter of 2022.

  • The net claims and claim expense ratio – prior accident years reflects net favorable development primarily from weather-related large losses in the 2017 to 2021 accident years.

  • Underwriting expense ratio increased 3.5 percentage points driven by:

    – continued impact of the other property class of business on the segment, which has a relatively higher expense ratio than the catastrophe class of business; and

    – a reduced benefit to the ratio following a reduction in management fees largely due to the reduced size of the Company’s structured reinsurance products and lower capital managed at Upsilon.

Underwriting Results – Casualty and Specialty Segment: Combined ratio of 93.8% and growth in net premiums written of 37.6%

 

Casualty and Specialty Segment

 

 

 

 

 

 

 

Three months ended June 30

 

Q/Q Change

 

(in thousands, except percentages)

 

2022

 

 

2021

 

 

Gross premiums written

$

1,246,318

 

$

910,602

 

36.9%

 

Net premiums written

 

975,641

 

 

708,957

 

37.6%

 

Underwriting income (loss)

 

51,923

 

 

13,854

 

 

 

 

 

 

 

 

 

 

Underwriting Ratios

 

 

 

 

 

 

Net claims and claim expense ratio – current accident year

 

65.1 %

 

 

67.0 %

 

(1.9) pts

 

Net claims and claim expense ratio – prior accident years

 

(0.9) %

 

 

(0.1) %

 

(0.8) pts

 

Net claims and claim expense ratio – calendar year

 

64.2 %

 

 

66.9 %

 

(2.7) pts

 

Underwriting expense ratio

 

29.6 %

 

 

30.9 %

 

(1.3) pts

 

Combined ratio

 

93.8 %

 

 

97.8 %

 

(4.0) pts

  • Gross premiums written increased 36.9%, principally in the professional liability and financial lines classes of business. This growth was primarily driven by increases in new and existing business written in the current and prior periods, combined with rate improvements.

  • Net premiums written increased 37.6%, primarily driven by growth in the professional liability and financial lines classes of business, consistent with the changes in gross premiums written.

  • Net claims and claim expense ratio improved by 2.7 percentage points principally as a result of lower current accident year losses. The net claims and claim expense ratio was also positively impacted by higher favorable prior accident year loss development as compared to the second quarter of 2021.

  • Underwriting expense ratio decreased 1.3 percentage points, principally due to a 1.0 percentage point decrease in the net acquisition expense ratio due to changes in estimated profit commissions.

Fee Income: $34.3 million of fee income primarily driven by stable management fee income

 

Fee Income

 

 

 

 

 

 

 

Three months ended June 30

 

Q/Q Change

 

(in thousands, except percentages)

 

2022

 

 

2021

 

 

Total management fee income

$

30,707

 

$

31,970

 

$

(1,263)

 

Total performance fee income (loss) (1)

 

3,548

 

 

14,187

 

 

(10,639)

 

Total fee income

$

34,255

 

$

46,157

 

$

(11,902)

  1. Performance fees are based on the performance of the individual vehicles or products, and may be negative in a particular period if, for example, large losses occur, which can potentially result in no performance fees or the reversal of previously accrued performance fees.
  • Management fee income was relatively stable in comparison to the second quarter of 2021, with reductions in the Company’s structured reinsurance products and lower capital managed at Upsilon, largely offset by increased capital managed at DaVinciRe Holdings Ltd., Vermeer Reinsurance Ltd., Medici, and Fontana Holdings L.P. and its subsidiaries (“Fontana”), which was launched in the second quarter of 2022.
  • Performance fee income was lower in the second quarter of 2022 compared to the second quarter of 2021. Performance fee income continued to be impacted by the underwriting deficit carried forward from the weather-related losses in 2021 in the current period, although to a lesser extent than in recent quarters.

Investment Results: Growth in net investment income; total investment result driven by net realized and unrealized losses, primarily in the fixed maturity investments portfolio

 

Investment Results

 

 

 

 

 

 

 

Three months ended June 30

 

Q/Q Change

 

(in thousands, except percentages)

 

2022

 

 

2021

 

 

Net investment income

$

107,211

 

$

80,925

 

$

26,286

 

Net realized and unrealized gains (losses) on investments

 

(654,107)

 

 

191,018

 

 

(845,125)

 

Total investment result

$

(546,896)

 

$

271,943

 

$

(818,839)

 

Total investment return – annualized

 

(10.1) %

 

 

5.2 %

 

(15.3) pts

  • Net investment income increased $26.3 million, primarily driven by higher investment yields from:

    – increasing interest rates in the Company’s fixed maturity trading and short term investment portfolios, and

    – higher average invested assets and yields in the catastrophe bond and equity trading investment portfolios.

  • Net realized and unrealized gains (losses) on investments decreased $845.1 million principally driven by:

    – net realized and unrealized losses on fixed maturity investments trading of $437.0 million from the significant increase in interest rates as compared to net realized and unrealized gains of $97.2 million in the second quarter of 2021, which was driven by decreasing interest rates.

    – net realized and unrealized losses on equity investments trading of $91.5 million principally driven by broad equity market declines, as compared to gains of $65.6 million in the second quarter of 2021 which was driven by gains in the Company’s strategic investment portfolio.

  • Total investments of $20.6 billion at June 30, 2022. Weighted average yield to maturity and duration on investments, which exclude investments that have no final maturity, anticipated yield to maturity or duration, was 3.9% and 2.6 years.

Other Items of Note

  • Net income attributable to redeemable noncontrolling interests of $49.3 million was primarily driven by:

    – Strong underwriting performance in DaVinci and Vermeer; and

    – Increase in the capital managed at the Company’s joint ventures, including the launch of Fontana during the quarter; partially offset by

    – Realized and unrealized losses on investments in the Company’s joint ventures driven by the significant increase in interest rates; and

    – Foreign exchange losses on hedges related to foreign currency share classes held by third-party investors in RenaissanceRe Medici Fund Ltd. (“Medici”).

  • Income tax benefit of $30.5 million was primarily driven by unrealized investment losses in the Company’s U.S.-based operations.

  • Net foreign exchange losses of $50.8 million primarily driven by losses attributable to third-party investors in Medici which are allocated through noncontrolling interests, as discussed above, and the impact of certain foreign exchange exposures related to the Company’s underwriting activities, which the Company does not anticipate will recur.

  • Share repurchases of 298.2 thousand common shares at an aggregate cost of $44.1 million and an average price of $147.85 per common share in the second quarter of 2022. Repurchased an additional 175.7 thousand of common shares at an aggregate cost of $25.3 million from July 1, 2022 through July 22, 2022.

  • Raised capital of $567.7 million in the second quarter of 2022 through Medici and the previously announced launch of Fontana, including $136.3 million from the Company.

Conference Call Details and Additional Information

Non-GAAP Financial Measures and Additional Financial Information

This Press Release includes certain financial measures that are not calculated in accordance with generally accepted accounting principles in the U.S. (“GAAP”) including “operating income (loss) available (attributable) to RenaissanceRe common shareholders,” “operating income (loss) available (attributable) to RenaissanceRe common shareholders per common share – diluted,” “operating return on average common equity – annualized,” “tangible book value per common share” and “tangible book value per common share plus accumulated dividends.” A reconciliation of such measures to the most comparable GAAP figures in accordance with Regulation G is presented in the attached supplemental financial data.

Please refer to the “Investors – Financial Reports – Financial Supplements” section of the Company’s website at www.renre.com for a copy of the Financial Supplement which includes additional information on the Company’s financial performance.

Conference Call Information

RenaissanceRe will host a conference call on Tuesday, July 26, 2022 at 10:00 a.m. ET to discuss this release. Live broadcast of the conference call will be available through the “Investors – Webcasts & Presentations” section of the Company’s website at www.renre.com.

About RenaissanceRe

RenaissanceRe is a global provider of reinsurance and insurance that specializes in matching well-structured risks with efficient sources of capital. The Company provides property, casualty and specialty reinsurance and certain insurance solutions to customers, principally through intermediaries. Established in 1993, RenaissanceRe has offices in Bermuda, Australia, Ireland, Singapore, Switzerland, the United Kingdom and the United States.

Cautionary Statement Regarding Forward-Looking Statements

Any forward-looking statements made in this Press Release reflect RenaissanceRe’s current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to numerous factors that could cause actual results to differ materially from those set forth in or implied by such forward-looking statements, including the following: the Company’s exposure to natural and non-natural catastrophic events and circumstances and the variance it may cause in the Company’s financial results; the effect of climate change on the Company’s business, including the trend towards increasingly frequent and severe climate events; the effectiveness of the Company’s claims and claim expense reserving process; the effect of emerging claims and coverage issues; the historically cyclical nature of the (re)insurance industries; collection on claimed retrocessional coverage, and new retrocessional reinsurance being available on acceptable terms; the ability of the Company’s ceding companies and delegated authority counterparties to accurately assess the risks they underwrite; the Company’s ability to maintain its financial strength ratings; the performance of the Company’s investment portfolio and financial market volatility; the effects of inflation; the highly competitive nature of the Company’s industry, resulting in consolidation of competitors, customers and (re)insurance brokers, and the Company’s reliance on a small and decreasing number of brokers; the impact of large non-recurring contracts and reinstatement premiums on the Company’s financial results; the Company’s ability to attract and retain key executives and employees; the effect of cybersecurity risks, including technology breaches or failure; the Company’s ability to successfully implement its business strategies and initiatives, and the success of any of the Company’s strategic investments or acquisitions, including its ability to manage its operations as its product and geographical diversity increases; the Company’s exposure to credit loss from counterparties; the Company’s need to make many estimates and judgments in the preparation of its financial statements; the Company’s ability to effectively manage capital on behalf of investors in joint ventures or other entities it manages; changes to the accounting rules and regulatory systems applicable to the Company’s business, including changes in Bermuda laws or regulations or as a result of increased global regulation of the insurance and reinsurance industries; other political, regulatory or industry initiatives adversely impacting the Company; the Company’s ability to comply with covenants in its debt agreements; a contention by the U.S. Internal Revenue Service that any of the Company’s Bermuda subsidiaries are subject to taxation in the U.S.; the effects of possible future tax reform legislation and regulations, including changes to the tax treatment of the Company’s shareholders or investors in its joint ventures or other entities it manages; the Company’s ability to determine any impairments taken on its investments; the uncertainty of the continuing and future impact of the COVID-19 pandemic, including measures taken in response thereto and the effect of legislative, regulatory and judicial influences on the Company’s potential reinsurance, insurance and investment exposures, or other effects that it may have; foreign currency exchange rate fluctuations; the Company’s ability to raise capital if necessary; the Company’s ability to comply with applicable sanctions and foreign corrupt practices laws; the Company’s dependence on the ability of its operating subsidiaries to declare and pay dividends; aspects of the Company’s corporate structure that may discourage third-party takeovers and other transactions; difficulties investors may have in serving process or enforcing judgments against the Company in the U.S.; and other factors affecting future results disclosed in RenaissanceRe’s filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.

RenaissanceRe Holdings Ltd.

Summary Consolidated Statements of Operations

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

(Unaudited)

 

Three months ended

 

Six months ended

 

June 30,
2022

 

June 30,
2021

 

June 30,
2022

 

June 30,
2021

Revenues

 

 

 

 

 

 

 

Gross premiums written

$

2,464,639

 

 

$

2,094,158

 

 

$

5,407,603

 

 

$

4,746,600

 

Net premiums written

$

1,863,616

 

 

$

1,512,292

 

 

$

4,028,833

 

 

$

3,336,375

 

Decrease (increase) in unearned premiums

 

(407,233

)

 

 

(319,502

)

 

 

(1,086,025

)

 

 

(989,749

)

Net premiums earned

 

1,456,383

 

 

 

1,192,790

 

 

 

2,942,808

 

 

 

2,346,626

 

Net investment income

 

107,211

 

 

 

80,925

 

 

 

190,902

 

 

 

160,729

 

Net foreign exchange gains (losses)

 

(50,821

)

 

 

3,234

 

 

 

(66,307

)

 

 

(19,554

)

Equity in earnings (losses) of other ventures

 

7,383

 

 

 

8,732

 

 

 

993

 

 

 

3,174

 

Other income (loss)

 

923

 

 

 

586

 

 

 

2,116

 

 

 

2,757

 

Net realized and unrealized gains (losses) on investments

 

(654,107

)

 

 

191,018

 

 

 

(1,327,124

)

 

 

(154,545

)

Total revenues

 

866,972

 

 

 

1,477,285

 

 

 

1,743,388

 

 

 

2,339,187

 

Expenses

 

 

 

 

 

 

 

Net claims and claim expenses incurred

 

706,239

 

 

 

520,021

 

 

 

1,547,972

 

 

 

1,387,072

 

Acquisition expenses

 

361,238

 

 

 

285,590

 

 

 

737,745

 

 

 

552,824

 

Operational expenses

 

72,520

 

 

 

58,203

 

 

 

140,427

 

 

 

113,514

 

Corporate expenses

 

12,352

 

 

 

10,125

 

 

 

24,854

 

 

 

20,530

 

Interest expense

 

11,895

 

 

 

11,833

 

 

 

23,850

 

 

 

23,745

 

Total expenses

 

1,164,244

 

 

 

885,772

 

 

 

2,474,848

 

 

 

2,097,685

 

Income (loss) before taxes

 

(297,272

)

 

 

591,513

 

 

 

(731,460

)

 

 

241,502

 

Income tax benefit (expense)

 

30,534

 

 

 

(13,862

)

 

 

67,241

 

 

 

5,654

 

Net income (loss)

 

(266,738

)

 

 

577,651

 

 

 

(664,219

)

 

 

247,156

 

Net (income) loss attributable to redeemable noncontrolling interests

 

(49,331

)

 

 

(113,544

)

 

 

(37,419

)

 

 

(66,694

)

Net income (loss) attributable to RenaissanceRe

 

(316,069

)

 

 

464,107

 

 

 

(701,638

)

 

 

180,462

 

Dividends on preference shares

 

(8,844

)

 

 

(7,289

)

 

 

(17,688

)

 

 

(14,578

)

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

$

(324,913

)

 

$

456,818

 

 

$

(719,326

)

 

$

165,884

 

 

 

 

 

 

 

 

 

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

$

(7.53

)

 

$

9.36

 

 

$

(16.64

)

 

$

3.36

 

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

$

(7.53

)

 

$

9.35

 

 

$

(16.64

)

 

$

3.35

 

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

$

5.51

 

 

$

5.64

 

 

$

8.99

 

 

$

5.73

 

 

 

 

 

 

 

 

 

Average shares outstanding – basic

 

43,170

 

 

 

48,163

 

 

 

43,264

 

 

 

48,871

 

Average shares outstanding – diluted

 

43,170

 

 

 

48,226

 

 

 

43,264

 

 

 

48,940

 

 

 

 

 

 

 

 

 

Net claims and claim expense ratio

 

48.5

%

 

 

43.6

%

 

 

52.6

%

 

 

59.1

%

Underwriting expense ratio

 

29.8

%

 

 

28.8

%

 

 

29.8

%

 

 

28.4

%

Combined ratio

 

78.3

%

 

 

72.4

%

 

 

82.4

%

 

 

87.5

%

 

 

 

 

 

 

 

 

Return on average common equity – annualized

 

(25.1

) %

 

 

27.6

%

 

 

(26.6

) %

 

 

4.9

%

Operating return on average common equity – annualized (1)

 

18.4

%

 

 

16.8

%

 

 

14.4

%

 

 

8.4

%

  1. See Comments on Regulation G for a reconciliation of non-GAAP financial measures.

RenaissanceRe Holdings Ltd.

Summary Consolidated Balance Sheets

(in thousands of United States Dollars, except per share amounts)

 

 

 

 

 

June 30,
2022

 

December 31,
2021

Assets

(Unaudited)

 

(Audited)

Fixed maturity investments trading, at fair value

$

13,085,367

 

 

$

13,507,131

 

Short term investments, at fair value

 

4,429,483

 

 

 

5,298,385

 

Equity investments trading, at fair value

 

692,747

 

 

 

546,016

 

Other investments, at fair value

 

2,314,232

 

 

 

1,993,059

 

Investments in other ventures, under equity method

 

75,979

 

 

 

98,068

 

Total investments

 

20,597,808

 

 

 

21,442,659

 

Cash and cash equivalents

 

1,398,095

 

 

 

1,859,019

 

Premiums receivable

 

5,408,217

 

 

 

3,781,542

 

Prepaid reinsurance premiums

 

1,354,565

 

 

 

854,722

 

Reinsurance recoverable

 

4,206,459

 

 

 

4,268,669

 

Accrued investment income

 

75,302

 

 

 

55,740

 

Deferred acquisition costs and value of business acquired

 

1,089,426

 

 

 

849,160

 

Receivable for investments sold

 

279,442

 

 

 

380,442

 

Other assets

 

384,436

 

 

 

224,053

 

Goodwill and other intangible assets

 

240,647

 

 

 

243,496

 

Total assets

$

35,034,397

 

 

$

33,959,502

 

Liabilities, Noncontrolling Interests and Shareholders’ Equity

 

 

 

Liabilities

 

 

 

Reserve for claims and claim expenses

$

13,442,806

 

 

$

13,294,630

 

Unearned premiums

 

5,117,217

 

 

 

3,531,213

 

Debt

 

1,169,393

 

 

 

1,168,353

 

Reinsurance balances payable

 

4,385,834

 

 

 

3,860,963

 

Payable for investments purchased

 

517,753

 

 

 

1,170,568

 

Other liabilities

 

309,938

 

 

 

755,441

 

Total liabilities

 

24,942,941

 

 

 

23,781,168

 

Redeemable noncontrolling interests

 

4,352,797

 

 

 

3,554,053

 

Shareholders’ Equity

 

 

 

Preference shares

 

750,000

 

 

 

750,000

 

Common shares

 

43,881

 

 

 

44,445

 

Additional paid-in capital

 

479,085

 

 

 

608,121

 

Accumulated other comprehensive income (loss)

 

(15,168

)

 

 

(10,909

)

Retained earnings

 

4,480,861

 

 

 

5,232,624

 

Total shareholders’ equity attributable to RenaissanceRe

 

5,738,659

 

 

 

6,624,281

 

Total liabilities, noncontrolling interests and shareholders’ equity

$

35,034,397

 

 

$

33,959,502

 

 

 

 

 

Book value per common share

$

113.69

 

 

$

132.17

 

Contacts

INVESTORS:
RenaissanceRe Holdings Ltd.

Keith McCue

Senior Vice President, Finance & Investor Relations

(441) 239-4830

MEDIA:
RenaissanceRe Holdings Ltd.

Hayden Kenny

Vice President, Investor Relations & Communications

(441) 239-4946

or

Kekst CNC

Dawn Dover

(212) 521-4800

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