interest rates. Looking forward, however, our investment portfolio is positioned to benefit from increasing interest rates. While rising rates would have an initial negative mark-to-market impact on our investment portfolio, due to our relatively low duration, we would expect to more than recoup these losses over time through reinvestment in higher yielding securities. CLIMATE CHANGE Given the multiple weather-driven natural catastrophes the world experienced this year, climate change continues to be an important issue. The academic research as well as the recent Intergovernmental Panel on Climate Change (IPCC) 6 th Assessment Report are aligning to a more unified view of how and when the climate is likely to change. We share the IPCC’s view, which is consistent with the way we reflect climate risk in our models. For almost two decades, we have invested heavily to understand the influence of climate change on the weather and its effect on the risk we take. RenaissanceRe Risk Sciences is the culmination of this investment. It provides us with a significant competitive advantage in assessing the impact of climate change, and allows us to continuously update our models to reflect the latest science. But while climate change clearly drives weather, how much of the volatility experienced in the last few years is directly related to it? As with most real-world phenomena, the answer is a complex mix of interrelated causes. It is hard not to see the fingerprints of climate change when looking at the many record-breaking events of the last five years. But we also know that there are other environmental influences at work that result in alternating active and quiet periods for hurricanes and other climatic events. An equally important influence on recent volatility has been the impact of social inflation. As much as storms are getting stronger and more frequent, which we can model for, social inflation and outright fraud are also increasing loss costs in ways that are much more difficult to quantify. Building cost inflation – as well as the continuation of the social inflation we saw in Hurricane Irma in 2017 – are both playing a larger role in the cost of catastrophes in the United States and beyond. So, while we actively adjust our view of hurricane risk for the influence of climate change, we also reflect the impacts of social and building cost inflation when modeling and building our portfolios. II. Purpose and ESG Strategy PURPOSE, VISION AND MISSION During 2021, we adopted a Purpose Statement and updated our Vision and Mission statements. Having a clear and concise understanding of our purpose, vision and mission is the foundation of our consistent strategic approach. Our purpose is quite literally why we exist, and by adopting a strategy clearly tailored to reflect this purpose, we are able to maximize our utility to stakeholders. While our purpose captures who we are, our vision and mission demonstrate how we are uniquely positioned to fulfill our purpose more effectively than our competitors. The aggregate of our purpose, vision and mission defines the value proposition that enables us to deliver superior returns for our shareholders. Purpose Beginning with purpose – this is the answer to the question of “What is our value to the world?” For RenaissanceRe, our purpose is to “protect communities and enable prosperity.” Much is resident in this brief statement. At the most basic level, we provide protection against fortuitous losses, most notably from natural catastrophes, by assuming the largest and most difficult to insure risks in society. Shifting a risk from the vulnerable to the resilient has broad, macroeconomic benefits, as well as potentially facilitating the internalization of harmful negative externalities in those responsible for creating them. When catastrophic events occur, we provide the capital so insurers can pay claims to homeowners and other stakeholders to rebuild their houses and restore their communities. In addition, our products provide robust signals concerning risky behavior, which encourage safety and promote mitigation. Reinsurance also enables prosperity. It does this by encouraging a Pareto efficient allocation of capital for potential future losses. As I have explained in previous Letters to Shareholders, this is the ideal balance between undersaving and oversaving, which maximizes capital available for other productive purposes in society, while minimizing the risk of uninsured economic loss (which is the protection gap). The result is the Goldilocks scenario of an economy making the most of its resources (prosperity) while simultaneously preparing for potential disasters (protection). I passionately believe our purpose engenders great social utility and find it indispensable in guiding our strategy. Vision Vision answers the question, “What is our longest-term goal as a firm?” Our vision is “to be the best underwriter.” We wanted a vision statement that was memorable, repeatable, and understandable, one that would resonate with our stakeholders, and most importantly with our employees. I believe our vision statement is at the same time aspirational and grounding; aspirational in that it is an enduring vision which requires constant maintenance; grounding in that it serves as a firm guidepost for day-to- day decision making. In every choice at RenaissanceRe, a foundational consideration must be “Does this further our vision of being the best underwriter?” If not, why are we considering it? Mission Mission answers the question “What do we do on behalf of our customers and investors?” Our mission is “to match desirable risk with efficient capital.” This aligns neatly with our vision “to be the best underwriter,” as we believe that the best underwriter most effectively matches desirable risk with efficient capital. Our mission also bridges the gap between two important stakeholder groups: the purchasers of reinsurance and the providers of capital. It puts them on an even footing and reinforces the need to serve their interests equally. Our mission statement intentionally leads with desirable risk, which we believe should always be the starting point for the best underwriter. It is only after we have identified and quantified risk, and calculated its desirability, that we endeavor to match it with efficient capital. The inverse, beginning with capital against which one must then allocate risk, often results in sub-optimal returns to investors. The second half of our mission statement addresses efficient capital – which to us means the capital most readily able to bear a particular risk. We think of capital broadly. It encompasses our shareholders’ equity as well as the third- party capital in our Capital Partners business. But it extends to our preferred equity, our debt, our credit facilities, and the retrocessional protection we purchase, including catastrophe bonds. Each of these play an important role in our capital structure and balancing them efficiently reduces our overall cost of capital, helping us approach Pareto optimality while simultaneously providing a strong platform for future growth. OUR ROLE IN FACILITATING CLIMATE TRANSITION One important aspect of our purpose is the role we play in helping facilitate the world’s transition to a lower -carbon economy. Anthropogenic climate change is both an existential threat to the planet and an imminent risk to our industry, and we bear the responsibility of being part of the solution. As a reinsurance company, there are three primary means through which we can help effectuate transition to a lower -carbon world, which I have listed in order of complexity: • as an asset owner, • through our business operations, and • as an underwriter of risk. Our role as an asset owner is the least complex. As I will discuss further, we have made significant strides in decarbonizing our investment portfolio while also using it to facilitate the transition to a low-carbon world. Using our investment portfolio to promote a low-carbon future furthers our purpose of protecting communities and enabling prosperity, while also supporting our vision of being the best underwriter by helping reduce long-term climate risk to our business. 5 2021 Annual Report RenaissanceRe Holdings Ltd. Letter to Shareholders