RenaissanceRe raised $566m third-party capital, fee income rose 87% in Q1 – Artemis.bm


RenaissanceRe, the Bermuda based reinsurance and third-party capital management specialist, raised almost $566 million of third-party capital in the first-quarter of 2024, to further expand its range of ILS funds and reinsurance joint-venture vehicles, while the fee income earned by this business soared 87% in the quarter.

It’s a strong start to 2024 for the RenaissanceRe Capital Partners team, that oversees and manages third-party investor capital at the Bermuda based reinsurer, as well as its joint-venture initiatives.

Fresh capital was raised across a number of the RenRe Capital Partners structures, including reinsurance joint-ventures focused on property and catastrophe, as well as casualty and specialty, plus the firm’s growing catastrophe bond fund.

Of the $565.7 million of partner capital raised in the first quarter of 2024, the DaVinci joint-venture reinsurer that operates a little like a rated sidecar structure saw $300 million in new capital, the Fontana casualty and specialty lines joint-venture added $100 million and the Medici catastrophe bond fund benefited from $145.7 million of inflows in the period.

We believe this capital raising means the Medici cat bond fund may now have surpassed $2 billion in assets under management for the first time, including RenaissanceRe’s stake in the cat bond strategy.

It’s also assumed that the sum of capital raised in Q1 includes the $350 million allocation that AIG has made to the DaVinci Re sidecar-like but equity backed reinsurance joint-venture structure and the newer casualty and specialty joint-venture Fonatana Holdings.

Performance from the strong returns of 2023 are now benefiting both RenaissanceRe and its third-party ILS investor base, which has resulted in some significant returns of capital as well.

The reinsurance firm said that it returned $701.2 million of partner capital during the first quarter of 2024, which included $390.7 million of distributions from the DaVinci Re, Vermeer Re, Medici and Top Layer Re structures after the strong earnings these vehicles experienced in 2023.

The profitable underwriting year of 2023 is also visible in RenaissanceRe’s fee income, with a significant increase to performance fees earned.

At the same time, management fee income has also risen again, helped in part by the inclusion of some fees earned for the AlphaCat ILS fund strategies that came with the acquisition of Validus from AIG.

For the first-quarter, performance fees earned by the RenaissanceRe Capital Partners business soared to almost $27.5 million, significantly higher than the prior years almost $3.9 million.

Management fee income was also higher, at just over $56 million for the quarter, up on Q1 2023’s $40.9 million.

Overall, fee income earned through the insurance-linked securities (ILS) and reinsurance joint-venture businesses at RenaissanceRe came in at $83.6 million for Q1 2024, which was some 86.6% higher than the prior year.

The growth in management fees is thanks to the steady growth of strategies managed, with fresh capital added to at least some of the ILS strategies and joint-ventures almost every single quarter over recent years, in particular DaVinci Re, Fontana and the Medici cat bond fund.

Performance fees soared thanks to the improved underwriting results from 2023 and prior year favourable development, primarily driven by DaVinci, RenRe said.

It’s also notable, that for the first-quarter of 2024, RenaissanceRe reports that net income attributable to redeemable noncontrolling interests reached $244.8 million.

This was driven by the strong underwriting results in DaVinci and Vermeer and net investment income and higher yielding assets in the investment portfolios of its joint ventures and managed ILS funds.

Finally, the year started well for RenaissanceRe in underwriting terms as well, with the company reporting a $1.2 billion increase in gross premiums written, thanks in part to the renewal of what was the Validus book of business.

The property book grew by $585.7 million, or 44.9% and the combined ratio for property business was only 42.9%. Property catastrophe business in particular grew by $412.5 million.

It resulted in over $534 million of underwriting income from the property book at RenaissanceRe, which suggests strong underwriting results for the joint-ventures and attractive returns for the ILS funds too.

Read more on RenaissanceRe’s Q1 2024 results over at our sister publication Reinsurance News.

View information on many dedicated ILS fund managers, as well as reinsurers offering ILS style investment opportunities, such as RenaissanceRe, in our Insurance-Linked Securities Investment Managers & Funds Directory.

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