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RenaissanceRe, the Bermuda based reinsurance company and third-party capital manager, has reported raising almost $238 million in additional third-party capital from investors for some of its ILS structures in time for the 1/1 renewal season, while over the course of 2024 investors benefited from strong earnings from joint-ventures and ILS funds.
Over the course of 2024, RenaissanceRe raised $857.4 million from investors for its range of reinsurance joint-ventures and insurance-linked securities (ILS) fund strategies.
But, last year RenRe actually returned more capital than it raised, as investors benefited from distributions thanks to reinsurance JV and ILS funds performing well and delivering strong earnings to them.
In terms of capital raised in calendar year 2024, RenRe reports that $300 million was raised for the DaVinci Re equity backed sidecar-like reinsurer, while the PGGM backed rated reinsurer Vermeer Re took in $175 million and the casualty and specialty ILS structure Fontana took $100 million.
2024 capital raising was a little down on the prior year, when RenRe’s Capital Partners structures took in around $1.2 billion of fresh capital from investors.
But this is likely more a function of right-sizing the different JV’s and ILS funds, rather than anything else.
For the second year running, returns of third-party capital, through earnings distributions and redemptions, outpaced new capital raised in 2024.
Some $1.4 billion of capital was returned across the full-year, with $396.9 million of distributions from DaVinci, Vermeer, Medici and Top Layer Re thanks to strong earnings across these vehicles.
In addition, the Upsilon collateralized reinsurance and retrocession structure returned $332.9 million to investors after trapped collateral was released over the course of the year.
In addition, there were some redemptions as third-party investors rebalanced portfolios largely due to the strong earnings they were generating.
Capital raised in time for the 1/1 January 2025 renewal season was down year-on-year, again likely due to the structures needing to remain right-sized to the opportunity and versus RenRe’s own balance-sheet.
Some $237.8 million was raised across the DaVinci joint-venture reinsurance company, the Medici catastrophe bond fund strategy and the Fontana casualty/specialty lines JV.
In addition, $99 million of capital was returned to investors from DaVinci and Fontana, RenRe reported.
Redeemable noncontrolling interests, which is one measure of third-party capital utilised at RenRe, rose from $6.1 billion to almost $6.98 billion over the course of 2024. It’s important to note that this is not total third-party capital AUM, but it does show RenRe continued to expand its third-party capital and ILS strategies over last year.
Recall that RenR’es third-party capital and ILS AUM reached $7.72 billion after Q3 2024.
Reflecting the very strong earnings generated for third-party and ILS investors in 2024, RenaissanceRe reported net income attributable to redeemable noncontrolling interests of $170.4 million for the fourth-quarter, and a very impressive $1.1 billion for the full-year.
DaVinci and Vermeer were particularly strong performers, RenRe noted, alongside gains in the Medici catastrophe bond fund portfolio.
The full-year figure could have been even higher were it not for some losses being shared with third-party investors in the final quarter of 2024, with around $186.7 million in large losses shared over the full year, more than half of which came from hurricanes Helene and Milton.
Finally, fee income, a measure of the growing scale and also the profitability of the reinsurance joint ventures and ILS funds under management by RenaissanceRe Capital Partners.
For the fourth-quarter of 2024, the fee income generated reached $77.1 million, which was up 8.9% from Q4 2023. Both management and performance fees were up year-on-year.
For full-year 2024, fee income for the third-party capital and ILS business reached $326.8 million, which was up by an impressive 38% year-on-year.
Management fee income increased by $43.3 million to $219.86 million in 2024, while performance fee income increased $46.7 million to over $106.9 million.
Growth in joint ventures and ILS funds, as well as earnings of some deferred management fees from prior years, plus the very strong performance achieved in 2024 have all driven these increases.
The $326.8 million of fee income for the full-year is now a significant and growing proportion of annual income for RenaissanceRe.
But, it’s important to remember that RenRe benefits from more than just the earnings of its third-party capital management.
The significant third-party capital AUM is additional underwriting firepower, helping the reinsurance company enhance and elevate its relevance and position in the marketplace. While also acting as a kind of leverage for its own equity balance-sheet, enabling the company to do much more with it. While also allowing RenRe to better optimise its risks across multiple balance-sheets with different risk/return appetites.
View information on many dedicated ILS fund managers, as well as reinsurers offering ILS style investment opportunities, such as RenaissanceRe’s Capital Partners, in our Insurance-Linked Securities Investment Managers & Funds Directory.
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