RenRe’s Medici ILS fund grows to $284m, Upsilon shrinks further in Q3

by Artemis on November 8, 2016

RenaissanceRe (RenRe) has continued to expand its Medici ILS fund offering which now has assets under management of $284 million, while its Upsilon retrocessional reinsurance focused fund continued to shrink in the third-quarter of 2016 as a response to market conditions.

The Bermuda-headquartered reinsurance firm and third-party, or ILS, capital manager takes a careful approach to its ILS fund offering, adjusting their size based on just how attractive RenRe feels opportunities are in that area of the market.

In the last quarter the company continued to increase the size of the RenaissanceRe Medici Fund Ltd., which is an insurance-linked securities (ILS) fund that invests across the spectrum of insurance and reinsurance linked assets, including catastrophe bonds, predominately in property catastrophe risks.

Meanwhile the reinsurers Upsilon ILS funds, which are focused on the per-occurrence and aggregate retrocessional reinsurance market, have continued to shrink in response to market conditions that RenRe has previously said were unattractive.

During the first nine months of 2016 the RenaissanceRe Medici Fund Ltd. grew its third-party assets under management from approximately $115m to $181m, helped by new third-party investor subscriptions of almost $79m while redemptions equalled just $21.7m.

RenRe has a 36.4% ownership stake in the Medici ILS fund, which is approximately $102m and the ILS fund had total assets under management of $284m at the 30th September 2016.

So clearly RenRe continues to find attractive collateralized reinsurance and catastrophe bond opportunities that have enabled it to raise additional third-party capital investors during 2016.

Meanwhile, the Upsilon RFO vehicle, which we understand to be the underwriting vehicle behind the Upsilon Collateralized Fund and RenaissanceRe Diversified Fund (collectively known as the Upsilon Funds), shrank during the first three-quarters of 2016.

The Upsilon ILS funds had total assets under management of $250.6m at the end of 2015, but that reduced to $215.4m at the end of September 2016.

RenaissanceRe has a 28.9% participation in the risks underwritten by Upsilon which is included in the above figures, which is up from the 21.7% participation at the end of 2015.

So RenRe continues to seek to operate in the best interests of its third-party investors, adjusting the size of its ILS fund offerings depending on the attraction of opportunities in the marketplace.

Clearly the Medici ILS strategy is the one where right now RenaissanceRe still feels reinsurance pricing is sufficient to encourage new inflows of capital, whereas for its position on the retrocession market does not seem to have changed, as evidenced by further downsizing of Upsilon.

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