Capital Partners an “important source of resilience” for RenaissanceRe: CEO O’Donnell

RenaissanceRe’s third-party capital and insurance-linked securities management unit Capital Partners is considered an “important source of resilience” for the company and a key differentiator, especially for clients that “value, scale, reliability and flexibility,” according to CEO Kevin O’Donnell.

Speaking during RenaissanceRe’s first-quarter earnings call yesterday, O’Donnell explained that the RenaissanceRe Capital Partners division continues to deliver as expected, driving attractive earnings through fee income that complements the reinsurer’s investment and underwriting earnings.

O’Donnell said that fee income, “Performed equally well this quarter,” saying, “We reported total fee income of approximately $94 million. Performance fees were the main driver of the upside, reflecting strong current year underwriting results and favourable prior year development.”

The CEO continued, “Capital Partners continues to be an important source of persistent and diversified earnings. It allows us to leverage our industry leading underwriting franchise to generate capital-light fees.

“This complements the income we earn on our balance-sheets, creating an additional value from our underwriting business.

“That is another important source of resilience, and remains a clear differentiator for RenaissanceRe, especially in markets where clients value, scale, reliability and flexibility.”

RenRe’s CFO Bob Qutub also discussed the important contribution of third-party and ILS capital fee income for the reinsurer, saying he anticipates the run-rate continuing.

“We generated $94 million of fees, with management fees of $48 million and performance fees of $46 million. Performance fees were higher than our expectations due to a combination of strong underwriting results, favourable development and a one-time recognition of deferred performance fees related to a return of capital by DaVinci.”

Qutub continued, “Looking ahead to the second quarter, we expect management fees to be around $50 million and performance fees will vary by quarter, but should come in around $120 million for the year, absent any large loss events or favourable development.”

As we reported yesterday, investors also opted to take profits out of some of the RenRe reinsurance joint-venture structures in the first-quarter, benefiting from the strong earnings generated in recent years.

When asked during the call whether that capital return to investors will affect fee income going forwards, Qutub commented, “That’s really a distribution. Does it affect this year’s performance? No, we’ll keep in each of the vehicles the capital we need to deploy, currently in our expectation. They had a good year in 2025 you can see the NCI (noncontrolling interest) was $900 million plus that we earned. We’re returning some of that back to the investors in those funds. So I think that’s a good thing.”

CEO O’Donnell further clarified, “The vehicles are about the same sizes, this year as last year. So this is really just returning earnings, and it’s our normal process. We do it every year.”