Bermudian reinsurance firm and third-party capital manager RenaissanceRe has grown its insurance-linked securities (ILS) and managed capital assets to an impressive $3.6 billion, thanks to growth in some of its ILS fund strategies and the launch of the new Langhorne Re venture.
Of the near $3.6 billion of total assets managed within reinsurer RenaissanceRe’s Ventures unit, specifically by the RenaissanceRe Underwriting Mangers, Ltd. and RenaissanceRe Fund Management Ltd. entities, almost $2.2 billion is from third-party investors, largely institutional in nature, as of February 1st 2018, we understand.
Interestingly, the now $3.6 billion of managed capital is approaching the size of RenaissanceRe’s own shareholders’ equity, which stood at $4.4 billion at the end of 2017.
This demonstrates a shift that many reinsurers are only beginning to undergo now, but which RenRe has been undergoing for over a decade now.
With the use of other capital sources, supplemental balance-sheets and direct access to the capital markets, to complement their own capacity, which eventually could see the companion capital (or whatever you prefer to term it) growing to be larger than their own balance-sheet equity.
RenaissanceRe has raised fresh capital for some of its third-party capital and ILS vehicles in the wake of the 2017 losses, as it saw an opportunity to expand its underwriting in some areas of the property catastrophe market.
Among these were an expansion of the Upsilon collateralized reinsurance and retrocession vehicle, which now stands at $800 million of capital in terms of limit deployed, of which $695 million is from third-party investors.
The company also expanded its Medici ILS fund strategy for the January renewals as well, growing the RenaissanceRe Medici Fund Ltd., an insurance-linked securities (ILS) strategy that invests across the spectrum of insurance and reinsurance linked assets, including catastrophe bonds, but predominately in property catastrophe risks, to $450 million, with $370 million of that sourced from third-party investors.
DaVinci Re, the third-party capitalised underwriting vehicle that operates a little like a sidecar, sat at $1.4 billion, with $290 million of third-party capital at Feb 1st, after some fund raising had been undertaken later in 2017.
The new life and annuities joint venture vehicle Langhorne Re, which will be operated in a similar style to DaVinci Re but for the life space we understand, had $780 million of capital at Feb 1st, with the majority, or $730 million, coming from institutional investors.
Finally, the Fibonacci Re vehicle, a sidecar-like vehicle that provides investors with catastrophe bond like notes, is currently $115 million in size, $105 million of which is third-party funded. This vehicle recently issued a new $70 million tranche of notes.
The growth of the joint-venture and third-party capital vehicles at RenaissanceRe demonstrates the more attractive underwriting environment, as well as the growing importance of the role these efficient underwriting vehicles play for the reinsurer.