RenRe raises $132m of new capital for Medici ILS and cat bond fund

RenaissanceRe, the global reinsurer and third-party reinsurance capital manager, had raised $132 million of new capital for its largely catastrophe bond focused insurance-linked securities (ILS) fund Medici through April 1st this year.

RenaissanceRe (RenRe) has had a lot of success in raising new funds for its range of ILS and collateralized reinsurance funds and structures over the last couple of years.

The company had raised some $730 million of new capital in time for the January reinsurance renewals this year, adding assets to its collateralised reinsurance and retrocession focused Upsilon RFO Re Ltd., the third-party capitalised and market facing reinsurer DaVinciRe Ltd. and its most cat bond focused RenaissanceRe Medici Fund Ltd. strategy.

That took the firm’s third-party assets under management of its RenaissanceRe Capital Partners unit to $6.4 billion earlier this year.

But, with catastrophe bond market issuance remaining elevated and opportunities to deploy more capital into this segment evident, RenRe has raised additional funds through the first few months of the year to enable it to capitalise on opportunities for its Medici ILS fund strategy.

RenRe raised $28 million in the first-quarter of the year for the Medici fund strategy and then added a further $104 million at April 1st.

On the back of that, CFO Bob Qutub recently explained that this additional investment from third-parties has now reduced RenRe’s ownership stake in Medici to 13.7% as of April 2021, down from 15.4% at March 31st.

The Medici ILS fund had roughly $863 million of assets as of January 1st 2021.

With Medici’s non-controlling interest balance reported as $737.7 million as of March 31st, it’s likely that including RenRe’s share the Medici cat bond focused ILS fund strategy will now be bigger than $900 million.

The one uncertainty there is related to the impacts of US winter storm Uri in the first-quarter, as RenRe had reported some investment losses and a reduction in net income for Medici, which is no surprise given the impacts to certain catastrophe bonds from that freezing and severe winter weather event.

With catastrophe bond market activity remaining elevated through the second-quarter so far, we’d expect RenRe to easily deploy the additional funds raised for Medici and perhaps to raise some more to increase its participation in recent cat bond issuance.