RenRe raises new capital for third-party and managed balance-sheets

In the wake of major losses from hurricanes and earthquakes Bermudian reinsurance firm RenaissanceRe is “fully capitalized” according to its CEO, having raised new funds for its third-party and managed balance-sheets including DaVinciRe and Upsilon RFO.

RenaissanceRe fell to a loss on the third-quarter catastrophes, reporting a net loss of $504.8 million, or $12.75 per diluted common share, for the third quarter of 2017, as catastrophe losses drove a net negative impact to the firms underwriting result of $838.7 million.

RenaissanceRe’s shareholders are not the only ones to shoulder some of the Q3 catastrophe losses, the reinsurers third-party capital investors in its range of joint-venture and managed balance-sheet vehicles have also all helped the firm to pay its losses.

Following such major disasters the most important thing for reinsurance firms such as RenaissanceRe is to be able to offer continuity to clients and to recapitalise for the renewals, something the firm says it has achieved.

Commenting on RenRe’s results, CEO Kevin J. O’Donnell commented, “This was a quarter that reminded the market of the volatility inherent in our business. We were once again able to demonstrate the benefit of being a long-term, dependable partner to our customers, paying claims rapidly and providing value beyond price. We executed well on our strategy, protected our capital, and our results were within expectations. I am proud of our team, which worked hard assessing losses, paying claims and writing new business against a background of multiple complex events.”

But importantly, O’Donnell added, “Looking forward, I am excited about the future. Our balance sheets, and those we manage, are fully capitalized and we are prepared for the opportunities we anticipate at the January 1 renewal.”

RenRe has raised new capital to help to replenish its DaVinciRe third-party capital backed reinsurance vehicle, as well as for its Upsilon collateralized reinsurance and retrocession funds.

For the third-quarter, DaVinciRe recorded a net loss attributable to noncontrolling interests in the reinsurer for the third quarter of $204.3 million, down $239.9 million principally due to large losses from the major catastrophes that hit DaVinciRe Holdings Ltd.

But RenRe has actively worked to recapitalise the vehicle, announcing an equity raise for DaVinciRe of $248.6 million from third-party investors and RenaissanceRe.

RenRe also sold $49.7 million of its shares in DaVinciRe to third-party shareholders, which reduced its economic ownership in DaVinciRe to 22.1%, as of October 1st 2017.

Additionally, RenRe has announced that it raised capital for its Upsilon RFO vehicle, issuing $46.5 million of non-voting preference shares to investors, $17.7 million of which was taken by the reinsurer and the rest third-parties. This left RenRe’s participation in the risks assumed by Upsilon RFO at 16%.

Good news for those investors and the existing ones in RenaissanceRe’s third-party capital vehicles and joint-ventures is the fact that the reinsurance firm continues to increase its managed catastrophe premiums underwritten.

The company reported that its managed catastrophe premiums grew to over $25 million for the quarter, up from $73 million in the prior year period.

For the first nine months of 2017 RenRe reported managed catastrophe premiums written of over $1.1 billion, up significantly from $905 million written in the same period of 2016.

Ceding clients will be encouraged that RenaissanceRe feels it has fully recapitalised itself and investors will be hoping to take advantage of any rise in reinsurance rates that the company can access at the upcoming January renewals.