RenaissanceRe (RenRe), the Bermuda headquartered global reinsurance firm, saw its third-party capital assets under management remain relatively flat at $6.4 billion over the first six months of 2021, but a change in the allocation mix reflected industry trends and investor appetite for catastrophe bonds.
RenRe had reported to us that its third-party capital under management across insurance-linked securities (ILS) and joint-venture structures was just slightly under $6.4 billion at the start of the year.
Over the course of the first-half of 2021, the mix of assets has changed slightly, but overall third-party capital managed across the vehicles by the RenaissanceRe Capital Partners unit stood at $6.424 billion as of June 30th, representing just a $52 million increase over the first-half.
Of course, most of the growth experienced by RenRe was around the January renewals, when it lifted its third-party and ILS capital assets to a new high.
The June 30th figure is again a new high, but it shows that the company has restrained from raising too much capital into certain vehicles, as it looked to right-size capital to the opportunity presented to it.
Which brings us onto the change in mix, as RenRe’s assets under management seem to reflect the broader trend in the ILS industry, of capital shifting towards catastrophe bonds and more transparent, or predictable, structures over the first-half of 2021.
Reflecting the shift in investor priorities and focus this year, RenRe’s RenaissanceRe Medici Fund Ltd., which invests in catastrophe bonds and other reinsurance-linked assets, has grown from $729 million of assets under management at January 1st, to $879 million at June 30th 2021.
That’s a 21% increase in AuM for the largely catastrophe bond focused Medici fund strategy managed by RenRe.
Conversely, the collateralised reinsurance and retrocession focused Upsilon RFO Re Ltd. and the Upsilon ILS fund strategy, declined in AuM from $2.06 billion at January 1st down to $1.892 billion as of June 30th this year, an 8% decline.
Of course, timing could also have a lot to do with these shifts, as the retrocession book written on a collateralized basis for Upsilon will largely be a 1/1 renewal item.
Where as Medici has been able to capitalise on the very active catastrophe bond market through the first-half of 2021, to bring in fresh investor assets and grow its size.
As ever, RenaissanceRe kept its shares in these two ILS fund strategies, which amount to $271 million for Upsilon and $136 million for Medici at the mid-point of the year.
Which put Upsilon at $2.163 billion as of June 30th 2021 and Medici at $1.015 billion.
That’s a record size for the catastrophe bond focused Medici ILS strategy, while Upsilon remains close to its highs.
There will likely be opportunities to further expand the Upsilon strategy towards the end of this year and may have been some opportunities around the July renewals we imagine, as some retrocession and collateralized reinsurance is transacted then.
Including all of RenRe’s shares, across its third-party capital managed ILS funds, reinsurers and joint-ventures, total assets reached $11.541 billion at the mid-point of 2021.
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