Bermudian reinsurance firm RenaissanceRe is raising capital for its DaVinci Re Holdings joint-venture through a $150m debt issuance, with the proceeds set to repay a loan made by RenRe to the venture, to repurchase shares or for corporate needs.
The DaVinci Re vehicle is largely third-party capitalised, but RenaissanceRe has been either selling or repurchasing shares in the vehicle lately, as it has adjusted its share in the vehicle in light of the pressured property catastrophe reinsurance market where DaVinci Re underwrites its business.
The private debt offering of $150 million of 4.750% Senior Notes due 2025 is expected to close on or about the 4th May, with net proceeds being used to repay a $100 million loan from RenaissanceRe Holdings Ltd., and to repurchase DaVinci Re shares or to be retained for general corporate purposes.
Moody’s Investors Service said that it has rated the 10-year, 4.750% senior notes of DaVinciRe Holdings Ltd. at Baa2 with a stable outlook.
The DaVinci Re vehicle enables RenaissanceRe to pool third-party capital into a rated reinsurance vehicle, enhancing the reinsurers capacity and allowing it to leverage efficiencies from capital markets sourced funding.
The vehicle is seen as core and strategic to the reinsurer and as a result plays an important role in RenRe’s property catastrophe underwriting strategy. Using private debt to raise capital is just another capital tool at the disposal of the reinsurer as it optimises its use of capital sources.