RenaissanceRe, the Bermuda based reinsurance and third-party capital management specialist, is working to bring investors in the AlphaCat Managers offering into its Capital Partners products, in the wake of the completion of the firms acquisition of Validus from AIG.
With the acquisition finalised as of November 1st, Artemis spoke with Chris Parry, the Global Head of Capital Partners at RenaissanceRe, to understand more about the integration process and what it means for the insurance-linked investment offering of RenRe going forwards.
Parry explained that a lot of planning went into the integration, which is well-underway.
“Our priority is always to provide the highest-quality capital management for all investors. Throughout integration planning, we focused on creating a smooth transition for new investors while also maintaining excellent service for our existing partners. I’m very pleased that we were able to accomplish this,” Parry said.
He went on to say that, “As part of the Validus Re transaction, the Capital Partners team assumed management of the AlphaCat platform and we were pleased to welcome these investors to RenaissanceRe on November 1.
“While we will no longer be offering the AlphaCat product, for investors that wish to trade forward with us, we will be working to bring them into our existing, full suite of Capital Partners products. This could be through our rated balance sheets, collateralized re or cat bond products.”
Overall, the breadth of the offering at RenaissanceRe Capital Partners, in terms of the join-venture reinsurance structures and insurance-linked securities (ILS) funds does not change.
RenRe already had a range of access points for investors, from collateralized reinsurance, to catastrophe bonds and equity investment-like quota share reinsurance vehicles, focused on catastrophe and specialty perils and Parry feels that the company is well-positioned to grow these structures next year.
“Our product offering remains unchanged,” he explained. “We will continue to offer investors the opportunity to invest in our rated balance sheets (DaVinci and Fontana), Upsilon (Collateralized Re), Medici (cat bonds).
“We expect to see further growth in the platform in 2024 and we will continue to distinguish ourselves through our access to risk, expert underwriting and strong alignment of interest with our investors.”
Going on to say that, “We expect our structure to stay the same with our investors benefiting from growth in the overall size of the business and our vehicles taking a proportional share of the newly acquired Validus business that renews from 2024 onwards. This not only provides them with greater scale but also enhanced diversification.
“This is especially pertinent given that we will be able to grow in attractive lines of business at a favourable point in the cycle.”
There are other benefits, for RenRe and its third-party ILS investors, now that the Validus acquisition is completed, with this helping to provide a platform for continued expansion.
“The Validus transaction advances our strategy as a leading global reinsurer, giving us additional scale and positioning us to be the premier broker market for P&C reinsurance,” Parry explained. “As such, our investors will benefit from greater access to risk through new lines of business, new platforms and a broader geographic footprint. In addition, we will have access to valuable new tools and a deeper pool of talent.”
Talent is a key consideration and RenaissanceRe Capital Partners has welcomed some of the former AlphaCat Managers employees into its team, both to assist with the running-off of AlphaCat funds, as well as to work on the integration and future growth opportunities.
Parry said, “I am particularly excited that we were able to bring on several talented members of the AlphaCat team. Our new team members will help maintain continuity for legacy AlphaCat investors as we ramp down the business, while also bringing additional expertise to Capital Partners.”
Among those we’ve learned have come over to RenRe Capital Partners to manage the run-off, are senior AlphaCat executives: Kevin Ronaldson (former AlphaCat CFO) who becomes SVP, Head of Operations; Christian Husby, as SVP to continue managing AlphaCat investor relations during the run-off; and Chiara Soria, as VP and Legal Counsel.
We understand that as the AlphaCat assets under management are run-off, the resources that have come over to RenRe are likely to get reallocated to assist Capital Partners in managing the growth it has experienced.
Overall, there are twelve new employees at RenRe Capital Partners after the AlphaCat integration, taking the business unit to thirty six strong.
“We were very fortunate to bring on a significant number of the AlphaCat team to support both the ramp down of the legacy business and our existing portfolio management and investor relations teams. It has been fantastic to welcome the new team following the close of the transaction. We now have over 30 professionals directly working in the Capital Partner business,” Parry explained.
With the integration of AlphaCat Managers and bringing its investors onboard happening during the fourth-quarter, we don’t yet have any visibility of how this will affect the RenaissanceRe Capital Partners assets under management at this time.
The business unit ended September 2023 with roughly $6.8 billion of third-party assets in its reinsurance ventures and ILS funds, which “represents further year-on-year growth, driven predominately by increases in both the DaVinci (rated balance sheet) and Medici (cat bond) strategies,” Parry said.
He added that, “We continue to observe a flight to efficiency (i.e., investing in the most operationally efficient vehicles) and flight to simplicity (i.e., tradable cat bond strategies).”
It will be interesting to see how the AlphaCat integration increases that, as well as the impending investment that AIG is set to make into some of the RenRe Capital Partners vehicles.
On those investments, Parry told us, “AIG remains on track to invest up to $500 million dollars in aggregate across DaVinci and Fontana. The investment is expected to be facilitated through a combination of partially selling down our shares and injecting new capital to support the growth of the respective vehicles.”
Now, we look forward to seeing how the integration of AlphaCat helps the Capital Partners team take their ambitions to the next level, with the additional scale and opportunity set to benefit the long-standing investors behind the platform, as well as any new ones that make the move across to RenRe Capital Partners strategies from the legacy AlphaCat ILS funds.