RenaissanceRe third-party capital AUM hits $6.85bn on cat bond growth

RenaissanceRe saw its third-party investor capital assets under management (AUM), dedicated to its property and casualty reinsurance business, rise by $250 million during the second-quarter of the year, to reach a new high of $6.85 billion.

It was a quarter of slightly slower growth for RenaissanceRe, as the firm had raised significant new investor funds for its reinsurance joint-venture vehicles and insurance-linked securities (ILS) funds earlier in the year.

The first-quarter of 2023 saw RenRe’s third-party capital assets under management (AUM) rise by $400 million, to reach just slightly under $6.6 billion in assets managed, at March 31st.

But, more impressive perhaps is the fact that end of year 2022 fund-raising from investors, plus the additional fund-raising successes in 2023, have now seen RenRe’s third-party capital AUM for its JV’s and ILS funds increase by $1 billion since the end of last year.

While RenRe had raised an impressive $350.5 million of new capital from investors largely for catastrophe bond strategies during the second-quarter of 2023, with some churn elsewhere, the total AUM only increased by $250 million in the quarter.

The Upsilon collateralized reinsurance and retrocession focused ILS fund structure saw its third-party investor capital dip below a billion for the first time in more than three years, ending Q2 2023 at $880 million of capital from third-party investors, and at $1.01 billion including RenRe’s co-investment share.

Interestingly, despite the very attractive reinsurance market conditions, RenRe’s DaVinci Re equity backed sidecar-like reinsurer saw its third-party capital shrink slightly from $2.48 billion to $2.42 billion, but RenRe right-sized the vehicle by adding a little more co-invest, which saw DaVinciRe grow overall to $3.23 billion, up from $3.14 billion a quarter earlier.

The other RenRe JV and ILS vehicles were relatively flat in all, with the catastrophe bond strategies the main source of AUM growth, as Medici grew by $270 million to reach $1.73 billion in Q2 2023, and a new segregated account focused on cat bonds for an investor added a further $150 million.

Now, at the middle of 2023, if you add up all the RenRe JV and ILS vehicles, so DaVinciRe, Upsilon, Vermeer, Medici, Fontana and this new segregated account, the total third-party investor sources AUM sits at $6.85 billion, but adding in RenRe’s co-invest takes the capitalisation to $8.12 billion, up $312 million on the end of Q1.

It’s also notable that the capitalisation of RenRe’s Capital Partners structures is now above the firms shareholder equity (~$7.4bn) and that’s without taking into account the additional $4 billion of capital in the State Farm backed Top Layer Re JV.

Given the significant rise in fee income earned by RenRe from its ILS and third-party reinsurance capital management activities, it’s clear the continued growth is only going to see the fee contribution increasing, making the performance of this part of the RenRe business more important to earnings each quarter.

You can see more details about the individual vehicle and fund assets under management in the RenaissanceRe Capital Partners entry in Artemis’ Insurance-Linked Securities Investment Managers & Funds Directory.