RenaissanceRe, a Bermuda-based reinsurance company and third-party capital management specialist, added $568 million in premiums to its insurance-linked (ILS) and auto-linked insurance products in the second quarter of the year.
Most of this went to the recently launched casualty and specialty reinsurance lines focused on Fontana’s affiliated vehicles, while the Medici fund, which focuses on disasters, accounted for all the new funds raised.
Of the $567.7 million of new ILS and combined vehicles raised in the second quarter of 2022, RenaissanceRe (RenRe) said $431.4 million came from third-party investors, while the remaining $136.3 million was its share of the draw. .
RenRe’s third-party assets under management, in ILS managed mutual funds or vehicles, reached $6.8 billion in the quarter.
Announcing its results last night, RenRe also revealed strong underwriting growth, with a 23.2% increase in total underwriting, while the Casualty and Specialty segment grew 37.6% and Property 10.5%.
A large financial write-down affected the overall results, as the effects of a major environment characterized by rising interest rates and lower inflation led to a $654 million net loss and non-recurring in the sector.
The result is a financial loss due to shareholders of $ 324.9 million, despite the fact that the business was very successful.
We will see many of the biggest business filings in the next few years for the insurance and insurance industry.
Had it not been for the write-down, RenRe’s results would have been solid, as $316.4 million in write-downs were earned, along with $34.3 million in fees and $107.2 million in net acquisition costs during Q2.
Kevin J. O’Donnell, President and Chief Executive Officer, commented on the results, “We reported a strong quarter, with continued top line growth and operating profit reflecting the strength of our differentiated platform. Our financial results were driven by strong operating performance. in both areas, a significant increase in income and growth of Capital Partners’ business.
“We are pleased with our 18.4% annualized return on common equity in the sector, and we are confident that our consistent strategy, leadership in encouraging markets and strong liquidity will enable us to continue to grow the stock.”
The company said it saw “new opportunities” particularly in the recovery of the financial crisis, during the quarter, which helped to increase the growth of assets.
RenRe also cited “cost control” in the property business, which will ultimately benefit ILS and its affiliates.
The incidence of accidents appeared to be slightly higher in Q2 2022, than in the previous period, which slightly disappointed the written results by raising the combined ratio to 57.6%, from 43.8% in the previous year, for the RenRe writing segment.
One factor helping RenRe this quarter, is the managed funds in its reinsurance vehicle and the retrocession upsilon is now significantly lower than a year ago.
A corresponding reduction in management fees from Upsilon and other reduced insurance products, contributed a modest benefit to the consolidated ratio this year.
Fees, derived from ILS, contracts and other services managed by a third party at RenRe, decreased slightly year-on-year, at $30.7 million in Q2 2022, down from $31.97 million.
Management fees decreased due to the lower cost of the Upsilon vehicle, reducing the reinsurance activity, while it was offset by the increase in funds managed by RenRe’s equity structured sidecar such as reinsurer DaVinciRe Holdings Ltd., its joint-venture (with PGGM) rated Vermeer Reinsurance. Ltd., his Medici fund-raising cat group, and his private equity vehicle Fontana Holdings LP.
But it was operating income that took the biggest hit, as the impact of the disastrous 2021 loss continues to affect RenRe’s earnings from its third-party capital.
Operating income for Q2 2022 was just $3.55 million, down from about $14.2 million last year.
On operating income, the company said, “Operating income continues to be affected by the write-downs caused by weather damage in 2021 at this time, although it is less than in the recent past.”
In addition, strong underwriting at DaVinci and Vermeer, as well as better managed funds helped drive $49.3 million of net income attributable to non-controlling interests at RenRe affiliates.
But there was a blow to Medici’s investors, as RenRe reported a foreign exchange loss of $50.8 million, which it said was driven by losses caused by third-party investors at Medici.
RenRe’s income from various insurance groups (ILS) and other third-party institutions was higher in Q2 2022 than the previous quarter, indicating a gradual recovery from the loss-making work of previous years. the impact of construction.
As a result, it will be interesting to see how the project progresses, although the storm and any new risks may disrupt the recovery before we see the full potential of RenaissanceRe’s Capital Partners business.