AIG invested $350m in RenaissanceRe’s Capital Partners vehicles at 1/1

Insurance giant AIG made good on its promise to invest into some of the third-party capital backed reinsurance joint-venture vehicles operated by RenaissanceRe at the start of 2024, with a $350 million deployment to two structures.

The move was on the cards as a result of an agreement reached as part of RenaissanceRe’s acquisition of AIG’s reinsurance businesses under the Validus brand.

As we explained, AIG was set to invest up to $500 million into third-party capital and joint-venture vehicles run by RenaissanceRe’s Capital Partners unit.

The investment was anticipated to be made into the long-standing DaVinci Re sidecar-like but equity backed reinsurance joint-venture structure and the newer casualty and specialty joint-venture Fonatana Holdings

We later reported that RenaissanceRe (RenRe) CEO Kevin O’Donnell had said in November 2023 that this $500 million investment was still expected and at that time was on-track.

O’Donnell said the investments were  “expected to be facilitated through a combination of partially selling down our shares and injecting new capital to support growth.”

Now, it has been confirmed that AIG has invested $350 million at January 1st 2024 into the two third-party capital structures in question.

RenRe CFO Bob Qutub said today during the firm’s earnings call, “As expected, AIG invested $350 million in our Capital Partners business, effective January 1 with $300 million in DaVinci and $50 million in Fontana.”

He added that, “We facilitated most of this investment by reducing our ownership stake in DaVinci from 28% to 24%.”

So, not the full $500 million that was expected, but rather it seems a tranche of this has been deployed so far.

This is likely because RenRe carefully managed its capital, so as not to take in more than is necessary at any one time.

In fact, later in the earnings call today, it was highlighted by executives that RenRe feels its third-party capital structures are well-capitalised at this time, so it’s likely been a choice not to take on the entire $500 million from AIG in January, with plenty of the year left for the insurer to allocate the remaining $150 million.

As we reported earlier today, RenRe said it had raised nearly $495 million in new capital for January 1st, which it now seems largely came from the AIG allocation to its Capital Partners vehicles.