RenRe’s third-party AuM hits $6.8bn thanks to Fontana & fresh capital

RenaissanceRe, the Bermuda-based reinsurance firm and third-party capital management specialist, saw its external capital under management rise to $6.8 billion by the end of April, helped by the launch of its Fontana Holdings casualty / specialty lines joint venture and some other additional fund raising.

At January 1st 2022, RenaissanceRe (RenRe) reported its third-party capital assets under management sat at around $6.3 billion.

During this year so far, as we previously reported, the reinsurance firm had raised significant new capital, some of which has gone to replace outflows and also capital lost to catastrophe events.

The company said that it raised $786.3 million during the first quarter of 2022, $576.6 million from third-party investors backing RenRe’s range of insurance-linked securities (ILS) funds and joint venture reinsurance vehicles, while $209.7 million came from the reinsurer itself.

Then, at the start of the second-quarter, RenRe had added $475 million of capital committed for its recently launched Fontana Holdings casualty and specialty lines JV vehicle, of which $400 million had already been funded, $273.7 million from third-party investors and $126.3 million from RenRe.

On top of that, RenRe had also raised additional funds for its catastrophe bond focused strategy, Medici, with another $147 million raised for the vehicle after Q1 ended, including $10 million from RenRe.

The upshot of all of this additional capital is that RenRe has now told us that the third-party shares of its range of ILS and joint venture reinsurance investment vehicles stood at $6.8 billion as of May 1st, a new high for the reinsurer and up roughly 8% in 2022 so far.

When you consider that RenRe’s own balance-sheet was made up of shareholder’s equity valued at around $6.6 billion at the start of this year, it’s clear third-party capital is starting to be the larger contributor of raw capital, although of course the balance-sheet leverage still means the equity goes further when it comes to underwriting.

As well as the roughly $6.8 billion of third-party capital, RenRe’s range of ILS structures and reinsurance joint venture vehicles also contain another $1.4 billion of capital from RenRe itself, taking their total size to $8.2 billion.

Add on the $4 billion of capital from State Farm supported reinsurance joint-venture Top Layer Re, and RenRe’s managed capital business counted an impressive $12.2 billion of capital by the end of April.

That’s significant underwriting firepower and a major contributor to RenaissanceRe’s earnings, through the fee income delivered for managing the third-party capital and the structures themselves, the less easily measured benefits this gives RenRe in being able to write certain areas of the risk tower less suited to its balance-sheet, and the stature it provides the reinsurer in the market by enabling it to do much more and be far more helpful to clients.

When you consider RenRe’s own CEO said he expected ILS investor scepticism would be high through 2022, the additional capital and launch of new ILS opportunities at the company is all the more impressive.

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