RenRe already recaptures management fees deferred due to California wildfires: Execs

The executive leadership of Bermuda headquartered reinsurer RenaissanceRe have explained during an earnings call that the company has already recaptured most of the third-party reinsurance capital management fee income that had been deferred after the California wildfire loss activity experienced earlier in 2025.

Speaking about the RenaissanceRe Capital Partners division, where the investor-backed reinsurance joint-venture and insurance-linked securities (ILS) funds are managed, the firm’s CEO and CFO highlighted that fee income has already been unlocked from the significant catastrophe loss event that occurred in January.

The California wildfires had dented the performance of many across the reinsurance and insurance-linked securities (ILS) industry, something RenaissanceRe acknowledged in its first-quarter reporting.

At that time in April, RenaissanceRe reported that the California wildfires resulted in losses being shared with third-party investors and also dented the firms fee income for the Q1 2025 period.

But, in reporting its second-quarter 2025 results yesterday, RenRe reported a bumper amount of fee income for the period, which in the comments made during the earnings call yesterday afternoon was explained as due to both strong quarterly performance as well as the unlocking of deferred fees from Q1.

RenRe CEO Kevin O’Donnell explained, “Just one quarter after the California wildfires, fees have reset to normal levels, and we have already recaptured management fees deferred from last quarter.”

Later in the call he reiterated it by saying that, “Our Capital Partners business has recovered to its full fee generating potential and continues to contribute substantial low volatility earnings to our bottom line.”

Going into more detail O’Donnell explained, “We had a strong second quarter, it tends to be a light cat quarter that is not necessarily what’s budgeted. So we had greater earnings and greater catch up on our fees because of that, and then obviously favourable development benefited our third party capital vehicles as well, so that pushed us to recover some of the deferred fees more quickly.”

This favourable development has likely also unlocked some capital that may have been trapped due to the California wildfire activity, while also allowing investors to benefit from performance that has now recovered for affected contracts, we suspect.

RenRe’s CFO Bob Qutub further explained, “The management fee, we expected the deferral to be a little bit longer. But we got it all back.”

Qutub also noted that, “The favourable development on the property cat side accelerated the ability to earn the performance fees.”

The CFO further explained during the call, “Given our strong underwriting results and significant favourable development this quarter, we recaptured the majority of management fees that were deferred as a result of the California wildfires in the first quarter. This also resulted in earning performance fees earlier in the quarter than expected.”

The fact fee income has already been unlocked and flowed to the benefit of RenaissanceRe (RenRe) and its shareholders, while positive development on those wildfire affected positions will have flowed to the benefit of third-party investors, likely also reads-across positively to the rest of the ILS market, where trapped capital may be freeing up more quickly after the wildfires than we’d seen from other significant catastrophe events.

We’ve heard of collateralized reinsurance focused ILS funds already unlocking some trapped capital that had been affected by wildfires, so we suspect this trend could be more widely spread across the market.

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