RenRe third-party capital fee income hits record high in Q2, JV & ILS investors share in profits

RenaissanceRe, the Bermuda headquartered reinsurance company and third-party capital manager, has reported that its Capital Partners business generated record fee income from its range of joint ventures and insurance-linked securities (ILS) funds in the second-quarter of 2025, while profits shared with investors in the vehicles also rose to one of its highest levels ever.

In addition, RenaissanceRe raised a little more capital during the quarter, although at a much slower pace than we’ve been seeing of late, suggesting the company feels its ILS and third-party capital strategies are relatively right-sized for the current reinsurance market environment.

Recall that, RenaissanceRe (RenRe) reported raising almost $462 million in new third-party capital across its range of joint-ventures and insurance-linked securities (ILS) funds in the first-quarter of 2025.

In the first-quarter, the company also reported that losses from the California wildfire were shared with investors and the event dented the fee income generated for the period.

But, as we also reported, RenRe increased its third-party capital assets under management by the end of Q1 2025, with this figure reaching a new high of $7.94 billion, having risen by roughly $770 million in the year to March 31st 2025.

As a result, RenRe entered the second-quarter of 2025 with significant third-party capital firepower, alongside its own balance-sheet underwriting capital.

Which perhaps is reflected in the announcement that only $106.1 million of new third-party capital was raised in Q2 2025, although the second-quarter has always been a slower period of capital raising for the RenRe Capital Partners team, it seems.

Of the capital raised, RenRe reported that $81.3 million was within its Medici catastrophe bond focused fund strategy, although it is not specified if this was the new UCITS strategy or the offshore cat bond fund, as well as $17.5 million raised for the Upsilon Diversified ILS fund strategy, which has a collateralized reinsurance and retrocession focus.

As we saw a year ago, more third-party capital was returned than raised in the second-quarter, with further releases of trapped capital from reinsurance and retro arrangements invested in under the Upsilon ILS strategy.

RenRe reported that $216.7 million was returned in total, including $153 million to investors in Upsilon Diversified and $56.7 million in the Medici cat bond fund strategy, which shows that Medici grew further in the period as capital raised outstripped capital returned.

Total redeemable noncontrolling interests, which is one metric of third-party capital under management at RenRe, but not ever as high as its full disclosures that come later with its 10Q, rose slightly to be reported at just over $7.04 billion. But recall that this is not all of RenRe’s ILS and third-party capital, which stood higher at almost $8 billion at the end of Q1, it’s a different metric and should not be construed as its total third-party and ILS capital figure.

After having shared losses with some of its third-party capital investors from Q1, the second-quarter saw RenRe delivering significant profits to them from the underwriting performance of its joint-venture vehicles and the investment returns of its ILS fund strategies.

For Q2, RenRe reports having shared $328.3 million of net income with redeemable noncontrolling interests, the third-party capital investors, which was primarily driven by the underwriting performance of its DaVinci sidecar-like joint-venture and the Vermeer Re JV reinsurance company backed by ILS investor PGGM, as well as investment income from the JV’s and managed ILS fund strategies.

That’s the highest figure in terms of income shared with third-party investors since Q3 of 2024 and also one of the highest figures ever reported, suggesting a strong quarter of total returns for the RenRe managed JV’s and ILS funds.

It also reads-across positively for other third-party capital reinsurance and ILS strategies for the second-quarter, suggesting many investors will have experienced improved returns over Q1.

With a profitable second-quarter for the RenRe managed third-party capitalised reinsurance joint-ventures and ILS funds as well as record high assets under management in its Capital Partners business after Q1, it’s no surprise that fee income was also at a record level for the company.

RenRe reported earning $95 million of fee income from its third-party capital management and ILS fund business for Q2 2025, which was up by nearly 13% on the prior year quarter.

Management fees earned rose slightly to $56.4 million in the second-quarter, while performance fee income jumped by almost $10 million to $38.55 million compared to the prior year.

The increase in performance fees was down to the underlying underwriting results of the third-party capital structures and also some prior year net favorable development, primarily in DaVinci and Upsilon.

RenRe noted that its management fee income “remained consistently strong.”

The overall fee income figure generated through the third-party capital reinsurance JV’s and ILS funds of almost $95 million is a new record quarterly high for RenaissanceRe, beating the previous high of just over $84 million from Q2 2024 by nearly $11 million.

This reflects the higher third-party capital assets under management across the vehicles, as well as the strong performance and positive reserve releases generated in Q2 2025 by the RenRe Capital Partners business.

Commenting on the second-quarter performance, Kevin O’Donnell, President and Chief Executive Officer, said, “We delivered outstanding results this quarter, reporting 24.2% annualized operating return on average common equity and 10.4% year-to-date growth in tangible book value per common share plus change in accumulated dividends. Underwriting and fee income reached record highs, and investment income remained near peak levels.

“At the mid-year renewals, our partnership approach and ability to provide lead quotes and increased capacity to our customers enabled us to grow into attractive property catastrophe opportunities at rates and terms that outperformed the broader market. Our performance this quarter reflects the continuing strength of our business and the powerful execution of our team. As we look forward, the strength of our earnings base combined with persistent favorable underwriting and investment environments position us to continue delivering substantial value for our shareholders.”

In Q2, RenRe grew its underwriting in the catastrophe class of business by $98.1 million in gross premiums, or 7.8%, which it said was “driven by strong mid-year renewals reflective of organic growth on existing clients, as well as new underwriting opportunities, including in U.S. catastrophe-exposed business.”

The third-party capital haul managed by the company, which remember rose to a new high of $7.94 billion as of March 31st 2025, will have been a meaningful contributor to help in driving this property catastrophe reinsurance growth for RenRe.

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