RenaissanceRe, the Bermuda based reinsurance company and third-party capital manager, has raised 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, but the California wildfires saw losses shared with investors and dented the firms fee income for the period.
Of the $461.8 million in new third-party capital raised in Q1 2025, the largest share of the new capital raised went to the firm’s Fontana specialty and casualty joint-venture platform at $129.2 million.In addition, the DaVinci Re equity backed sidecar-like reinsurance joint-venture benefited from $69.7 million of new investor capital, while the Medici cat bond fund strategy saw $61.5 million raised for it.
RenaissanceRe’s new UCITS catastrophe bond fund saw the biggest capital growth, of any ILS fund structure managed by RenaissanceRe (RenRe), but not all of this was new capital raised, with some being transferred in from the main Medici cat bond strategy.
Having launched the new RenaissanceRe Medici UCITS Fund with $341.5 million of capital allocated to the new cat bond fund, the company noted in its Q1 2025 results that $201.5 million came from third-party investors, of which $176.5
million was transferred in kind from the main Medici cat bond fund platform, while $140 million came from the company itself.
During the first-quarter of 2025, RenRe also returned capital to third-party investors in its JV’s and ILS funds, which amounted to $406.2 million.
Within this, $72 million of third-party capital was returned in Fontana, and $254.1 million in Medici but that included the $176.5 million transferred in kind to the new Medici UCITS cat bond fund strategy.
Loss activity is likely to be the main story of the RenRe Q1 2025 results reporting, with the California wildfires driving significant impacts for the company, which is anticipated given its role as a leading property catastrophe reinsurance capital provider.
As would be anticipated, the third-party investors in some of the joint-venture vehicles and ILS funds also took their share.
RenRe reported that the California wildfires and other large loss events in the first-quarter added 52.6% to its combined ratio, resulting in a CR of 128.3% for the period.
This drove an underwriting loss of -$770.6 million for the company in the period.
Overall, the California wildfires drove a net negative impact to RenRe’s underwriting result of almost -$1.26 billion.
Because of this, the net loss attributable to redeemable noncontrolling interests reached $195.3 million for the period, with the DaVinci vehicle ($112.4m) and the Vermeer ($107m) joint-venture reinsurance company backed by capital allocated by Dutch pension investor PGGM taking the most significant impacts.
This was offset by continued delivery of net investment income across the JVs and ILS funds, as well as net realized and unrealized gains in the investment portfolios of RenRe’s joint ventures and managed funds.
However, the total net negative impact from the Los Angeles, California wildfires to noncontrolling interests in RenRe’s joint-ventures and managed ILS funds reached a significant $507.6 million, on top of which a further $17.2 million from other large loss events took the total net negative impact for noncontrolling interests (largely third-party capital investors) to almost $524.8 million during the period.
The significant catastrophe loss activity in the quarter has driven a performance fee loss for RenRe’s third-party capital management business, while also denting management fees as well.
RenRe reported total fee income earned from the third-party capitalised JV’s and ILS funds of $30.5 million for the first-quarter of 2025, with management fees of $46.1 million and the performance fee loss of -$15.6 million.
On the management fee side, RenRe disclosed a reduction in management fees from DaVinci as a result of the catastrophe loss activity in the quarter.
However, while the $46.1 million of Q1 2025 management fees was down on the prior year’s $56 million, RenRe also noted there had been a recapture of previously deferred management fees in Q1 2024 which was not repeated this year.
On the performance fee loss, RenRe again noted the large losses including the wildfires denting the DaVinci vehicle as a driver, as well as other structured reinsurance products.
As of the end of the first-quarter, RenaissanceRe reported that redeemable noncontrolling interests, which is one measure of third-party capital utilised at RenRe, fell from $6.98 billion at Dec 31 2024 to $6.69 billion as of Mar 31 2025, with the reduction in capital down to the catastrophe loss activity, capital being returned and also the transfer of funds from the main Medici platform into the new UCITS cat bond fund.
It’s important to note that this is not total third-party capital AUM and RenRe’s third-party capital and ILS assets under management (AUM) had reached $7.81 billion at January 1st 2025.
Despite the significant impacts of the wildfires in Q1 2025, this has again been a quarter where RenaissanceRe generated positive fee income from the Capital Partners activities, while the significant pool of third-party managed capital has helped to moderate the effect of losses, given the sharing of underwriting profits and losses with its third-party investors.
