Q1 2024 RenaissanceRe Holdings Ltd Earnings Call

Operator: To all Sison Holds customers, we appreciate your patience and ask that you please continue to stand by.

I appreciate your patience.

Can you just standby.

[music] stuff.

Operator: © BF-WATCH TV 2021 ?? ?? ?? ?? ?? ??

Uh huh.

Speaker Change: Got it.

Speaker Change: Right.

Speaker Change: [music].

Operator: Please stand by; your program is about to begin. If you should need any assistance during your conference today, please press star zero. Good morning.

Your program is about.

Speaker Change: If you should need any assistance during your conference today, Please press star zero.

Speaker Change: Yeah.

Savannah: My name is Savannah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Renaissance Re first quarter 2024 earnings conference call and webcast. After the prepared remarks, we will open the call for your questions. Instructions will be given at that time. And lastly, if you need operator assistance, please press star zero. Thank you. I will now turn the call over to Keith McCue, Senior Vice President of Finance and Investor Relations. Please go ahead.

Savannah: Good morning, My name is Savannah, and I will be your conference operator today at this time I would like to welcome everyone to the Renaissance REIT first quarter 2024 earnings conference call and webcast. After the prepared remarks, we will open the call for your questions instructions will be given at that time and lastly, if you need operator assistance. Please.

Savannah: Press Star zero. Thank you.

Keith Alfred McCue: I will turn the call over to Keith Mccue, Senior Vice President of Finance and Investor Relations. Please go ahead.

Keith Alfred McCue: Thank you, Savannah. Good morning and welcome to Renaissance REIT's first quarter earnings conference call. Joining me today to discuss our results are Kevin O'Donnell, President and Chief Executive Officer, Bob Qutub, Executive Vice President and Chief Financial Officer, and David Marra, Executive Vice President and Group Chief Underwriting Officer. First, some housekeeping matters.

Keith Alfred McCue: Thank you Savannah, good morning, and welcome to Renaissance release first quarter earnings Conference call. Joining me today to discuss our results are Kevin O'donnell, President and Chief Executive Officer, Bob <unk> Executive Vice President and Chief Financial Officer, and David Maura Executive Vice President and group Chief underwriting Officer.

Keith Alfred McCue: Our discussion today will include forward-looking statements, including new and updated expectations for our business and results of operations following the validated transaction. It is important to note that actual results may differ materially from the expectations shared today. Additional information regarding the factors shaping these outcomes can be found in our SEC filings and in our earnings release. During today's call, we will also present non-GAAP financial measures. Reconciliations to GAAP metrics and other information concerning non-GAAP measures may be found in our earnings release and financial supplement, which are available on our website at renree.com. Now, I'd like to turn the call over to Kevin. Thanks, Keith. Good morning, everyone.

Keith Alfred McCue: First some housekeeping matters. Our discussion today will include forward looking statements, including new and updated expectations for our business and results of operations following the validates transaction.

Keith Alfred McCue: I want to note that actual results may differ materially from the expectations shared today additional information regarding the factors shaping these outcomes can be found in our SEC filings and in our earnings release during todays call. We will also present non-GAAP financial measures reconciliations to GAAP metric.

Keith Alfred McCue: Mix and other information concerning non-GAAP measures may be found in our earnings release and financial supplement which are available on our website at <unk> Dot com and now I'd like to turn the call over to Kevin Kevin.

Keith Alfred McCue: Yes.

Kevin: Thanks Keith.

Kevin O'donnell: And thank you for joining today's call. Last night, we reported an annualized operating return on average common equity of 29%. This is a great start to the year and builds on our momentum following an equally strong finish to last year. Individually, each of our three drivers of profit, underwriting fees, and investment income is performing well. Having all three aligned at the same time, however, has resulted in one of the strongest return profiles I've seen in my career.

Kevin O'donnell: Good morning, everyone and thank you for joining today's call.

Kevin: Last night, we reported an annualized operating return on average common equity of 29%.

Kevin: This is a great start to the year and built on our momentum following an equally strong finish to last year.

Kevin: Individually each of our three drivers of profit underwriting fee and investment income are performing well having.

Kevin: Having all three aligned at the same time, however, as resulted in one of the strongest return profiles ive seen in my career.

Kevin O'donnell: If 2023 was about advancing our strategy, 2024 is about execution. Last year, we successfully delivered a step change in reinsurance pricing terms and conditions. We then accelerated our strategy by acquiring one of the best reinsurance companies in the market, Validus Ridge. For 2024, our primary goal is to reap the benefits of last year's two strategic miles. As reflected in our financial results for the quarter, in aggregate, these milestones are mutually reinforcing and highly accretive to our bottom line. However, continued success, however, depends on strong execution. To begin, we remain highly focused on delivering the combined REN revalidus portfolio, a process that will be ongoing through mid-year renewal.

Kevin: If 2023 was about advancing our strategy 2024, it's about execution.

Kevin: Last year, we successfully delivered a step change in reinsurance pricing terms and conditions. We then accelerated our strategy by acquiring one of the best reinsurance companies in the market Validus re.

Kevin: For 2024, our primary goal is to reap the benefits of last year's two strategic milestones.

Kevin: As reflected in our financial results for the quarter in aggregate. These milestones are mutually reinforcing.

Kevin: Highly accretive to our bottom line.

Kevin: Continued success, however, it depends on strong execution.

Kevin: To begin we remain highly focused on delivering the combined ran revalued its portfolio.

Kevin: A process that will be ongoing through mid year renewals.

Kevin O'donnell: We remain on track to retain at least $3 billion of the Validus premium. If we are ultimately successful in doing so, our combined portfolio will exceed $12 billion in gross rate and premium. Given the very favorable reinsurance environment, we expect this to be highly accretive to shareholders. The success of the Validus acquisition depends, however, on much more than just retaining the underwriting portfolio. Employees and systems must be integrated.

Kevin: We remain on track Okay.

Kevin: To retain at least $3 billion of Validus premium.

Kevin: If we are ultimately successful in doing so our combined portfolio will exceed $12 billion in gross written premiums.

Kevin: Given the very favorable reinsurance environment, we expect this to be highly accretive to shareholders.

Kevin: The success of the Validus acquisition, however, it depends on much more than just retaining the underwriting portfolio.

Kevin O'donnell: Synergies must be achieved, and this process must remain seamless for our customers. Consequently, we are focusing a substantial amount of effort on integration, and we are making excellent progress. Our capital partners business is another area where the validus acquisition is mutually reinforced. Capital Partners is larger than it has ever been and continues to grow.

Kevin: Employees in systems must be integrated synergies must be achieved in this process must remain seamless to our customers.

Kevin: Consequently, we are focusing a substantial amount of effort on the integration and we are making excellent progress.

Kevin: Our capital partners business is another area, where the Validus acquisition is mutually reinforcing.

Kevin: This business.

Kevin O'donnell: This generates substantial fee income for our shareholders. It also brings significant capital efficiency to our balance sheets and to the Validus portfolio as we bring it onto our platform. This efficiency will be realized over the course of the year as we successfully renew the business and place it on the designated owned or capital partner balance. We're also focused on growing our investment portfolio in what continues to be the best interest rate environment in decades. Validus brought a substantial additional flow at an opportune time, and we are investing it at increasingly attractive returns. Our overall capital and liquidity positions are as strong as I have ever seen.

Kevin: It's larger than it has ever been and continues to grow this generated substantial fee income for our shareholders. It also brings significant capital efficiencies through our balance sheets and to the validus portfolio as we bring it onto our platform.

Kevin: This efficiency will be realized over the course of the year as we successfully renew the business and place it on the designated owned our capital partner balance sheet.

Kevin: We're also focused on growing our investment portfolio and what continues to be the best interest rate environment in decades.

Kevin: This brought us substantial additional float at an opportune time.

Kevin: And we are investing at that increasingly attractive returns.

Kevin: Our overall capital and liquidity positions are as strong as I've ever seen in aggregate, we enter the hurricane season positioned to outperform.

Kevin O'donnell: In aggregate, we enter the hurricane season positions to outperform. There's been a lot of attention on this year's particularly elevated hurricane season forecast, so I want to spend a few minutes discussing our perspective. Most of the reports this year are focused on just two of the many important variables that are part of the forecasting model. The first is elevated sea surface temperatures, and the second is the El Nino-La Nina Southern Oscillation.

Kevin: There's been a lot of attention on this year's particularly elevated hurricane season forecast, so I want to spend a few minutes discussing our perspective.

Kevin: Bolstered with reports this year are focused on just two of the many important variables that are part of the forecasting model.

Kevin: The first is elevated C circumstance pictures and the second.

Kevin: The El Nino logging, India Southern oscillation.

Kevin O'donnell: With regard to the first, tropical Atlantic sea surface temperatures hit record highs earlier this year, and they remain warmer than average across most of the Atlantic Basin, at or above the already-anomalous 2023 level. Much can change between now and when, but the long-range forecast suggests that this warmth will likely persist. We've seen elevated sea surface temperatures before. While it is difficult to assess the incremental catalyst for formation this level of heat will have, our model is pointing to significant Atlantic tropical cyclone activity.

Kevin: With regard to the first tropical Atlantic Sea surface temperatures hit record highs earlier this year.

Kevin: They remain warmer than average across most of the Atlantic Basin.

Kevin: At or above the already anomalous 2023 levels.

Kevin: Much can change between now and when the season the long range forecast suggest that this one will likely persist.

Kevin: We have seen elevated sea surface temperatures before while it is difficult to assess the incremental catalyst per formation. This level of heat will have our model is pointing to significant Atlantic tropical cyclone activity.

Kevin O'donnell: The second driving force is the El Nino La Nina Southern Oscillation, which in 2023. We benefited from El Nino conditions, which limit Atlantic tropical cyclone formation. These conditions are, and long-range forecasts suggest that La Nina conditions are likely to return during the late summer or early fall. La Nina typically results in lower wind shear and increased thunderstorm activity, both of which promote tropical cyclone development. In general, El Nio has a stronger suppressing influence on formation than it has on enhancement. That said, heightened sea surface temperatures and La Nina conditions are just two important variables in a complex system. Many other factors, such as wind shear and the drying effect of African dust, influence formation.

Kevin: The second driving force is the El Nino La India Southern oscillation.

Kevin: In 2023.

Kevin: We benefited from El Nino conditions, which limits Atlantic tropical cyclone formation.

Kevin: These conditions are shifting.

Kevin: And long range forecasts suggest that la Nina conditions are likely to return during the late summer or early fall.

Kevin: I mean, you typically results in lower wind shear and increased thunderstorm activity, both of which promote tropical cyclone development.

Kevin: In general El Nino has a stronger suppressing influence on formation.

Kevin: And yet has on enhancing formations.

Kevin: That said heightened sea surface temperatures and La India conditions are just two important variables in a complex system.

Kevin: Many other factors such as wind shear and the trailing effects of the African does influence formation.

Kevin O'donnell: Additionally, Steering and Currents are important as more storms do not automatically mean more landfills or landfills in densely populated areas. Ultimately, we do not cover hurricane formation. We pay losses caused by landfalling storms. Many different variables beyond weather conditions need to simultaneously align before a major hurricane becomes a material loss for us. Given this, we have constructed a portfolio that's designed to deliver resilient performance against a wide spectrum of potential tail

Kevin: Additionally, steering.

Kevin: Current <unk> are important.

Kevin: As more storms do not automatically mean more landfills or landfalls in densely populated areas.

Speaker Change: Ultimately, we do not cover hurricane formations.

Speaker Change: We paid losses caused by land falling storms.

Speaker Change: Many different variables beyond weather conditions need to simultaneously ally before a major hurricane it becomes a material loss for us.

Speaker Change: Given this we have constructed a portfolio that is designed to deliver a resilient performance against a wide spectrum of potential tail outcomes.

Kevin O'donnell: Over the years, we have often discussed the three qualities that we value: Superior Risk Selection, Superior Capital Management, and Superior Customer Relations. These core values underpin everything we do, leading to two important outcomes. The possibility of an elevated hurricane season is not a risk we transfer to our clients; rather, we manage risk over a multi-year period and price it accordingly. For our customers, the provision of consistent coverage and pricing regardless of forecast is a key component of our value proposition. As I've discussed in the past, there's a value to incumbency. An important aspect of incumbency is consistency.

Kevin: Over the years, we have often discussed the three superiors that we value.

Kevin: Superior risk selection and superior capital management, and a superior customer relations.

Kevin: These core values underpin everything we do.

Kevin: Leading to two important outcomes first the possibility of an elevated hurricane season is not a risk we transfer to our clients.

Kevin: Rather we manage risk over a multiyear period and price it accordingly.

Kevin: Our customers the provision of consistent coverage and pricing regardless of forecast is a key component of our value proposition.

Kevin: As I've discussed in the past there is a value to incumbency.

Kevin: Important aspect of incumbency is consistency.

Kevin O'donnell: Our consistency over the years despite forecasts plays a significant role in ensuring our position as a first call market and a leading reinsurer across the full spectrum of property casualty reinsurance. Second, we have seen elevated forecasts before. Already, we have constructed a seasonal model that incorporates the forecast of elevated frequencies for both minor and major hurricanes, and Abstracts or Portfolios again.

Kevin: Our consistency over the years despite forecast plays a significant role in ensuring our position as a thought first of all market and a leading reinsurer across the full spectrum of property casualty reinsurance.

Kevin: Second we have seen elevated forecast before.

Kevin: Already we have constructed a seasonal model that incorporates the forecast of elevated frequencies for both minor and major hurricanes.

Kevin: And I've stressed our portfolios against this.

Kevin O'donnell: As one would expect, our returns are lower under this model. But given our disciplined underwriting, proactive gross net strategy, and strongly diversified three drivers of profit, these expected returns are still strongly positive. In summary, our portfolio is well underwritten, our risk is on the right balance sheets, and we are in an excellent capital position. Our customers rely on us for long-term, consistent partners, and they continue to reward us with their loyalty. That concludes my opening comments.

Kevin: As one would expect our returns are lower under this model.

Kevin: But given our disciplined underwriting proactive gross to net strategy and strongly diversified three drivers of profit. These expected returns are still strongly positive.

Kevin: In summary, our portfolio is well under it our risk is on the right balance sheets, and we are an excellent capital position our customers rely on us for long term consistent partners and we continue to reward us with their loyalty.

Speaker Change: That concludes my opening comments I will provide more detail.

Kevin: On our segment performance at the end of the call, but first Bob will discuss our financial performance for the quarter.

Kevin O'donnell: I'll provide more detail on our segment performance at the end of the call, but first, Bob will discuss our financial performance for the call. Thanks, Kevin. And good morning, everyone.

Robert Qutub: We started the year with another excellent quarter with operating income of $636 million and an annualized operating return on average common equity of 29%. The strong returns in the quarter were driven by superior results across all three drivers of profit, with underwriting income of $541 million up 46%, fees of $84 million up 87%, and retained net investment income of $267 million up 59%. Year-to-date, we have grown our principal metric, tangible book value per share plus change in accumulated dividends, by 5%.

Bob: Thanks, Kevin and good morning, everyone. We started the year with another excellent quarter with operating income of $636 million and an.

Bob: Operating return on average common equity of 29%.

Bob: The strong returns in the quarter were driven by superior results across all three drivers of profit with underwriting income of $541 million up 46% fees of $84 million up 87% and retain net investment income of $267 million.

Kevin: 59%.

Kevin: Year to date, we have grown our principal metrics tangible book value per share plus change in accumulated dividends by 5%.

Robert Qutub: This represents strong earnings that were partially offset by $194 million in retained mark-to-market losses in our investment portfolio. Over time, we expect these losses to accrete back to par. In the near term, we are benefiting from higher rates on new investments. I'll discuss the results in more detail in a moment, but there are a few key takeaways that I would like to highlight.

Kevin: This represents strong earnings that were partially offset by a $194 million in retained mark to market losses in our investment portfolio.

Kevin: Overtime, we expect these losses to accrete back to par near term, we are benefiting from higher rates on new investments.

Speaker Change: I will discuss our results in more detail in a moment, but there are a few key takeaways that I would like to highlight.

Robert Qutub: First, as Kevin mentioned, this quarter you are seeing the full three-month benefit of Validus in our financial results. Overall, net premiums written were $3.2 billion, up 41%. And underwriting income was $541 million, up 46% from Q1 last year. Second, we reported strong overall underwriting results with a combined ratio of 78% or 75% after adjusting for the impact of purchase accounting. This was a low quarter for catastrophes, with property catastrophe and other property having excellent quarters.

Speaker Change: First as Kevin mentioned this quarter you are seeing a full three months benefit of Validus in our financial results overall net premiums written were $3 2 billion.

Kevin: Up 41% and underwriting income was $541 million up 46% from Q1 last year.

Kevin: We reported strong overall underwriting results with a combined ratio of 78% or 75% after adjusting for the impact of purchase accounting.

Kevin: This was a low quarter for catastrophes with property catastrophe and other property, having excellent quarters, the casualty and specialty adjusted combined ratio was 97%, which included the impact of four percentage points from the Baltimore Bridge collapsed, which I will discuss in a moment.

Robert Qutub: The Casualty and Specialty Adjusted Combined Ratio was 97%, which included an impact of 4 percentage points from the Baltimore Bridge collapse, which I will discuss in a moment. And third, fee income was $84 million on the back of solid growth in our joint ventures and strong performance. And finally, retained net investment income was a healthy $267 million.

Kevin: Third fee income was $84 million on the back of solid growth in our joint ventures and strong performance.

Kevin: And finally retained net investment income was a healthy $267 million <unk>.

Robert Qutub: Consensus is building around a higher for longer interest rate environment, which should support strong net investment income for the rest of the year. In summary, we have built a powerful platform with several distinct sources of income, rewarding our shareholders with security returns while making us increasingly resilient to catastrophe activity. Now moving out to our first quarter results and our first driver of profit underwriting, and as we discussed, we had a phenomenally successful 1-1 renewal and retained the combined Renaissancere and Validus portfolio according to plan. As a result, gross premium written was up 43% with robust growth across both segments. Net premiums written were up slightly less, at 41%.

Kevin: Consensus is building around a higher for longer interest rate environment, which should support strong net investment income for the rest of the year.

Kevin: In summary, we have built a powerful platform with several distinct sources of income rewarding our shareholders with superior returns, while making us increasingly resilient to catastrophe activity.

Kevin: Now moving now to our first quarter results and our first driver of profit underwriting and as we discussed we had a phenomenally successful one one renewal and retained the combined Renaissance re and Validus portfolio. According to plan.

Kevin: As a result gross premium written were up 43% with robust growth across both segments net premiums written were up slightly less at 41%. This reflects our decision to purchase some additional ceded protection and our property catastrophe book as part of our gross to net strategy as well as some timing differences.

Robert Qutub: This reflects our decision to purchase some additional seated protection in our property catastrophe book as part of our gross to net strategy, as well as some timing differences, which reported strong overall results with an adjusted combined ratio of 75%. Moving now to our casualty and specialty portfolio, where gross and net premiums rated were up 41% and 45%, respectively, as we incorporated the Validus business onto our platform. As Kevin will explain, we exercise underwriting discipline by growing into attractive areas such as specialty while reducing exposures to areas such as professional liability.

Kevin: We reported strong overall results with an adjusted combined ratio of 75%.

Kevin: Moving now to our casualty and specialty portfolio, where gross and net premiums written were up 41% and 45% respectively. As we incorporated the validus business onto our platform.

Kevin: As Kevin will explain we exercise underwriting discipline by growing into attractive areas, such as specialty while reducing exposures to areas such as professional liability.

Robert Qutub: Net earned premiums in casualty and specialty were $1.5 billion, up 52%, also driven by Validus. In the second quarter, we are expecting net earned premiums to be about $1.6 billion. This quarter reported an adjusted combined ratio for casualty and specialty of 97%, which contained 4 percentage points from the Baltimore Bridge collapse. The bridge had an overall net negative impact on our consolidated results of $55 million.

Kevin: Net earned premiums in the casualty and specialty were one 5 billion up 52% also driven by Validus in the second quarter. We are expecting net earned premiums to be about $1 6 billion.

Kevin: This quarter reported and adjusted combined ratio for casualty and specialty at 97%, which contained four percentage points from the Baltimore Bridge collapse. The bridge had an overall negative impact on our consolidated results of $55 million.

Robert Qutub: On average, we continue to expect a mid-90s casualty and specialty combined ratio after adjusting for the impact of purchase accounting. Moving to our property segment, and starting with property catastrophe, where we reported strong growth driven by renewal of the combined portfolio at attractive rates and terms and conditions. Gross premiums written were up by 44%, and net premiums written were up by 30%. We see that about $277 million or 21% of property catastrophe business compared to 12% in Q1 last year.

Kevin: On average we continue to expect a mid nineties casualty and specialty combined ratio after adjusting for the impact of purchase accounting.

Kevin: Moving to our property segment and starting with property catastrophe, where we reported strong growth driven by renewal of the combined portfolio at attractive rates and terms and conditions.

Kevin: Gross premiums written were up by 44% and net premiums written were up by 30%, we see it at about $277 million or 21% of property catastrophe business compared to 12% in Q1 last year property catastrophe had an excellent quarter with an adjusted combined ratio of 16%.

Robert Qutub: Property catastrophe had an excellent quarter with an adjusted combined ratio of 16% reflecting low losses and 10 percentage points of favorable development. The acquisition expense ratio was up by about 3 percentage points driven mainly by the impact of purchase accounting adjustments.

Kevin: <unk> low losses, and 10 percentage points of favorable development.

Kevin: The acquisition expense ratio was up by about three percentage points, driven mainly by the impact of purchase accounting adjustments.

Robert Qutub: Moving now to other property, where gross premiums written were up by 46% and net premiums written were up by 64%, driven mainly by the addition of the Validus portfolio. Net earned premiums in Q1 were $390 million, up 16%. The reductions we made in 2023 in our other property book continue to earn through, and next quarter, we expect other property premiums earned to be about $360 million. Other property printed excellent results in the quarter with an adjusted combined ratio of 75% and about 11 percentage points of favorable development, predominantly from attritional loss. The other property current accident loss year ratio was 57%, which included a 5 percentage point impact from the Baltimore Bridge collapse.

Kevin: Moving now to other property, where gross premiums written were up by 46% and net premiums written were up by 64% driven mainly by the addition of the Validus portfolio.

Kevin: Net earned premiums in Q1 were $390 million up 16%.

Kevin: The reductions we made in 2023 and our other property book continued to earn through and next quarter. We expect other property premiums earned to be about $360 million.

Kevin: Other property credit excellent results in the quarter with an adjusted combined ratio of 75% and about 11 percentage points of favorable development for trying to predominantly from Attritional losses.

Kevin: The other property current accident loss year ratio was 57%, which included a five percentage point impact from the Baltimore Bridge collapsed.

Robert Qutub: Going forward, we continue to expect an Other Property Attritional Loss Ratio of O-50. Moving now to fee income in our Capital Partners business, where fee income reached $84 million, up 87% from the comparable quarter. Management fees were $56 million, up 37% from Q1 2023, reflecting increased capital in our joint venture vehicles. Performance fees were $27 million, driven by joint venture growth and strong performance, including favorable development in the quarter. In the second quarter, we expect management fees of around $55 million and performance fees of around $15 million, absent the impact of any large loss of assets.

Kevin: Going forward, we continue to expect and other property attritional loss ratio.

Kevin: <unk>.

Kevin: Moving now to fee income in our capital partners business, where fee income reached $84 million up 87% from the comparable quarter.

Kevin: Management fees were $56 million up 37% from Q1, 'twenty, three reflecting increased capital and our joint venture vehicles performance fees were $27 million driven by joint venture growth and strong performance, including favorable development in the quarter.

Kevin: In the second quarter, we expect management fees of around $55 million and performance fees of around $15 million absent the impact of any large loss events.

Robert Qutub: Moving now to investments, where retained net investment income was $267 million, up 4% from Q4 and up 60% from a year ago. Treasury rates have consistently ticked up through the year, leading to a $194 million retained mark-to-market loss in the quarter. Overall, retained unrealized losses in our fixed maturity investments stand at $189 million, or $3.58 per share.

Kevin: Moving now to investments where retained net investment income was $267 million up 4% from Q4 and up 60% from a year ago Treasury rates have consistently ticked up to the year, leading to a $194 million retain mark to market losses in the quarter.

Kevin: Overall retained unrealized losses in our fixed maturity investment stand at $189 million.

Kevin: Or $3 58 per share we expect this to accrete to par over time.

Robert Qutub: We expect this to accrete to par over time. Our retained yield to maturity was relatively flat at 5.5%, which is slightly higher than our net investment income return of 5.3% in Q1 of this year. We have kept duration stable and expect retained net investment income to be relatively flat compared to the first quarter. Financial markets are expecting Treasury rates to persist around current levels, which should continue to support strong contributions from net investment income in the quarters ahead.

Kevin: Our retained yield to maturity was relatively flat at five 5%, which is slightly higher than our net investment income return of five 3% in Q1 of this year.

Kevin: We have kept duration stable and in the second quarter expect retained net investment income will be relatively flat compared to the first quarter.

Kevin: Financial markets are expecting treasury rates to persist around current levels, which should continue to support strong contributions from net investment income in the quarters ahead.

Robert Qutub: Turning briefly to expenses, we have already achieved significant synergies from the Validus acquisition. While absolute operating expenses have increased year over year due to the acquisition, our operating expense ratio ticked down to 4.3%. We expect the operating expense ratio to stay relatively flat through 2020. Corporate expenses remain elevated, with about $20 million of the $39 million total related to the ballot as acquisition.

Kevin: Now turning briefly to expenses, we have already achieved significant synergies from the Validus acquisition will absolute operating expenses have increased year over year due to the acquisition, our operating expense ratio ticked down to four 3%.

Kevin: We expect the operating expense ratio to stay relatively flat through 2024.

Kevin: Corporate expenses remained elevated with about $20 million of the $39 million total related to the Validus acquisition. These trends just transaction related expenses are excluded from operating income and should start to taper off next quarter.

Robert Qutub: These transaction-related expenses are excluded from operating income and should start to taper off next quarter. Now, finishing with capital management, we are heading into the mid-year renewals with a very strong capital position. As we have discussed in the past, Renaissance Re has a long history of being disciplined stewards of capital and will remain consistent in our approach to capital management. Our primary focus is optimizing the Validus business by renewing it on our wholly owned and capital partners balance. As we complete the integration, we will continue looking for the best opportunities to deploy CAP. And in conclusion, we had another excellent year.

Kevin: Now, finishing with capital management, we are heading into the mid year renewals with a very strong capital position as we have discussed in the past Renaissance has a long history of being disciplined stewards of capital and we remain consistent in our approach to capital management.

Kevin: Our primary focus is optimizing the validus business by renewing it onto our wholly owned and capital partners' balance sheets as we complete the integration we will continue looking for the best opportunities to deploy capital.

Kevin: And in conclusion, we had another excellent year.

Robert Qutub: Another excellent quarter with significant top-line growth related to valid and substantial contributions from each of our three drivers of profit. Underwriting income was strong, following a highly successful 1-1 renewal. Management and performance fees were both up significantly, driven by underlying portfolio growth and strong performance. And finally, net investment income continues to be a stable, significant source of income for our shareholders. And with that, I'll turn the call back over to Kevin.

Kevin: Another excellent quarter with significant topline growth and related to Validus and substantial contributions from each of our three drivers of profit.

Kevin: Underwriting income was strong following a highly successful one one renewal management and performance fees were both up significantly driven by underlying performance portfolio growth and strong performance and finally net investment income continues to be stable significant source of income for our shareholders and with that I'll turn the call.

Kevin O'donnell: Back over to Kevin.

Kevin O'donnell: Thanks, Bob. As usual, I'll divide my comments between our property and casualty segment. Starting with property, we began the quarter with a magnitude 7.5 earthquake in Japan. While this was one of the strongest recorded earthquakes in the region, due to low population density and resilient infrastructure, its impact on the reinsurance industry is low. As a result, the earthquake did not have a significant influence on 4-1 renewals, and programs generally renewed in an orderly manner; there was sufficient reinsurance capacity. We have strong relationships in Jamaica. And we're successful in renewing our combined lines at rates which were flat to down 5%. Rates online in Japan tend to be low.

Kevin O'donnell: Thanks, Bob.

Kevin O'donnell: Usual I'll divide my comments between our property and casualty segments.

Kevin O'donnell: Starting with property, we began the quarter with a magnitude seven five earthquake in Japan.

Kevin O'donnell: While this was one of the strongest recorded earthquakes in the region due to low population density and resilient infrastructure its impact to the reinsurance industry as well.

Kevin O'donnell: As a result, the earthquake did not have a significant influence on 401 renewals and programs generally renewed in an orderly manner.

Kevin O'donnell: There was sufficient reinsurance capacity to meet demand.

Kevin O'donnell: He has strong relationships in Japan.

Kevin O'donnell: And were successful in renewing our combine lines at rates, which were flat to down 5%.

Kevin O'donnell: Based on line of Japan tend to be low.

Kevin O'donnell: So such a small shift in price does not significantly impact either top or bottom line.

Kevin O'donnell: So such a small shift in price does not significantly impact either the top or bottom line. Our underwriting team is working on the mid-year renewals, and we have already completed several large placements. We're seeing additional demand for reinsurance come to the market, particularly in Florida, driven by a variety of factors, including first, a more attractive primary market with higher underlying rates and growing confidence that recent regulatory reforms have helped stabilize the market. This has resulted in significant takeouts from citizens, the state-run insurer of Last Resort, which should drive additional demand for reinsurance.

Kevin O'donnell: Our underwriting team is working on the midyear renewals and we have already completed several large places we're seeing additional demand for reinsurance come to the market, particularly in Florida, driven by a variety of factors, including.

Kevin O'donnell: First a more attractive primary market with higher underlying rates and growing confidence that recent regulatory reforms have helped stabilize the market.

Kevin O'donnell: This has resulted in significant takeouts from citizens the state run insurer of last resort, which should drive additional demand for reinsurance.

Kevin O'donnell: And second, the end of the reinsurance to assist policy holders or the RAP layer, where Florida provided $1.1 billion in free property cap reinsurance below the cap. We have been reducing exposure to Florida domestics for almost a decade due to their poor financial performance and social inflation issues. Although we believe the market is in a much better place, we remain cautious. For the most part, our focus will be on applying our underwriting strategy to values. In other property, the market continues to be attractive, although rate increases have started to moderate. Rates have been growing substantially since 2019.

Kevin O'donnell: Second the end of the reinsurance to assist policyholders or the wrap layer.

Kevin O'donnell: Florida provided $1 1 billion of free property cat reinsurance below the Cat fund.

Kevin O'donnell: We have been reducing exposure to Florida domestics for almost a decade due to their poor financial performance and social inflation issues.

Kevin O'donnell: Although we believe the market is in a much better place we remain cautious for the most part our focus will be.

Kevin O'donnell: On applying our underwriting strategy to the Validus book.

Kevin O'donnell: In other property the market continues to be attractive although rate increases have started to moderate.

Kevin O'donnell: <unk> been growing substantially since 2019.

Kevin O'donnell: Although the rate of increase is slowing, we continue to like the return profile of the risk that we assume. That said, we expect that our growth and other property this year will primarily be through selective renewal of the Validus portfolio. Touching now briefly on the Francis Scott Key Bridge collapse in Baltimore.

Kevin O'donnell: Although the rate of increase is slowing we continue to like the return profile or the risk that we assume.

Kevin O'donnell: That said, we expect that our growth in other property. This year will primarily be through selective renewal of the validus portfolio.

Kevin O'donnell: Touching briefly on the Francis Scott Key bridge collapsed in Baltimore.

Kevin O'donnell: As Bob discussed, this had an impact on both our property and specialty segments. Going forward, this loss is likely to result in additional opportunities for us in marine and other specialty markets, which I will outline in a minute. have already been attractive. Moving now to casualty and special risks, Overall, this segment continues to demonstrate healthy underlying profitability. Trends from 1-1 generally continue for casualty and special risks... Our view is that the general casualty market is keeping in line with the loss trend, and we are supporting students who demonstrate strong underwriting discipline. Additionally, we continue to reduce on certain lines, like DNO, where underlying rates are declining. Seating commissions from D&O are declining for the second year in a row in some cases.

Kevin O'donnell: As Bob discussed this had an impact on both our property and casualty and specialty segments.

Kevin O'donnell: Going forward. This loss is likely to result in additional opportunities for us in marine and other specialty markets, which are a result of which I'll outline in a minute have already been attractive.

Kevin O'donnell: Moving now to casualty and specialty overall this segment continues to demonstrate healthy underlying profitability.

Kevin O'donnell: <unk> from one one generally continued for casualty and specialty.

Kevin O'donnell: Our view is that general.

Kevin O'donnell: The general casualty market is keeping in line with loss trend and we are supporting students who demonstrated strong underwriting discipline.

Kevin O'donnell: Additionally, we continue to reduce on certain lines like D&O, where underlying rates are declining.

Kevin O'donnell: Ceding Commission, India, D&O or reducing for the second year in a row in some cases.

Kevin O'donnell: This provides an offset to rate reductions and positions the best programs for long-term profitability. We are managing our portfolio accordingly. In specialty, as we discussed last quarter, the Validus acquisition provided us with a large market leadership position and broad diversification within specialty law. We expect that the Baltimore Bridge collapse, as well as recent aviation incidents, will further drive a specialty market disruption and an attractive rate environment. We will continue to manage our portfolio by growing in the most attractive classes and reducing in more challenging areas. Cyber, for example, is seeing increased competition from reinsurers, and we are reducing our net exposure.

Kevin O'donnell: This provides an offset to rate reductions and positions the best programs for long term profitability.

Kevin O'donnell: We are managing our portfolio accordingly.

Kevin O'donnell: In specialty as we discussed last quarter, the Validus acquisition provided us with a large market leadership position and broad diversification within specialty lines.

Kevin O'donnell: We expect that the Baltimore bridge collapse as well as recent aviation incidences.

Kevin O'donnell: We will further drive our specialty market dislocation at an attractive rate environment.

Kevin O'donnell: We will continue to manage our portfolio by growing in the most attractive classes.

Kevin O'donnell: And reducing and more challenging areas cyber for example, you're seeing increased competition from reinsurers and we are reducing our net exposure here.

Kevin O'donnell: In our credit business, we are largely maintaining our combined market share. After a difficult 2023, charity continues to experience significant rate increases. Mortgage origination volume has declined, but we have found some attractive opportunities within private mortgage insurance. Bovalet has brought us a large mortgage book.

Kevin O'donnell: In our credit business, we are largely maintaining our combined market share.

Kevin O'donnell: After a difficult 2023 surety continues to experience significant rate increases.

Kevin O'donnell: Mortgage origination volume has declined but we have found some attractive opportunities within private mortgage insurance.

Kevin O'donnell: While Valeant has brought us a large mortgage book relative to our equity our mortgage risk remains consistent.

Kevin O'donnell: Relative to our equity, our mortgage risk remains consistent. Our agility in maintaining discipline and leaning into the most attractive lines is apparent with the premium shift this quarter. In Q1 2023, specialty made up 27% of our gross casualty specialty premium. It now makes up 38%.

Kevin O'donnell: Our agility and maintaining discipline and leaning into the most attractive lines.

Kevin O'donnell: Is apparent with the premium shifts this quarter.

Kevin O'donnell: In Q1, 2023 specialty made up 27% of our gross casualty specialty premiums.

Kevin O'donnell: It now makes up 38%.

Kevin O'donnell: Conversely, professional liability made up 26% of our premium in Q1 2023 and has reduced to 18%. We have kept the general casualty and credit relatively flat at 28% and 16% of our book respectively. I mention these changes to highlight our ongoing activities to shape our portfolio and write into the best opportunities. Shifting now to Retro Perkins.

Kevin O'donnell: Conversely professional liability made up 26% of our premium in Q1 2023.

Kevin O'donnell: And has reduced to 18%.

Kevin O'donnell: We have kept to general casualty and credit relatively flat at 28% and 16% of our foot respectively.

Kevin O'donnell: I mentioned these changes to highlight our ongoing activities to shape, our portfolio and right into the best opportunities.

Kevin O'donnell: Shifting now to retro purchases.

Kevin O'donnell: At 1-1, we saw continued discipline around retrostructures pricing, and pricing was relatively flat. We primarily traded with our long-term partners, and we were able to secure additional capacity. As we renew the Validus portfolio onto Renaissancere balance sheets, it is incorporated into our various retro programs. The next major renewal for our retro program is in June, and we expect that we will be able to purchase the limit that we desire.

Kevin O'donnell: At one one we saw continued discipline around retro structures pricing and pricing was relatively flat.

Kevin O'donnell: We primarily traded with our long term partners and we were able to secure additional capacity.

Kevin O'donnell: As we renew the validus portfolio onto Renaissance, we balance sheets. It is incorporated into our various retro programs.

Kevin O'donnell: The next major renewal for our retro program is in June and we would expect that we will be able to purchase the limit that we desire.

Kevin O'donnell: That said, our strong capital and liquidity position provides us with significant flexibility, and we will only purchase additional limits if it improves our overall portfolio. Difting now to capital partners. As Bob discussed, fees were healthy this quarter and contributed significantly to financial outperformance. Overall, Capital Partners is performing well, and we expect it to continue to grow. In conclusion, it was an excellent quarter. We started the year in a strong position with all three drivers of profit contributing meaningfully to our results.

Kevin O'donnell: That said, our strong capital and liquidity position provides us significant flexibility and we will only purchase additional limit if it improves our overall portfolio.

Kevin O'donnell: Shifting now to capital partners as Bob discussed fees were healthy this quarter and contributed significantly to financial outperformance.

Kevin O'donnell: <unk> capital partners is performing well.

Kevin O'donnell: And we expect it to continue to grow.

Kevin O'donnell: In conclusion, it was an excellent quarter.

Kevin O'donnell: Starting 'twenty four.

Kevin O'donnell: Strong position with all three drivers of profit contributing meaningfully to our results.

Kevin O'donnell: Rates and terms and conditions continue to be favorable, and we are confident in our ability to build an attractive, Renaissance-ready, and validist portfolio. Interest rates continue to support strong net investment income. And finally, Capital Partners continues to grow and contribute substantial fee income. Thanks, and with that, I'll turn it over to questions.

Kevin O'donnell: Right in terms and conditions continue to be favorable and we are confident in our ability to build an attractive Renaissance re and validus portfolio.

Kevin O'donnell: Interest rates continue to support strong net investment income and finally capital partners continues to.

Kevin O'donnell: <unk> to grow and contribute substantial fee income.

Speaker Change: Thanks, and with that I'll turn it over for questions.

Operator: And at this time, if you would like to ask a question, please press star 1 on your listening keypad. If you wish to remove yourself from the queue, you may do so by pressing star 2. We remind you to please unmute your line when introduced, and if possible, please pick up your handset for optimal sound quality. In the interest of time, we do ask that you please limit yourself to one question and one follow-up. We will now take our first question from Elyse Greenspan with Wells Fargo. Please go ahead.

Speaker Change: And at this time, if you would like to ask a question. Please press star one.

Speaker Change: Pat if you wish to remove yourself from the queue you may do so by pressing star Q.

Speaker Change: We remind you to please UN mute your line when introduced and if possible. Please pickup your handset for optimal sound quality and the interest of time, we do ask that you. Please limit yourself to one question and one follow up.

Speaker Change: We will now take our first question from Elyse Greenspan with Wells Fargo. Please go ahead.

Elyse Beth Greenspan: Good morning. Kevin, in your introductory comments, you reaffirmed the at least $3 billion of Validus premium. I just want to get a sense post Q1, based on the renewals and the growth you saw there, could there be some upside to that number? I just want to get a sense of how the renewals were versus your expectation on the base that you had to renew in the first quarter.

Elyse Beth Greenspan: Hi, Thanks, good morning.

Elyse Beth Greenspan: Kevin.

Elyse Beth Greenspan: In your introductory comments you reaffirmed the at least $3 billion of Validus premium I just wanted to get a sense post the Q1.

Elyse Beth Greenspan: Are you.

Elyse Beth Greenspan: Based on the renewals and the growth you saw there could there be some upside to that number I just wanted to get a sense of how the renewals were versus your expectation on the base rate that you had to renew.

Elyse Beth Greenspan: In the first quarter.

Kevin O'donnell: Thanks, Elyse. I would say we should keep our commentary exactly the same as we did before, which is three billion worth of potential for a bit of upside. When we first declared the increase from 2.7 to 3 billion, it was based on our expectations of what our performance October portfolio would look like. So the things that we're seeing in the April renewals and going into June and July are basically framing up within expectations of how we set up that original increase in our forecast. So I wouldn't change anything at this point.

Speaker Change: Thanks Elyse.

Speaker Change: I would say we would keep our commentary at exactly the same as we did before which is three.

Elyse Beth Greenspan: $3 billion with the potential for a bit of upside.

Elyse Beth Greenspan: When we.

Elyse Beth Greenspan: First declared the increase from two 7% to $3 billion. It was based on our expectations of what our program at October portfolio looks like so the things that we're seeing in the April renewals and going into June July are basically framing up within expectations of how we set up that original increase in our fourth.

Speaker Change: Cast so I wouldn't change anything at this point.

Elyse Beth Greenspan: And then my second question is on Florida. You know, as a follow-up to your prepared remarks, Kevin, I guess when you think about the state, what do you need to see in Florida to be less cautious, or just to become more positive and to begin to increase your exposure? And then, you know, on Florida, can you just give us a sense of where prices are trending for the 6-1 renewal?

Speaker Change: Thanks.

Speaker Change: And then my second question is on Florida.

Speaker Change: As a follow up to your prepared remarks, Kevin I guess, when you think about the state what do you need to see in Florida to be less cautious.

Speaker Change: Well just to become more positive and to begin to increase your exposure and then on Florida can you just give us a sense of.

Speaker Change: Where prices are trending for the next one renewals.

Kevin O'donnell: So, yeah, no, thank you for that. I think Well, we think we'll see elevated demand in Florida, mostly at the top layers. Vermeer certainly has an appetite to write some of that. It's very capital efficient for Vermeer to put that sort of capacity out.

Kevin O'donnell: So yes, thank you for that I think.

Kevin O'donnell: We think we will see we think we will see elevated demand in Florida, mostly a top layers.

Speaker Change: Vermeer has certainly an appetite to write some of that it's very capital efficient for premier to put that sort of capacity out.

Kevin O'donnell: For Renry, I would say with the scale that we have and with the portfolio that we've already written, over the last several years, we have biased our southeast wind exposure to larger national accounts and away from Florida accounts, as I mentioned. I think for us to meaningfully shift the portfolio is unlikely, regardless of terms, conditions, and pricing changes in Florida. I would say we have capacity to put out, and if there's overwhelming opportunity and a significantly enhanced rate beyond our expectations, we would continue to grow into that market, but that's not our expectation.

Kevin O'donnell: For Renren.

Kevin O'donnell: With the scale that we have and with the portfolio that we've already written over the last several years, we have biased our southeast wind exposure to larger national accounts and away from the Florida accounts as I mentioned I think for us to meaningfully shift the portfolio, it's unlikely regardless of terms conditions and pricing changes.

Kevin O'donnell: In Florida, I would say, we have capacity to put out and if there is overwhelming opportunity and significant enhanced.

Kevin O'donnell: Beyond our expectations right, we would continue to grow into that market, but that's not our expectation.

Speaker Change: Hey, Dave.

David Edward Marra: Hey, Elyse, this is David. I'll add a bit of color to that. We do expect good growth in demand and good discipline from the market in the Florida space. As Kevin mentioned, it's not just Florida; it's also the nationwides that have Florida exposure. At 1.1, we saw growth in demand in the high single-digit percentages. We would expect going into 6.1 renewals that we'd get more growth in demand than that, so it might be 10 to 15 percent, and some of those programs are already locked up now. So we're optimistic.

Speaker Change: Hey, Elyse this is David.

David Edward Marra: A bit of color on that and we do expect good growth in demand and good discipline from the market and the Florida space as Kevin mentioned, it's not just Florida. It's also the nationwide's that have sort of exposure.

David Edward Marra: <unk>, we saw growth in demand and about the high single digit percentages, we would expect going into six one renewals that we get more growth and demand in that so it might be 10% to 15%.

David Edward Marra: Trending in some of those programs are already being locked up now. So we are optimistic about the ability to create a good portfolio of profitable risk, but we're approaching it cautiously as we have.

Operator: Transcripts provided by Transcription Outsourcing, LLC.

Kevin O'donnell: And then just the price piece: would you expect the price to kind of be flat down? What do you expect?

Speaker Change: And then just the price piece would you expect price to kind of be flat down like what do you expect.

Kevin O'donnell: We think things will trade around the high levels that we've seen.

Speaker Change: We think things will trade around the strong levels that we've seen since 2023.

Operator: http://www.youtube.com or the link in the description below.

Kevin O'donnell: Theres positive dynamics with the legal reforms, but those are still unproven following a big gap there.

Kevin O'donnell: but those are still unproven following a big cap. The risk is still quite capital-intensive, and there's always the potential for high frequency of storms in Florida. So we think things will trade similar to what they've traded for since 2023.

Kevin O'donnell: <unk> is still quite capital intensive and there's always the potential for high frequency of storms in Florida. So so we think things will trade similar to what they traded for since 2023.

Speaker Change: Thank you.

Operator: Our next question comes from Meyer Shields with KVW. Go ahead. Great. Thanks. Good.

Speaker Change: Our next question comes from Meyer Shields with CDW.

Meyer Shields: Please go ahead.

Meyer Shields: Great, thanks. I hope you could clarify what you meant by the renewal or transfer of the Validus Florida book to Renaissancere. I couldn't tell whether that was an implication of expected growth or decline.

Meyer Shields: Great. Thanks.

Meyer Shields: Was hoping you could clarify what you meant by the renewal.

Meyer Shields: Transferring the Validus, Florida book.

Meyer Shields: Two Renaissance, we I couldn't tell whether that was an indication of expected growth or declines.

Kevin O'donnell: What we're looking at is taking Very simply, Renry is one, Validus is one, and we want it to equal two. So we expect that we'll renew the Validus portfolio. We like the book that they wrote. There's some overlap with our book, and there's some diversification in the domestics that they wrote down in Florida. So I didn't mean to highlight anything other than the combined portfolio will be roughly equal to the two independent portfolios.

Meyer Shields: What we're looking at is taking.

Meyer Shields: Very simply rent <unk> Validus is one we wanted to equal two so we expect that we will renew the validus portfolio, we like the book that the road. There is some overlap with our book and there is some.

Meyer Shields: Some diversification in the.

Meyer Shields: Domestic set they wrote down in Florida.

Speaker Change: I didn't mean to highlight anything other than.

Speaker Change: The combined portfolio will be roughly equal to the two independent portfolios.

Meyer Shields: Okay, all right, sorry, I probably overthought that one. Can we get an update? I know it goes back a little while when you were talking about the delta between the reserving and pricing actuaries' view of, I guess, social inflation or casualty loss trends. And I was hoping you could update that on where those two sources of opinion are.

Speaker Change: Okay, Alright, thats all over thought that one.

Speaker Change: Can we get an update I know goes back a little while when you were talking about the delta between the reserving and pricing Actuaries view.

Speaker Change: I guess, social inflation or casualty loss trends and I was hoping you could update that on where those two sources of opinion.

Kevin O'donnell: I'll start, and then I'll turn it over to Dave. You know, we have been, as you would expect, slow to take the benefit of price into our casualty portfolio and into most of our specialty portfolio. So there still remains a relatively consistent gap between our pricing and reserving loss ratios. You know, I think we're also, as we mentioned on other calls, relatively slow to recognize good news. I think, you know, so when we think about how the curves are developing, pretty substantial lag before we'll accept good news, and we immediately recognize bad news, but I'll turn it over to David for more detail.

Speaker Change: I'll start and then I'll turn it over to Dave.

Speaker Change: Yes.

Speaker Change: We have been.

Speaker Change: As you would expect slow to take the benefit of price into our casualty portfolio.

Dave: And into most of our specialty portfolio. So theres still remains relatively consistent gap between our pricing and reserving loss ratios.

Dave: I think we're also as we've mentioned on other calls relatively slow to recognize good news.

Dave: <unk>.

Dave: So when we think about.

Dave: How the curves are developing.

Dave: Pretty substantial lack before will accept good news and we immediately recognize bad news.

Dave: I'll turn it over to Dave for more detail.

David Edward Marra: Yeah, I think, like Kevin said, that reserving process which recognizes the bad news early and the good news...

Dave: Yes, I think Kevin said that reserving process, which recognizes the bad news early on that good news once there's more seasoning is important because it does lead to stronger more stable forward reserves, what we're seeing in the market is that in the general liability side, we still have rates, increasing and covering loss trend.

Operator: One third more seasoning is important because it does lead to a stronger, more stable pool.

Operator: Transcripts provided by Transcription Outsourcing, LLC.

David Edward Marra: Where they're decreasing and losses are still at an elevated level. So our goal when we construct the portfolio is to make sure we maximize the best portfolios over the long term and we are scaling back and D&O.

Unknown Executive: Our goal when we construct a portfolio is to make sure we maximize the best portfolios over the long term, and we are scaling back on D&O now. Seating commissions are adjusting.

Unknown Executive: Unknown Executive, Meyer Shields, Robert Qutub, David Marra, Renaissancecere Holdings Ltd.

Unknown Executive: Now Youre ceding commissions are adjusting and that provides some offset to that but it's still the right portfolio construction results.

Dave: Those percentages.

Speaker Change: Okay perfect. Thanks, so much.

Speaker Change: Thanks, Brian.

Operator: Our next question comes from Ryan Tunis with Autonomous Research. Please go ahead.

Speaker Change: Our next question comes from Ryan Tunis with Autonomous Research. Please go ahead.

Ryan James Tunis: Hey guys, good morning. First question, I guess, is just on the Baltimore Bridge loss. Just wanted to get a better sense of, I guess I'm just trying to figure out, I guess, what kind of verticality there could be in that loss picture. So anything you can give us in terms of how you came up with, I guess, the reserve you're thinking about. And also just curious, like what type of reinsurance contracts are responding to that. Is it traditional reinsurance?

Ryan James Tunis: Hey, guys good morning.

Ryan James Tunis: First question I guess, just on the Baltimore Bridge loss, just wanted to get a better sense of I guess I'm just trying to figure out I guess, what kind of Unocal me there could be.

Ryan James Tunis: And that loss is there anything you can give us in terms of how you.

Ryan James Tunis: How you came up with I guess.

Ryan James Tunis: If you are thinking about and also just curious.

Ryan James Tunis: What type of reinsurance contracts.

Ryan James Tunis: Responding to that as it's traditional reinsurance or I'm not sure how much.

Kevin O'donnell: Or I'm not sure how much retro you're right, but it is in that type of contract, and the loss is coming. Yeah, I think I'll start. I'll let Dave do most of the talking on this. The bridge loss, the reason we want to highlight it is that it happened in the quarter. It's got a lot of press, and it's across two segments. So I wanted to give you a little bit of transparency. We think recognizing it early makes a lot of sense.

Ryan James Tunis: Marine Youre actually right, but.

Ryan James Tunis: Is it that type of contract and the losses coming from.

Kevin O'donnell: We also think it's the largest marine loss that's ever happened, so I think that also fed into our thinking. We don't think we're oversized with the loss, but I'll turn it over to Dave to talk a little bit more about the coverage.

Dave: Yes, I think ill.

Speaker Change: I'll start I'll, let say if youre most of the talking on that site.

Ryan James Tunis: The bridge lawsuit the reason we wanted to highlight it as it happened in the quarter.

Ryan James Tunis: It's got a lot of precedents across two segments. So I wanted to give you a little bit of transparency.

Ryan James Tunis: Recognizing it early it makes a lot of sense. We also think it's the largest marine loss that's ever happened. So I think that also fed into our thinking we don't think we're oversize with the loss, but I'll turn it over to Dave to talk a little bit worried about the coverages.

David Edward Marra: Yeah, the two coverages that are most in play are marine liability and then property. And that's why we booked it in two separate segments. For marine liability, you asked about where that gets reinsured, whether it's...

Dave: The two coverages that are most in play our marine liability and then property and Thats why we booked it in the two separate segments and Marine liability you asked about where that gets reinsured, whether it's retro.

David Edward Marra: We assume that through traditional excess of loss in the marine environment,

Operator: [inaudible]

Dave: We assume that through traditional excess of loss in the marine and energy space, which covers marine and energy often in a combined way.

Ryan James Tunis: And then we also do write some assumed retro we also buy some retro to limit our exposure on that overall account that's where.

Ryan James Tunis: The specialty piece is being assumed and then the property piece is in our other property property risks in quota share portfolio.

David Edward Marra: And then the property piece is in our other property, property risk, and quota share portfolio. And with regard to the verticality that you mentioned, I think property is a little bit easier to get your hands around. We think there is some scope for more people to be pulled into the casualty, and we contemplated that in the reserve, but we don't think this is a runaway where there's, uh.., you know, a significant expansion beyond the coverage that you said is already sort of known.

David Edward Marra: With regard to the verdict Ality that you mentioned I think the property is a little bit easier to get your hands around.

David Edward Marra: We think there is some scope for more people to be pulled into the casualty only contemplated that in the reserve, but we don't think this is a runaway where there is.

Ryan James Tunis: Significant potential beyond the coverage et cetera already sort of known.

David Edward Marra: Thanks, that's helpful. And then I guess one just for Bob, not asking for without asking for specific expenses, savings, guidance, or anything like that. Just curious, things like real estate, whatever. I'm sure that there are states that have been identified, and it's safe to assume that those

Speaker Change: Thanks, that's helpful and then I guess, one just Bob now.

Speaker Change: Asking for what I was asking.

Bob: Expense savings guidance or anything like that just curious.

Bob: Things like real estate, whatever like I'm sure that there are seeds that have been identified is it safe to assume that those are.

Ryan James Tunis: any of that, you know, kind of minor stuff or whatever's in these few numbers or is some of the easy stuff you've identified as storm to come for the rest of 24. Thanks, Ryan.

Bob: So any of that kind of minor stuff for whatever's in these <unk> numbers or.

Speaker Change: Yes, some of the easy stuff you've identified storm to come for the rest of 'twenty four.

Robert Qutub: We got some of those in the fourth quarter, you know, in the first two months of owning, so we got some of the easier ones up front. You're going to see a lot of these are transition costs that will carry into the first quarter as we do the integration. As I said, it's going to taper off, you know, over the next three quarters down to a nominal amount by Q4 and gone by 2025. So we're expected to see a decline.

Speaker Change: Thanks, Brian.

Speaker Change: Some of those in the fourth quarter and the first two months of opening so we got some of the easier ones upfront you're going to see a lot of these transition costs. It will carry into first quarter as we do the integration as I said, it's going to taper off over the next three quarters down to a nominal amount by Q4 and gone by 2025, so expecting to see a decline was $20 million. This.

Speaker Change: <unk>, probably be $5 6 million last next quarter.

Speaker Change: And just sorry, just to clarify.

Speaker Change: Not the one timers I'm talking about core costs maybe.

Real estate or something like that.

Robert Qutub: It's $20 million this quarter, probably will be $5, $6 million last next quarter. And sorry, just to clarify, not just the one time as I'm talking about costs, like maybe like real estate or something like that. The real estate, okay, so let me rephrase, the real estate and costs like that, we've taken the charges on the unused space that we're not going to use. So what you're going to see now is the recurring use of those spaces is now up in our operating income.

Robert Qutub: So the real estate, Okay. So let me rephrase, the real estate and costs like that we've taken the charges on the unused space that we're not going to use so what youre going to see now is the recurring use of those spaces is now up and our operating income what are you seeing outside of operating income would be the transition integration a lot of those are people at one time.

Robert Qutub: What you're seeing outside of operating income would be, you know, the transition integration; a lot of those are people and one-time costs that come through some consultants that will go away. So that's in the corporate expenses; that's the 20 million that I refer to in my prepared comments. Thanks.

Robert Qutub: Cost to come through consultants that will go away. So that's in the corporate expenses, that's a $20 million that I referred to in my prepared comments.

Speaker Change: Yes.

Robert Qutub: Thanks.

Operator: Your next question comes from Joshua Shanker with Bank of America. Please go ahead.

Robert Qutub: Our next question comes from Joshua Shanker with Bank of America. Please.

Joshua David Shanker: Please go ahead.

Joshua David Shanker: Is there a way to frame what the organic growth was at Renry proper and the organic growth within the part of the Validus book that you wanted to renew? Yeah.

Joshua David Shanker: And then you can imagine I mean get nowhere with this but I'll ask anyway.

Joshua David Shanker: Way to frame, what the organic growth was.

Joshua David Shanker: Raymarine proper.

Joshua David Shanker: The organic growth within the part of the Validus book that you've wanted to renew.

Joshua David Shanker: Yes.

Kevin O'donnell: We're not looking at it that way. You know, as I mentioned, Unknown Executive, Meyer Shields, Robert Qutub, David Marra, Renaissancere Holdings Ltd. I'm very happy with the quality of the underwriting. I'm very happy with the underwriters and the people from Validus.

Joshua David Shanker: We're not looking at it that way.

Joshua David Shanker: As we mentioned.

Kevin O'donnell: Kind of early on.

Kevin O'donnell: Heavy overlap with the Validus portfolio I think what we said is to at the time, we announced the acquisition about as close to a 30% quota share as we could get with the portfolio. So we are.

Joshua David Shanker: Very happy with the quality of the underwriting we're very happy with the quality of the underwriters and the people from Validus.

Kevin O'donnell: We have grown on accounts beyond the 1 plus 1 equals 2. We have shrunk on some of the accounts. The area that we've probably grown the most on a combined basis is within specialty.

Joshua David Shanker: Have grown on accounts beyond the one plus one equals two we have shrunk in some of the accounts one plus one equals to the area that we've probably grown the most on a combined basis within specialty.

Kevin O'donnell: And we've had great success, but it's too difficult for us to think about assigning organic growth between shared accounts. So when we're looking at, we target the amount that we want. Our clients and brokers have been enormously loyal and helpful to us. So when we look at the growth, we're proud of the number that we've put up, but we're not breaking it out between organic and combined, which may make sense. Again, you began your remarks talking about not wanting to pass the risk of hurricane volatility on to your shareholders. You know, the last time the...

Kevin O'donnell: And we've had great success, but we're not it's too difficult for us to think about assigning organic growth between shared accounts. So when we're looking at we target the amount that we want our clients and brokers have been enormously loyal and helpful to us. So when we look at the growth. We're proud of the number that we put out but we're not breaking it out between organic and combined.

Kevin O'donnell: Maybe it makes sense I understand getting you began your remarks talking about not wanting to pass the risk of hurricane volatility beyond your shareholders.

Joshua David Shanker: The last time.

Kevin O'donnell: The balance sheet was tested against major losses, probably Hurricane Ian, and people could determine how they felt about Renry's performance at that moment. But one thing that's really not been tested is the $100 billion disaster, the $150 billion, or the $200 billion disaster. Can you talk a little bit about how Renry's balance sheet and its partners' balance sheets change in terms of their exposure as the amount of the loss rises to levels not before seen?

Joshua David Shanker: The balance sheet was tested against the major losses, probably hurricane Ian.

Kevin O'donnell: People can turn how they feel about remedies before at that moment, but.

Kevin O'donnell: One thing, it's really not been Texas, the $100 billion disaster 100 secured the $200 billion answer can you talk a little bit about how.

Kevin O'donnell: <unk> balance sheet.

And its partners' balance sheets.

Kevin O'donnell: Change in terms of our exposure as the amount of the law rises to levels not <unk>.

Kevin O'donnell: Yeah, so I actually said we wouldn't transfer it to clients. The fact that we're going to hold the risk means or, you know, when he's holding that risk, and we'll manage it appropriately. I think in order to think about how we construct the Portfolio, we need to make sure that we are resilient to losses where, you know, if you think about what that means, as you move further into the tail, you're moving from, you know, income statement concerns to balance sheet concerns and making sure that we are available for the day after the loss to continue to support our clients. That's kind of integral to what we do.

Kevin O'donnell: Yes.

Kevin O'donnell: I actually said, we would transfer to clients. The fact that we're going to hold the risk means.

Kevin O'donnell: Henry is holding that risk and we will manage it appropriately I think in order to think about how we.

Kevin O'donnell: Construct portfolios.

Kevin O'donnell: We need to make sure.

Kevin O'donnell: That we are.

David Edward Marra: Resilient to losses.

Kevin O'donnell: If you think about.

Kevin O'donnell: What that means is as you move further into the tail you're moving from.

Kevin O'donnell: Income statement concerns to balance sheet concerns and making sure that we are available for the day. After the loss to continue to support our clients that's kind of integral in what we do.

Kevin O'donnell: If you take the two portfolios together, right now, our share of larger losses as a percent of equity is relatively consistent with what Renaissance Re has done historically. So we have not levered up the amount of risk that we're taking because we've put the Validus portfolio onto our balance sheet. So, when I think about the largest types of events that can happen, we are equally resilient compared to where we've historically been.

Kevin O'donnell: If you take the two portfolios together.

Kevin O'donnell: Right now our share of.

Kevin O'donnell: Larger losses as a percent of equity is relatively consistent with what <unk> has done historically.

Kevin O'donnell: So we have not levered up the amount of risk that we're taking because we put the validus portfolio onto our balance sheets.

Kevin O'donnell: So when I think about the largest types of events that can happen.

Kevin O'donnell: Our equally resilient compared to where we've historically been that said we are in a much stronger environment across each of the areas, which generate resilience on our balance sheet, we have much stronger investment income and with much stronger specialty income and much stronger fee income all of that bolsters the <unk>.

Kevin O'donnell: That said, we are in a much stronger environment across each of the areas that generate resilience on our balance sheet. We have much stronger investment income, and we have much stronger specialty income, and much stronger fee income. All of that bolsters the impact of any event that can come in from the Cat Book, particularly the Cat Book and the TAIL.

Kevin O'donnell: The impact of any event that could come in from the <unk> program. The Cat book, particularly the Cat book and the tail. So when I look at the portfolio.

Kevin O'donnell: So, when I look at the portfolio, it's well-constructed against TAIL risks. Obviously, we would suffer losses in a TAIL risk event, but there's nothing back there that would make me feel materially different than how I've historically felt about how we built our portfolio. And proportionality, you know, I did begin the correction, not passing the risk on to clients; all the clients are passing the risk on to you in some ways, but they're not passing on all the risk.

Kevin O'donnell: It's well constructed against tail risks, obviously would have suffered losses in it in a tail risk event, but there is nothing back there that would make me feel materially different then I'll have historically felt about how we built our portfolio.

Kevin O'donnell: And the proportionality.

Kevin O'donnell: Rob.

Kevin O'donnell: We began the correction.

Kevin O'donnell: Asking the risk on to.

Kevin O'donnell: Clients are also the clients are passed on to you in some ways, but theyre not passing on all of the rain is there a sense, we can make about about ads b.

Kevin O'donnell: The loss increased to levels not foreseen the amount of risk that has been transferred to <unk> versus the amount of risk that has not yet been transferred.

Kevin O'donnell: So.

Kevin O'donnell: I think.

Kevin O'donnell: Is there a sense we can make about, as the loss increases to levels not foreseen, the amount of risk that's been transferred to Ren Re versus the amount of risk that's not yet been transferred? So, I think what you're asking, well, the biggest exposure we have to an event like you're describing is our PropertyCat portfolio, which is an XOL portfolio. So, as the event continues to grow, losses will revert back to the primary companies once the limits are exhausted from the towers that they purchased.

Kevin O'donnell: What you're asking.

Kevin O'donnell: The biggest exposure we have to an event like you are describing as our property cat portfolio, which is an ex ol portfolio. So as the event continues to grow losses will revert back to the primary companies.

Kevin O'donnell: Once state limits are exhausted from the towers that they purchased so.

Kevin O'donnell: So I think the question you're asking is, as the loss continues to grow, we tap out and become a lower percentage of the overall participation in the loss. As the loss continues to escalate beyond the tower purchase. That's generally the point I'm getting at, since you don't give us PML disclosure, try and understand how Ren reads in a larger box environment. Yeah, the slope of our increase reduces with the size of the loss and as it reverts back to the primary company.

Kevin O'donnell: I think the question Youre asking is as the loss continues to grow we tap out and have become a lower percentage of the overall participation in the loss is the loss continues to escalate beyond the tower purchased.

Speaker Change: Is that your question.

Kevin O'donnell: That's currently in deployment and yet you don't give us P&L disclosure trying to understand how rent.

Kevin O'donnell: And that larger box environment.

Kevin O'donnell: Yes, the slope of our increase reduces with the size of the loss.

Kevin O'donnell: And as it reverts back to the primary company.

Speaker Change: Thank you appreciate it.

Kevin O'donnell: Okay.

Operator: Our next question comes from Yaron Kinar with Jeffries. Please go ahead.

Kevin O'donnell: Our next question comes from Darren <unk> with Jefferies. Please go ahead.

Yaron Joseph Kinar: Thank you good morning.

Yaron Joseph Kinar: I wanted to go back to.

Yaron Joseph Kinar: Your comments Kevin.

Yaron Joseph Kinar: The casualty market and how you feel that generally speaking the market is.

Yaron Joseph Kinar: and how you feel that, generally speaking, the market is keeping up with loss trends. I just want to square that with, you know, when I look at the 10K triangles there, we see that I think we saw a little bit of strengthening for accident year 22, another liability. We saw the initial loss peak for accident year 23, up substantially over the year. How do I square those data points with a comment?

Yaron Joseph Kinar: Keeping up with loss trends.

Yaron Joseph Kinar: I just wanted to square that with when I look at the 10-K triangles today or we see that.

Yaron Joseph Kinar: We saw a little bit of a strengthening for accident year 2002, and other liability. We saw the initial loss picks for accident year 2003 up substantially year over year.

Yaron Joseph Kinar: So how do I square those.

Yaron Joseph Kinar: Points, where the comment is is it just extra prudence on your side or other drivers there.

Robert Qutub: Is it just extra prudence on your side or other drivers there? Let me go ahead and start with that. Thanks for the question, Yaron. What you're looking at are the triangles and the K. And you'll see changes as we go through the actuaries; we'll true those up. What you see in terms of the earlier years or the more recent years, you're seeing some of the short-tail businesses that benefit will come in.

Speaker Change: Let me go ahead and start with that thanks for the question, Yes, we look at when Youre looking at.

Robert Qutub: Angles in the K.

Robert Qutub: And Youll see changes as we go through and the Actuaries will true those up what you see in terms of the earlier years. Furthermore, recent years Youre seeing some of the short tail business since that benefit will come in as far as development and prior years Youre always going to see some movement in the curve as we get more information, but with respect to how we feel about the reserves were very comfortable with our estimates that we have.

Robert Qutub: As far as development and prior years are concerned, you're always going to see some movement in the curves as we get more information. But with respect to how we feel about the reserves, we're very comfortable with the estimates that we have.

Robert Qutub: Okay.

Kevin O'donnell: To give a little bit of context, you know, I think there's been a lot of focus on reserves, and rightfully so. The majority of that focus is probably on years 14 to 18. Unknown Speaker When I think about our reserves, I think about the overall pool of reserves that we have, which is, I'll use round numbers, about $20 billion. When we break it down to the years that get the most attention, which are 2018 and prior, on a net basis, that's less than 5% of our reserve pool.

Robert Qutub: To give a little bit of context.

Robert Qutub: There's been a lot of focus on reserves and rightfully so.

Kevin O'donnell: The majority of that focuses on probably years, 14% to 18.

Kevin O'donnell: When I think about our reserves I think about the overall pool of reserves that we have which is what he was round numbers about $20 billion.

Kevin O'donnell: When we break it down to the years that get the most attention which are 2018 and prior on a net basis thats less than 5% of our reserve pool.

Kevin O'donnell: So we think there are issues that will emerge in the 14 to 18 years, but those issues are not significant to us because of the reserve balance that we have and the fact that we've decided to grow our casualty more substantially, 19 and forward. We have substantial protection for those years. So when I think about the reserve pool, I think there are always movements, as Bob mentioned, in specific years. But across the health of the portfolio and the health of the reserve pool that we have, I think we're in a significantly better position than the industry, and I feel very comfortable about the balance that we have as a company. I got it.

Kevin O'donnell: So we think there are issues that will emerge in the 2014 to 18 years, but these issues are not significant to us because of the reserve balance that we have and the fact that we've decided to grow our casualty more substantially 19 and forward.

Kevin O'donnell: Substantial protections on those years, so when I think about the reserve pool I think there are always movements as Bob mentioned in specific years, but across the health of the portfolio and the health of the reserve pool that we have I think we are in significantly better position in the industry and I feel very comfortable about the balance that we have as a company.

Yaron Joseph Kinar: And then with regard to the more recent accident here, maybe not 2020, just given the COVID lockdowns and whatnot, but as we look at 21, 22, 23, are you still very comfortable with law specs, and then not just your law specs, but your cedence law specs and those keeping up with legal terms? I'll speak to ours. I feel great about ours.

Speaker Change: Got it and then with regards to more recent accident years, maybe not 2020, just given the COVID-19 lockdowns and whatnot.

Yaron Joseph Kinar: 'twenty one 'twenty two 'twenty three are still very comfortable with.

Speaker Change: Prospects not.

Yaron Joseph Kinar: Not just your loss picks, but sure Stephen Foster those keeping up with loss trend.

Yaron Joseph Kinar: I'll speak to ours I feel great about.

Kevin O'donnell: Okay. And my second question, just going back to the commentary around the expectations for an active hurricane season. So I think I understand your point that, ultimately, you're not going to look to pass or, I guess, play with clients, your appetite for client risk, just given any year's dynamic on the hurricane side. But at the end of the day, an active hurricane season does potentially depress returns. So does that not factor into the ultimate appetite for growing and property in any given year? Yeah, so those are, thank you for asking for the clarification there.

Yaron Joseph Kinar: Okay.

Speaker Change: And my second question, just going back to the commentary around.

Kevin O'donnell: The expectations.

Kevin O'donnell: Active hurricane season.

Kevin O'donnell: I think I understand your point of ultimately youre not going to look to pass or.

Kevin O'donnell: I guess with clients.

Kevin O'donnell: Your appetite for client risk.

Kevin O'donnell: Just given any year's dynamic.

Kevin O'donnell: On the hurricane side, but at the end of the day and active hurricane season does potentially depressed returns.

Kevin O'donnell: So does that not factor into ultimate appetite into growing in property cat any given year.

Kevin O'donnell: Yes.

Kevin O'donnell: Thank you for asking for the clarification there.

Kevin O'donnell: When we think about our book of business, and you know, when it tries to touch on the value of incumbency, we look at the expected value of a client or a portfolio. That expected value is higher when we provide consistent coverage through elevated forecast and reduced forecast. Your second question is, how do we think about the risk? And how do we think about our portfolios? We absolutely think about the portfolios and how we're shaping the portfolios, how we're managing the risk that we're taking and the growth objectives that we have.

Kevin O'donnell: When we think about our book of business and what I tried to touch on is the value of incumbency. We look at the expected value of a client or a portfolio that expected value is higher when we provide consistent coverage through elevated forecasts and reduced forecast.

Kevin O'donnell: Your second question is how do we think about the risk and how do we think about our portfolios. We absolutely think about the portfolios and how we're shaping the portfolios how we're managing the risk that we're taking and the growth objectives that we have.

Kevin O'donnell: We will not transfer that to people who have trusted us in the renewal book that we have. But when we think about growth, as I mentioned in the Florida comment earlier, we have a high bar for us to want to continue to deploy resources into that. A contemplation of that would be expectations for a trade because many of the things that would be growth would be a trade, not a partner. So it absolutely folds into our portfolio construction, but we don't transfer it with the availability of capacity to our partners.

Kevin O'donnell: We will not transfer that to people who have trusted us in the renewable book that we have but when we think about growth I mentioned in a Florida comment earlier, we have a high bar for us to want to continue to deploy into that contemplation of that would be expectations for a trade.

Kevin O'donnell: Many of the things that would be growth would be a trade not a partner so.

Kevin O'donnell: Absolutely falls into our portfolio construction, but we don't have transparent with availability of capacity to our partners.

Operator: That makes sense. Thanks so much for the call.

Speaker Change: That makes sense. Thanks, so much for the color.

Operator: Okay.

Operator: Our next question will come from Brian Meredith with UBS. Please go ahead.

Operator: Our next question will come from Brian Meredith with UBS. Please go ahead, yet yes. Thanks couple of questions here for you first.

Brian Robert Meredith: Please go ahead. Yes, thanks. First, Kevin, I know previously your intentions were to shift cat capacity to the cat reinsurance line and away from other property. It's hard to see how much the actual organic growth was in other property, but is that still the case, or have you kind of changed your views on what's going on in the other property area? That's still the case.

Brian Robert Meredith: Kevin I know previously.

Brian Robert Meredith: Previously your intentions were to shift.

Brian Robert Meredith: Lastly to the cat reinsurance line away from other property.

Brian Robert Meredith: Hard to see how much the actual organic growth was another property, but is that still the case.

Brian Robert Meredith: You've kind of changed your views on what's going in the other property area.

Brian Robert Meredith: Yes.

Kevin O'donnell: You know, I think we're still getting excess return compared to the other property portfolio by writing property CAT, so we're focused there. We also like the distribution that comes in with the new attachment points in the CAT portfolio where there's less attritional loss coming through the income statement, obviously with the CAT book, which is an excess of loss book. So I would say our strategy on other property is relatively consistent. We are monitoring it closely, particularly the CAT exposed other property portfolio. We think there's a good rate there and a good opportunity, but on balance, the property CAT opportunity still trumps that opportunity for us. Great, thank you.

Kevin O'donnell: That's still the case I think.

Kevin O'donnell: We're still getting excess return compared to the other property portfolio.

Kevin O'donnell: By writing property Cat. So were focused there. We also like the distribution that comes in from the with the new attachment points and the cat portfolio, where theres less attritional loss coming through the income statement, obviously with the Cat book, which is in excess of loss book. So I would say our strategy on the other property is relatively consistent.

Kevin O'donnell: We have.

Kevin O'donnell: Monitoring closely, particularly the cat expose other property portfolio.

Kevin O'donnell: We think there's good rate there and good opportunity, but on balance the property cat opportunities still trumps that opportunity for us.

Brian Robert Meredith: And then the second question has to do with some people in the market moving down a little bit in towers to kind of accommodate demand for maybe some more traditional losses, because that was a problem last year. What are you seeing in the marketplace? Is that happening?

Speaker Change: Great. Thank you and then the second question.

Brian Robert Meredith: Has to do with we've heard a little bit about some.

Kevin O'donnell: And do we think that's going to continue to move in that direction, whereas it seems like there is more competition at the very high end? There is definitely more competition at the high end, but actually, I'll let Dave...

Brian Robert Meredith: Some people in the market moving down a little bit in towers to kind of accommodate demand for maybe some more attritional.

Kevin O'donnell: Losses, because that was a problem last year what are you seeing in the marketplace is that happening and do we think that's going to continue to move that direction.

Kevin O'donnell: Like more competition at the very high end.

Dave: It's definitely more competition to the hybrid.

Dave: It is.

Dave: More on the coal based yes. The competition is at the high end and also the increased demand at the high end so those bids.

David Edward Marra: Yeah, the competition is at the high end, and also there are increased demands at the high end. So those have been a nice balancing effect on each other. There has been interest in buying down below, and I think that earnings protection is something where there would be demand.

David Edward Marra: A nice balancing effect on each other.

David Edward Marra: Has been interest in buying down below and I think that earnings protection as something where there would be demand and the challenges that the cost of that protection will be too expensive for most clients to want to buy it there had been a few just some core partners, where they've bought here and there around the edges, but more or less the retention for 2023 of health into 2024.

Brian Robert Meredith: Gotcha. And can I squeeze one more in just quickly?

Brian Robert Meredith: Gotcha. And can I squeeze one more?

Speaker Change: Got you and can I squeeze one more and then just quickly. This is more of a I guess for Bob.

Brian Robert Meredith: This is more, I guess, for Bob. I looked at the acquisition expense ratio in CAT, and it's pretty high. Is it still there?

Brian Robert Meredith: Looked at the acquisition expense ratio.

Bob: And it's a pretty high.

Bob: Were there or is that kind of the new kind of post all of this kind of acquisition ratio cash returns.

Robert Qutub: Or is that kind of a new kind of post-validation kind of acquisition ratio in cadastral insurance? Yeah, thanks for the question. What's driving a lot of the increase in the acquisition cost ratio is the purchase accounting. In the property book, we had two points come into the property, same thing with casualty, same thing overall. That's what's driving it. That'll taper off a lot, largely over the

Bob: Yes. Thanks for the question, what's driving a lot of the increase in the acquisition cost ratios in purchase accounting the property property book He had two points come into the property same thing with casualty same thing overall, that's what's driving that will taper off largely over the next year.

Speaker Change: Helpful. Thank you.

Speaker Change: Thanks Brent.

Operator: Our next question comes from Mike Zaremski with BMO. Please go ahead.

Robert Qutub: Our next question comes from Mike <unk> with BMO. Please go ahead.

Operator: Okay.

Michael David Zaremski: Okay, thanks. I guess just want to, given there's a lot of moving parts in Dallas, I think I know the answer. But on capital management, you know, if share of purchases is, you know, should we be thinking that's not a meaningful part of the equation until, you know, 25 or after given the digestion of Validus, you know, just by

Michael David Zaremski: Okay. Thanks.

Michael David Zaremski: I guess just wanted to given there's just a lot of moving parts with Dallas I think I know the answer but on capital management.

Michael David Zaremski: Yes.

Michael David Zaremski: Share repurchases.

Michael David Zaremski: We thinking thats not a meaningful part of the equation until then.

Michael David Zaremski: 'twenty fiber or after given the digestion of Validus.

Michael David Zaremski: you know, despite excellent profitability and potentially, you know, depending on when the season goes on.

Michael David Zaremski: Excellent.

Michael David Zaremski: Stability and potentially spending.

Michael David Zaremski: Depending how long season guys.

Speaker Change: Yes. Thanks.

Speaker Change: Thanks, Mike for that question I tried to address that in the prepared comments right now when we're in a good capital position, but we're really focused on the integration. We've got two large balance sheets that Kevin was referring to the major focus right now is renewing on to that in the second major focus is consolidating those because what that does is it leaves stranded capital on those platforms.

Robert Qutub: I tried to address that in the prepared comments. Right now, you know, one, we're in a good capital position, but we're really focused on the integration. We've got two large balance sheets that Kevin was referring to, and the major focus right now is renewing that. And the second major focus is consolidating those because what that does is it leaves stranded capital on those platforms. So, mid-year and towards the end of the year, we're hoping to have those balance sheets back on our books.

Robert Qutub: Mid year and towards the end of the year, we're hoping to have those balance sheets back onto our books, but more importantly, as Kevin referred to is we're focused on deploying capital organically at the mid year renewals. So that's kind of back into that and what I was looking as to where we could optimize the returns on capital.

Robert Qutub: But more importantly, as Kevin referred to, we're focused on deploying capital organically at the mid-year renewal. So that's kind of back into that and what I was looking at as to where we could optimize the returns on capital.

Michael David Zaremski: Okay, that's right. It makes sense.

Robert Qutub: Okay.

Speaker Change: That makes sense.

Michael David Zaremski: Follow up. I'm just curious. So, you know, lots

Michael David Zaremski: Follow up.

Michael David Zaremski: Just curious so.

Speaker Change: Lots of <unk>.

Operator: Questions about casualty. You know, I think, you know, I've practiced with, you know, I think, I think most, most folks know that rent rent.

Michael David Zaremski: <unk> about casualty.

Operator: I think perhaps.

Operator: That's what I thought I think I think most most folks know that.

Operator: Transcripts provided by Transcription Outsourcing, LLC.

Operator: <unk> has a long history of conservative reserving.

Operator: But on the on the social inflationary aspects of the portfolio I'm, assuming those are mostly kind of quota share agreements with your with your clients and.

Speaker Change: Probably maybe a naive question, but do you just simply kind of use their loss ratio.

Operator: And what they are giving you are the actuaries able to kind of.

Operator: Bacon their own own view so.

Operator: Kind of how you how you decide how you're booking at thanks.

David Edward Marra: how you decide, you know, how you're booking that. Thanks. Hi, this is David. About the first question on the reservation on the quota share.

David Edward Marra: Yes, Hi, this is David.

David: About the first question on the reserving on the quota share, but a lot of it is quota share. So we are taking a proportion of what our clients end up writing in pain and suffering losses, our actuaries have an independent view is completely separate from what our clients book and so that.

David Edward Marra: But a lot of it is quota share, so we are taking a proportion of what

David Edward Marra: All clients end up writing and paying for losses. Our actuaries have an independent view. It's completely separate from what our clients book. And so that is fairly unrelated.

David Edward Marra: Fairly unrelated.

David Edward Marra: What we're seeing in social inflation is that we have a few different categories. The most intense is the commercial auto side, and that's an area where clients have seen a lot of deterioration due to social inflation. That's a class that we've historically avoided and had very little exposure to. General liability has some of that creeping into the umbrella layers, but rates are keeping up with that trend, so we probably have to continue to monitor that.

David: What we're seeing in social inflation as we have a few different categories.

David Edward Marra: The most intense as the commercial auto side and Thats, an area, where clients have seen a lot of deterioration with social inflation. That's a class that we historically avoided didn't have very little exposure to general liability has some of that creeping into the umbrella layers and but.

David Edward Marra: Rates are keeping up with that trend. So we have to continue to monitor that and D&O is where there's less social inflation exposure, but losses are elevated and we're cutting back the portfolio. There. So we take a very proactive approach to manage the portfolio. So that we're not as exposed to social inflation.

David Edward Marra: The D&O business is where there's less social inflation exposure, but losses are elevated, and we're cutting back the portfolio there. So we take a very proactive approach to manage the portfolio so that we're not as exposed to social inflation.

Operator: I'm Ed Lee Evers.

David Edward Marra: Average in the market.

Speaker Change: Okay. Thank you.

Operator: Our next question comes from Charlie Lederer from Citigroup. Go ahead.

Operator: Our next question comes from Charlie <unk> from Citigroup. Please go ahead.

Charlie Lederer: Hey, maybe just to follow up on the last question, can you share some color on maybe how border road trends have changed post a lot of the 4Q noise and casualty that we saw across the industry? Can you just clarify what do you mean by border of trends? So, as far as actual claim movements from your students, I know you guys have some, like, you know, a margin above them, maybe, but, um, you have, yeah.

Charlie Lederer: Hey, maybe just a follow up on the last question.

Charlie Lederer: Can you share some color on.

Charlie Lederer: Maybe how border road trends have changed.

Charlie Lederer: A lot of the <unk> and casualty that we saw across the industry.

Speaker Change: Could you just for clarification, what do you mean by quarter trends.

Charlie Lederer: Actual claim movements from your seat.

Charlie Lederer: I know you guys have.

Charlie Lederer: Margin about them, maybe but.

Charlie Lederer: Yes.

Charlie Lederer: Yeah, okay, I see what you mean. So as we get information from our students about where they're booking losses for individual claims, there has been a lot of activity, mostly from the 2016 to 2018 or 19 period, where our students are putting up more reserves for individual claim settlements. It's not as much about their IVNR level, that's an independent judgment, and then we judge our own IVNR levels. But there's

Speaker Change: Yes, Okay, I see what you mean.

Charlie Lederer: So as we get information from our seasons, where theyre booking.

Charlie Lederer: Losses for individual claims there has been a lot of activity, mostly from the 2016 to 2018 or 19 period, where our seats are putting up more reserves for individual claim settlements, it's not as much about their IV in our level of effort independent judgment, and we judge our own IV and our levels, but there is.

David Edward Marra: Healthy progression, meaning a significant progression of how our students are increasing their own case reserves, which is reflective of all the trends that we've discussed.

Charlie Lederer: Healthy progression, meaning significant progression of how our seasons are increasing their own case reserves, which is reflective of all the trends.

David Edward Marra: Yes.

Charlie Lederer: Got it. Thank you.

Speaker Change: Got it. Thank you and then just.

David Edward Marra: A follow up on the.

Charlie Lederer: Other operating expenses I know, Bob you said flat.

Charlie Lederer: For the year do you mean off of 'twenty three levels are up.

Charlie Lederer: Kind of a lower <unk> 24, a level that we saw.

Charlie Lederer: And then just a follow up on the other operating expenses. I know, Bob, you said flat for the year. But did you mean off of 23 levels or off of kind of the lower 1Q24 level that we saw?

Speaker Change: Just to make sure.

Bob: Charles Youre talking about the operating expenses at the corporate expenses that right.

Robert Qutub: Just to make sure, Charlie, you're talking about operating expenses, not corporate expenses. Is that right? Yeah. One versus the other.

Charlie Lederer: We're assisting us for.

Charlie Lederer: Yeah, the 4.3 ratio.

Robert Qutub: $4 three ratio.

Robert Qutub: Yeah, the ongoing cost just within the combined ratio did escalate, obviously, as a result of the casualty and property integrations coming from validers. However, casualty was proportionally a bit higher, so you saw a higher increase coming in on the casualty side. But early on, we're going through in terms of how we can match off some of these allocated costs. But right now, you will see an elevated cost coming in through the casualty side and property. It's down a little bit from the last quarter.

Charlie Lederer: Yes, the ongoing costs just within the combined ratio did elevate it obviously as a result of the casualty and property integrations coming from Validus casualty was proportionately higher so you saw higher increase coming in on the casualty side, but early on we are going through in terms of how we can match off some of these allocated costs, but right now you will see an elevated <unk>.

Robert Qutub: It's coming in through the casualty side and property, it's down a little bit from the last quarter I think Kathryn <unk> 48 last quarter was down $44 42. This quarter, so kind of looking at that for now.

Speaker Change: Okay, and I guess, just one one quickly.

Charlie Lederer: Okay, and I guess just one one quickly. I think the guide was for 40% amortization and 24% of the intangibles from the valid seal. Is that still the guide? It came in a little lighter than we expected in the quarter. Yeah, it started.

Robert Qutub: I think the guide was for 40%.

Charlie Lederer: Amortization in <unk> 24 of the intangibles.

Charlie Lederer: From the Valassis deal events.

Charlie Lederer: The guide came in a little lighter than we expected in the quarter.

Charlie Lederer: Yeah, it started, I mean, the amortization started in the first and last two months of last year, so as I tried to guide Brian when he asked the question from UBS was that they are going to start to taper off over the course of this year, and the bulk of them will be out by this year and the first quarter of next year, and then the longer tail on some of the longer lived intangibles will stay in for a while.

Speaker Change: Yes, it started when the amortization starting the first last few months of last last year. So as I tried to guide Brian too when he asked the question from UBS was that they are going to start to taper off over the course of this year and a bulk of moving out by.

Charlie Lederer: Into this year into the first quarter of next year and then the longer tail on some of the longer lived intangibles will stand for a while.

Speaker Change: Okay. Thank you.

Operator: Our next question comes from David Modamadan with Evercore ISI. Please go ahead.

Speaker Change: Our next question comes from David Mora Madden with Evercore ISI. Please go ahead.

David Edward Marra: Hi, Thanks, Good morning, hoping you could dig into the reserve development in the casualty and specialty.

David Edward Marra: Specialty segment, just some of the moving pieces among the lines.

David Edward Marra: <unk> segment.

David Edward Marra: Just some of the moving pieces among the lines behind the $2 4 million of favorable development.

David Edward Marra: Moving pieces among the lines behind $2.4 million of favorable development. Yeah, no, that's David.

David Edward Marra: That's a good question. You know, purchase accounting does go through the prior year. And so prior year development had about basically two points coming through there related to that. And so you will see a repressed level of favorable development. So think about 10 $11 million. Got it.

David Edward Marra: Yes.

David Edward Marra: David Thats a good question, we have the purchase accounting does go through the prior year and so prior year development had about basically two points coming through there related to that and say you will see a repressed level of favorable development, so think about $10 million to $11 million.

David Edward Marra: And what was driving that? The $10-11 million of favorable development? That's coming across as we go through the development on our prior years. But that $10 or $11 million is the purchase accounting adjustment that goes against it. So I think pre-purchase accounting favorable development would have been closer to about $13 or $14 million.

Speaker Change: Got it and what was what was driving that.

David Edward Marra: The other 10.

David Edward Marra: 10 of $11 million of favorable development.

David Edward Marra: That's coming across as we go through the development on our prior years, but that $10 million to $11 million is the purchase accounting adjustment that goes against it.

David Edward Marra: Pre purchase accounting favorable development would have been closer to about 13 or $14 million.

David Edward Marra: Understood. Thanks. Thanks for that clarification. And I think this this came up just just sticking on the on the reserves on the casualty side. Yeah, I think I think it came up earlier that on actually in your

Speaker Change: Understood. Thanks, Thanks for that clarification.

David Edward Marra: And I think this came up.

David Edward Marra: Just sticking on the reserves on the casualty side.

David Edward Marra: I think I think it came up earlier that on accident year 2014 through 18, you guys still have substantial protections on those years could you just elaborate what you mean by that and how much protection youre referring to.

David Edward Marra: 14 through 18, you guys still have substantial protection in those years. Could you just elaborate on what you mean by that and how much protection you're referring to?

David Edward Marra: and you're referring to?

Kevin O'donnell: Yeah, so there are several things that I was trying to highlight about that. One is that our book was substantially smaller from a written perspective in those years.

David Edward Marra: Yes.

David Edward Marra: There is.

Kevin O'donnell: Several things that I was trying to highlight on that so one is our book was substantially smaller from a written perspective in those years.

Kevin O'donnell: You know, if you look at the growth of our overall casualty specialty, it really started to increase materially in 19. The acquisitions that we've made, which brought prior year reserves, were protected by ADCs, which we've discussed before, both for Tokyo and for Validus, which buffers it. And then additionally, we have additional protections that we purchased for the syndicate for the years prior to 18. So within all of those, there's a significant limit to coverage, which also reduces the net amount, which was captured in the 5% that I highlighted earlier.

Kevin O'donnell: If you look at the growth of our overall casualty specialty it really started to increase materially in 19.

Kevin O'donnell: The acquisitions that we've made which brought prior year reserves were protected by Adcs, which we've discussed before both for Tokyo and for Valley.

Kevin O'donnell: Validus.

Kevin O'donnell: Which buffers and then additionally, we have additional protections that we purchased for the syndicate for the years prior to 2018.

Kevin O'donnell: So within all of those Theres significant limit in coverage, which also reduces the net amount which was <unk>.

Kevin O'donnell: Captured in the 5% that I highlighted earlier.

David Edward Marra: Got it. And

Speaker Change: Got it.

Kevin O'donnell: <unk>.

David Edward Marra: On the Tokyo Marine ADC, is there any way we can size how much of a...

David Edward Marra: The Tokio Marine ADC.

David Edward Marra: Is there any way we can size how much of a how much of it.

David Edward Marra: way we can size how much of a how much protection is left on that.

David Edward Marra: Protection is left on that.

David Edward Marra: No, there's a limit left. And, you know, we're not going to talk about an individual contractor with a counterparty. Okay.

David Edward Marra: No.

David Edward Marra: There is limit left.

David Edward Marra: No, we're not going to talk about an individual contract.

David Edward Marra: With the counterparty.

David Edward Marra: Okay, that makes sense. Thank you.

Speaker Change: Okay makes sense. Thank you.

Speaker Change: Thank you.

Operator: And this will conclude today's question and answer session. I would now like to turn the conference back to Kevin O'Donnell for any additional or closing remarks.

David Edward Marra: And this will conclude today's question and answer session I would now like to turn the conference back to Kevin O'donnell for any additional or closing remarks.

Kevin O'donnell: Well, thank you everybody. We're pleased with the results we've had this year and look forward to our call next quarter. Thanks again.

Kevin O'donnell: Well, thank you everybody.

Kevin O'donnell: We're pleased with the results we've had this year and look forward to our call next quarter. Thanks again.

Operator: And this concludes the Renaissance Free First Quarter 2024 Earnings Call-In Webcast. Please disconnect your line at this time and have a wonderful day.

Speaker Change: And this concludes the Renaissance for <unk> first quarter 2024 earnings call and webcast. Please disconnect. Your line at this time and have a wonderful day.

Operator: [inaudible]

Operator: [music].

Operator: Yes.

Operator:

Operator: [music].