Q2 2024 RenaissanceRe Holdings Ltd Earnings Call
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Ashley: Good morning, my name is Ashley, and I will be your conference operator today. At this time, I would like to welcome everyone to the Renaissance Re-Second Quarter 2024 earnings conference call in webcast.
Ashley: Good morning. My name is Ashley, and I will be your conference operator today. At this time, I would like to welcome everyone to the Renaissance RE second quarter 2024 earnings conference call and webcast. After the prepared remarks, we will open the call for questions. Instructions will be given at that time. Lastly, if you should require operator assistance, please press star zero.
Ashley: Thank you. I will now turn the call over to Keith McCue, Senior Vice President of Finance and Innovation and Investor Relations. Please go ahead. Thank you, Ashley.
Ashley: After the prepared remarks, we will open the call for questions. Instructions will be given at that time. Lastly, if you should require operator assistance, please press *0.
Keith McCue: I will now turn the call over to Keith McCue, Senior Vice President of Finance and Investor Relations.
Keith McCue: Thank you, Ashley.
Keith Alfred McCue: Good morning and welcome to Renaissance 3's second 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.
Kevin O'donnell: Good morning, and welcome to RenaissanceRe second 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, Group Chief Underwriting Officer.
Thank you, Ashley. Good morning and welcome to Renaissancere's second...
Kevin O'donnell: First, some housekeeping matters. Our discussion today will include forward-looking statements, including new and updated expectations for our business and results of operations. It's 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.
Speaker Change: First, some housekeeping matters. Our discussion today will include forward-looking statements, including new and updated expectations for our business and results of operations.
Speaker Change: It's 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.
Kevin O'donnell: Reconciliation 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 Renery.com.
Reconciliations to gap metrics and other information concerning non- GAAP measures may be found in our earnings release and financial supplement.
Keith Alfred McCue: Our discussion today will include forward-looking statements, including new and updated expectations for our business and results of operations. 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.
Kevin O'donnell: And now, I'd like to turn the call over to Kevin.
Speaker Change: which are available on our website at renree.com. And now, I'd like to turn the call over to Kevin. Kevin?
Kevin O'donnell: And thank you for joining today's call. Before I begin my comments, I want to welcome our Chief Underwriting Officer, David Marra, to the call. Going forward, he will provide the more detailed commentary on segment performance that I previously covered, and I look forward to his increased participation.
Kevin O'donnell: Thanks, Keith.
Kevin O'donnell: Good morning, everyone, and thank you for joining today's call. Before I begin my comments, I want to welcome our Chief Underwriting Officer, David Marra, to the call. Going forward, he will provide the more detailed commentary on segment performance that I've previously covered, and I look forward to his increased participation. Welcome, David. Turning to the quarter, I am pleased to report that Renets on to where he once again delivered excellent results. We reported an annualized operating return on average common equity of 28%. Notably, the operating return on this on equity of this quarter is almost identical to Q2 last year, but average common equity has increased by two-thirds.
Kevin: Thanks, Keith. Good morning, everyone, and thank you for joining today's call.
Kevin O'donnell: Turning to the quarter, I am pleased to report that Renaissancere once again delivered excellent results. We reported an annualized operating return on average common equity of 28%. Notably, the operating return on equity this quarter is almost identical to Q2 last year. But average common equity has increased by two-thirds. We have changed the scale of the company over the last several years, most significantly by acquiring Validus Re, and we are proud that this greater scale and diversification continue to reward our shareholders with superior returns.
Kevin O'donnell: We have changed the scale of the company over the last several years, most significantly, by acquiring valid history, and are proud that this greater scale of diversification continues to reward our shareholders with superior returns. Looking forward, over the remainder of this year and into 2025, I believe these superior returns can persist. It is an exciting time to be a researcher, and we are confident in our strategy, and we trust our execution. As you will hear us discussed today, we are delivering results across each of our three drivers of profit and believe that we can continue to do so for several reasons.
Kevin: We have changed the scale of the company over the last several years, most significantly by acquiring Validus Re. And are proud that this greater scale and diversification continues to reward our shareholders with superior returns.
Kevin O'donnell: Looking forward, over the remainder of this year and into 2025, I believe these superior returns can persist. It is an exciting time to be a reinsurer, and we are confident in our strategy, and we trust our execution. As you will hear us discuss today, we are delivering results across each of our three drivers of profit and believe that we can continue to do so for several reasons.
Kevin: Looking forward, over the remainder of this year and into 2025, I believe these superior returns can persist. It is an exciting time to be a reinsurer and we are confident in our strategy and we trust our execution.
Kevin: As you will hear us discuss today, we are delivering results across each of our three drivers of profit and believe that we can continue to do so for several reasons.
Kevin O'donnell: First, property reinsurance rates remain attractive. We let the market pricing reset in 2023 and are confident that the rate strength we are currently experiencing will continue. The market is becoming increasingly stable. Primary companies are adjusting to the new reinsurance market by increasing property rates. This allows them to continue to add limit to their reinsurance protections. Over the preceding year, we estimate that demand for property catastrophe reinsurance limit in the U.S. excluding cat bonds, as increased by about $20 billion. This new demand was present at the beginning of the year and accelerated into the midyear renewals.
First, property reinsurance rates remain attractive.
Kevin O'donnell: We led the market pricing reset in 2023 and are confident that the rate strength we are currently experiencing will continue. The market is becoming increasingly stable. Primary companies are adjusting to the new reinsurance market by increasing property rates. This allows them to continue to add limits to their reinsurance protection. Over the preceding year, we estimate that demand for property catastrophe reinsurance limits in the U.S., excluding cap bonds, has increased by about $20 billion.
Kevin: We led the market pricing reset in 2023 and are confident that the rate strength we are currently experiencing will continue.
Kevin: The market is becoming increasingly stable. Primary companies are adjusting to the new reinsurance market by increasing property rates. This allows them to continue to add limit to their reinsurance protections.
Kevin: Over the preceding year, we estimate that demand for property catastrophe reinsurance limit in the U.S., excluding cap bonds, has increased by about $20 billion.
Kevin O'donnell: This new demand was present at the beginning of the year and accelerated into the mid-year renewals. However, supply ultimately met this demand but did not exceed it. Second, interest rates have proven to be sticky, and even with anticipated rate cuts, will likely remain higher than they have been over most of the past two decades.
Kevin: This new demand was present at the beginning of the year and accelerated into the mid-year renewals. Supply ultimately met this demand but did not exceed it.
Kevin O'donnell: Supply, ultimately met this demand, but did not exceed it. Second, interest rates have proven to be sticky. And even with anticipated rate cuts, will likely remain higher than they have been over most of the past two decades. At the same time, our investment portfolio continues to grow. The combination of increased investment leverage, largely benefiting from our casualty and specialty portfolio. An increased book yield or driving compelling returns and benefiting shareholders. Third, our feed generating capital partners' businesses performing well. We have attractive structures and provide our third-party capital partners access to several offerings, all of which benefit from the exceptional talent of our underwriting franchise.
Kevin: Second, interest rates have proven to be sticky, and even with anticipated rate cuts, will likely remain higher than they have been over most of the past two decades.
Kevin O'donnell: At the same time, our investment portfolio continues to grow. The combination of increased investment leverage, largely benefiting from our casualty and specialty portfolio, and increased book yield are driving compelling returns and benefiting shareholders. Third, our fee-generating capital partners business is performing well. We have attractive structures and provide our third-party capital partners access to several offerings, all of which benefit from the exceptional talent of our underwriting franchise.
Speaker Change: At the same time, our investment portfolio continues to grow. The combination of increased investment leverage, largely benefiting from our casualty and specialty portfolio, and increased book yield are driving compelling returns and benefiting shareholders.
Kevin: Third, our fee-generating capital partners business is performing well.
Kevin: We have attractive structures and provide our third-party capital partners access to several offerings, all of which benefit from the exceptional talent of our underwriting franchise. This aligned strategy
Kevin O'donnell: This alliance strategy continues to attract capital and separates us from other managers. Our capital partners business improves our offerings to customers. Enhances our ability to optimize our portfolio and generate attractive fees for doing so. One more reason we are so excited about the future is the performance of our validist re-acquisition. We have renewed most of the Validist book at this point. And we believe we achieved our most important objectives: underwriting, people, and capital. From underwriting perspective, I am pleased to report that the Validist portfolio is outperformed initial expectations against every relevant metric. We successfully retained the combined book deep into our partnerships with customers and met our underwriting objectives across both segments.
Kevin O'donnell: This aligns strategy, continues to attract capital, and separates us from other managers. Our capital partners business improves our offerings to customers, enhances our ability to optimize our portfolio, and generates attractive fees for doing so. One more reason we are so excited about the future is the performance of our Validus reacquisition. We have renewed most of the Validus book at this point.
Kevin: continues to attract capital and separates us from other managers. Our capital partners business improves our offerings to customers, enhances our ability to optimize our portfolio, and generates attractive fees for doing so.
Kevin: One more reason we are so excited about the future is the performance of our Validus reacquisition.
Kevin O'donnell: And we believe we achieved our most important objectives, underwriting, people, and capital. From an underwriting perspective, I am pleased to report that the Validus portfolio has outperformed initial expectations against every relevant metric. We successfully retained the combined book, deepened our partnerships with customers, and met our underwriting objectives across both segments. As we have discussed in the past, we understood the Validus business very well, and there were no surprises, underwriting or otherwise.
Kevin: We have renewed most of the Validus book at this point.
Kevin: And we believe we achieved our most important objectives, underwriting, people, and capital.
Kevin O'donnell: As we have discussed in the past, we understood the validist re-business very well, and there were no surprises, underwriting or otherwise. From people and operations perspective, we have retained key talent. Legacy, validist employees are fully integrated into our teams and have been making substantial contributions at every level of our organization. Operationally, underwriting systems have been fully integrated since the closing, and we are on schedule for integrating our back office systems. In addition, we have been able to leverage several of Validist's proprietary systems and tools to augment our deal analysis and modeling. From a capital management perspective, we have already merged one of the two main validist balance sheets into the RenaissanceRevalent sheet.
Kevin: As we have discussed in the past, we understood the valid history business very well and there were no surprises, underwriting or otherwise.
Kevin O'donnell: From a people and operations perspective, we have retained key talent. Legacy Validus employees are fully integrated into our teams and have been making substantial contributions at every level of our organization. Operationally, underwriting systems have been fully integrated since the closing, and we are on schedule for integrating our back office system. In addition, we have been able to leverage several of Valida's proprietary systems and tools to augment our deal analysis and modeling.
Kevin: From a people and operations perspective, we have retained key talent. Legacy Validus employees are fully integrated into our teams and have been making substantial contributions at every level of our organization.
Kevin: Operationally, underwriting systems have been fully integrated since the closing, and we are on schedule for integrating our back-office systems. In addition, we have been able to leverage several of Valida's proprietary systems and tools to augment our deal analysis and modeling.
Kevin O'donnell: From a capital management perspective, we have already merged one of the two main validus balance sheets into a Renaissance rebalance sheet, and we remain on track to merge the remaining balance sheet by the end of the year. Together with renewing the Validus portfolio onto Renaissance rebalance sheets, these actions have freed substantial capital and liquidity at the holding company. This provides us with considerable dry powder to deploy into the business and return to shareholders. From my perspective, we still have a little work to do in order to fully integrate Validus.
Kevin: From a capital management perspective, we have already merged one of the two main balance sheets into a Renaissancere balance sheet. We remain on track to merge the remaining balance sheet by the end of the year.
Kevin O'donnell: We remain on track to merge the remaining balance sheet by the end of the year. Together with renewing validist portfolio onto Renaissancerevalent sheets, these actions have three substantial capital and liquidity at the holding company. This provides us with considerable drive powder to deploy into the business and return to shareholders. For my perspective, we still have a little work to do in order to fully integrate Validist, but successfully landing the underwriting portfolio was the most important milestone. Bob and Dave will provide additional insights into the success of Validist that suffice it to say we couldn't be happier regarding our execution on this deal.
Kevin O'donnell: But successfully landing the underwriting portfolio was the most important milestone. Bob and Dave will provide additional insights into the success of Alatis, but suffice it to say, we couldn't be happier regarding our execution on this deal.
Speaker Change: From my perspective, we still have a little work to do in order to fully integrate Validus. But successfully landing the underwriting portfolio was the most important milestone.
Speaker Change: will provide additional insights into the success of ALODIS but suffice it to say we couldn't be happier regarding our execution on this deal.
Kevin O'donnell: Moving now to the mid-year renewals, which David will discuss in greater detail. Overall, we were pleased with our results and the risk portfolio we constructed. This remains one of the most favorable property markets that I've seen in my career with attractive rates and terms and conditions relatively unchanged. All of which is to say, we are delighted with the state of the market, which I believe remains appropriately positioned in the insurance value chain, assumes the appropriate level of risk, and is being paid attractively for it.
Kevin O'donnell: Shifting out to the mid-year renewals, which David will discuss in greater detail. Overall, we were pleased with our results and the risk portfolio we constructed. This remains one of the most favorable property markets that I've seen in my career, with attractive rates and terms and conditions relatively unchanged. All of which is to say we are delighted with the state of the market, which I believe remains appropriately positioned in the insurance value chain, assumes the appropriate level of risk, and is being paid attractively for it.
Speaker Change: Shifting now to the mid-year renewals, which David will discuss in greater detail.
David: Overall we were pleased with our results and the risk portfolio we constructed. This remains one of the most favorable property markets that I've seen in my career with attractive rates and terms and conditions relatively unchanged.
David: All of which is to say, we are delighted with the state of the market, which I believe remains appropriately positioned in the insurance value chain, assumes the appropriate level of risk, and is being paid attractively for it.
Kevin O'donnell: Before turning to Bob, I would like to spend a minute discussing how we shaped our risk going into this wind season and how we have enhanced our resilience to loss. To help frame the discussion, I want to highlight three main points.
Kevin O'donnell: Before turning to Bob, I would like to spend a minute discussing how we shaped our risk going into this win season and how we have enhanced our resilience to loss. To help frame this discussion, I want to highlight three main points. First, on an absolute dollar basis, our risk is up. As we have grew exposure to Southeast hurricane, largely due to the addition of the validist portfolio. Second, on a percentage of equity basis, however, we reduced our exposure to loss. And third, we shaped our portfolio to steepen the curve. Further reducing the relative risk we are taking to small events compared to large events.
David: Before turning to Bob, I would like to spend a minute discussing how we shaped our risk going into this wind season and how we have enhanced our resilience to loss.
Kevin O'donnell: First, on an absolute dollar basis, our risk is up, as we have grown exposure to Southeast Hurricane largely due to the addition of a Validus portfolio. Second, on a percentage of equity basis, however, we reduced our exposure to loss, and third, we shaped our portfolio to steepen the curve, further reducing the relative risk we are taking to small events compared to larger events. The first two points are straightforward.
Speaker Change: To help frame the discussion, I want to highlight three main points. First, on an absolute dollar basis, our risk is up, as we have grew exposure to Southeast Hurricane largely due to the addition of a Validus portfolio.
David: Second, on a percentage of equity basis however, we reduced our exposure to loss.
David: And third, we shaped our portfolio to steepen the curve, further reducing the relative risk we are taking to small events compared to larger events.
Kevin O'donnell: We grew because rates were attractive, and we can deliver strong returns by deploying capital into hurricane risk, even when considering the elevated forecast. At the same time, we grew our equity base substantially, which reduced our overall risk on a percentage of equity base. The more complicated element and the one that added the most alpha to our portfolio relative to the market was our active shaping of the portfolio's distribution of outcomes to decrease exposure to smaller events compared to larger events.
Kevin O'donnell: The first two points are straightforward. We grew because rates were attractive, and we can deliver strong returns by deploying capital into hurricane risk, even when considering the elevated forecast. At the same time, we grew our equity base substantially, which reduced our overall risk on a percentage of equity basis. The more complicated element in the one that added the most profit to our portfolio relative to the market was our active shaping of the portfolio's distribution of outcomes. To decrease exposure to smaller events compared to larger events. We did this using our risk expertise, proprietary tools, and flexible capital platform including capital partners.
David: The first two points are straight forward. We grew because rates were attractive.
David: And we can deliver strong returns by deploying capital into hurricane risk, even when considering the elevated forecast. At the same time, we grew our equity base substantially, which reduced our overall risk on a percentage of equity basis.
David: The more complicated element and the one that added the most alpha to our portfolio relative to the market was our active shaping of the portfolio's distribution of outcomes to decrease exposure to smaller events compared to larger events.
Kevin O'donnell: We did this using our risk expertise, proprietary tools, and flexible capital platform, including capital partners. This substantially reduced the relative risk to our income statement. At the same time, we shifted the entire risk curve lower, reducing risk on our balance sheet, albeit less so than on the income statement. These actions benefit you as shareholders because we have grown into a strong market. Reducing your exposure to hurricane losses and Optimizing Portfolio Returns over the Full Distribution of Outcomes
David: We did this using our risk expertise, proprietary tools, and flexible capital platform, including capital partners. This substantially reduced the relative risk to our income statement.
Kevin O'donnell: This substantially reduced the relative risk to our income statement. At the same time, we shifted the entire risk curve lower; we're using risk to our balance sheet. All be it less, so then let that so the mean comes statement. These actions benefit you as shareholders because we grew into a strong market. We reduced your exposure to hurricane loss and optimized portfolio returns over the full distribution of outcomes. I believe that we were uniquely positioned to execute on this strategy and have constructed one of the most resilient portfolios since I started here at Renry in 1996.
David: At the same time, we shifted the entire risk curve lower, reducing risk to our balance sheet, albeit less so than the income statement.
David: These actions benefit you as shareholders because we grew into a strong market, reduced your exposure to hurricane loss, and optimized portfolio returns over the full distribution of outcomes.
Kevin O'donnell: I believe that we are uniquely positioned to execute on this strategy and have constructed one of the most resilient portfolios since I started here at Renry in 1996. Ensure that If you have the right tools, it's a good time to be a reinsurer. This concludes my opening remarks. Bob will now discuss our financial performance for the quarter, followed by David, who will provide an update on our segment performance. Thanks, Kevin. And good morning, everyone.
Renry: I believe that we were uniquely positioned to execute on this strategy and have constructed one of the most resilient portfolios since I started here at Renry in 1996.
Kevin O'donnell: In short, if you have the right tools, it's a good time to be a re-insurer.
David: In short, if you have the right tools, it's a good time to be a reinsurer.
Kevin O'donnell: This concludes my opening remarks.
Bob Qutub: Bob will now discuss our financial performance for the quarter, followed by David, who will provide an update on our segment performance.
David: This concludes my opening remarks. Bob will now discuss our financial performance for the quarter followed by David who will provide an update on our segment performance.
Bob Qutub: Thanks, Kevin, and good morning, everyone. This quarter, we delivered excellent results across all aspects of our business. Operating income was $651 million, and our annualized operating return on average common equity was 28%. All three drivers of profit are producing strong, sustainable sources of income. Underwriting income was $479 million, 37% from the second quarter of 2023. These were $84 million, 48%, and retained net investment income was $283 million, about 50%. These increasing earnings across all three drivers of profit are reflected in our operating EPS, which was $12.41 per share of this quarter, up 40% from a year ago.
Robert Qutub: This quarter, we delivered excellent results across all aspects of our business. Operating income was $651 million, and our annualized operating return on average common equity was 28%. All three drivers of profit are producing strong, sustainable sources of income.
Bob: Thanks Kevin and good morning everyone. This quarter we delivered excellent results across all aspects of our business.
Bob: Operating income was $651 million, and our annualized operating return on average common equity was 28%. All three drivers of profit are producing strong, sustainable sources of income.
Robert Qutub: Underwriting income was $479 million, 37% from the second quarter of 2023. These were $84 million, up 48%, and retained net investment income was $283 million, up 50%. These increasing earnings across all three drivers of profit are reflected in our operating EPS, which was $12.41 per share this quarter, up 40% from a year ago. As Kevin explained, we believe that the momentum behind our three drivers of profit will persist, and we will continue to generate superior returns for our shareholders.
Bob: Underwriting income was $479 million, 37% from the second quarter of 2023.
Bob: These were $84 million up 48% and retained net investment income was $283 million up 50%.
Bob: These increasing earnings across all three drivers of profit are reflected in our operating EPS, which was $12.41 per share this quarter, up 40% from a year ago.
Bob Qutub: As Kevin explained, we believe that the momentum behind our three drivers of profit will persist, and we will continue to generate superior returns for our shareholders.
Bob: As Kevin explained, we believe that the momentum behind our three drivers of profit will persist and we will continue to generate superior returns for our shareholders.
Robert Qutub: I will discuss our earnings in more detail in a moment, but first, I want to touch on capital management. Over the last several quarters, we have been consistently generating profits in excess of what we required to grow the business. We are now at a point in the ballotous integration where we are starting to free up more of this excess capital. We find our shares very attractive to current multiples. Since the end of the first quarter, we repurchased $170 million of our common shares. As we look forward, we are keeping an eye on hurricane season. However, as Kevin mentioned, we believe that we will deliver consistent, strong returns over the long term.
Robert Qutub: I will discuss our earnings in more detail in a moment, but first, I want to touch on capital management. Over the last several quarters, we have been consistently generating profits in excess of what we require to grow the business. We are now at a point in the ballotless integration where we are starting to free up more of this excess capital. We find our shares very attractive at current multiples. Since the end of the first quarter, we repurchased $170 million of our common shares. As we look forward, we are keeping an eye on hurricanes.
Kevin: I will discuss our earnings in more detail in a moment, but first I want to touch on capital management.
Kevin: Over the last several quarters, we have been consistently generating profits in excess of what we require to grow the business.
Bob: We are now at a point in the ballotless integration where we are starting to free up more of this excess capital.
David: We find our shares very attractive at current multiples. Since the end of the first quarter, we repurchased $170 million of our common shares.
Robert Qutub: However, as Kevin mentioned, we believe that we will deliver consistent, strong returns over the long term. This, combined with our leading ability to match desirable risk with efficient capital, means that we can capture attractive underwriting opportunities while continuing to repurchase shares at attractive valuations. Turning now to our second quarter results, and starting with our first driver of profit, underwriting, where gross premiums rated were up 29% or 36% year-to-date. We have seen attractive risk-adjusted returns in property catastrophe and specialty and have grown these classes of business by 35% and 82%, respectively, year-to-date. Net premiums written were up 29% for the quarter and 35% for the year. Underwriting income for the quarter was $479 million, and our adjusted combined ratio was 79%.
David: As we look forward,
Speaker Change: We are keeping an eye on hurricane season.
Speaker Change: However, as Kevin mentioned, we believe that we will deliver consistent, strong returns over the long term.
Bob Qutub: This, combined with our leading ability to match desirable risk with a fishing capital, means that we can capture attractive underwriting opportunities, while continuing to repurchase shares at attractive valuations.
Kevin: This, combined with our leading ability to match desirable risk with efficient capital, means that we can capture attractive underwriting opportunities while continuing to repurchase shares at attractive valuations.
Bob Qutub: Turning now to our second quarter results in starting with our first driver of profit underwriting, where gross premiums rated were up 29% or 36% year-to-date. We have seen attractive risk-adjusted returns in property catastrophe and specialty and have grown these classes of businesses by 35% and 82% respectively year-to-date. That premiums written were up 29% for the quarter and 35% for the year. Underwriting income for the quarter was $479 million, and our adjusted combined ratio was 79%. Year-to-date, we have generated over $1 billion of underwriting income with an adjusted combined ratio of 77%. Ltd. The gross premiums written were up $675 billion, or 35%.
Kevin: Turning now to our second quarter results and starting with our first driver of profit underwriting where gross premiums written were up 29% or 36% year-to-date.
Kevin: We have seen attractive risk-adjusted returns in property catastrophe and specialty and have grown these classes of businesses by 35% and 82% respectively year-to-date.
Speaker Change: That premium's written, we're up 29% for the quarter and 35% for the year.
Speaker Change: Underwriting income for the quarter was $479 million and our adjusted combined ratio was 79%. Year-to-date, we have generated over $1 billion of underwriting income with an adjusted combined ratio of 77%.
Robert Qutub: Year-to-date, we have generated over $1 billion of underwriting income with an adjusted combined ratio of 77%. Moving now to our property segment, starting with property catastrophe, where catastrophe gross premiums written were up by 26% and net premiums written were up by 16%. This difference relates to the purchase of additional retro and the increased use of our Upsilon vehicles. Let me tell you what I think about this.
Speaker Change: Moving now to our property segment and starting with property catastrophe where catastrophe gross premiums written were up by 26% and net premiums written were up by 16%. This difference relates to the purchase of additional retro and the increased use of our Upsilon vehicle.
Robert Qutub: Year-to-date property catastrophe gross premiums written were up $675 billion, or 35%. Year-to-date, net premiums written grew by 24%. However, on a gross-to-net basis, which gives effect to our joint ventures, our net retained grew by about the same as our gross. The overall property catastrophe adjusted combined ratio was 25% and included 14 percentage points of favorable development, predominantly from the 21 through 23 accident years. The current accident year loss ratio was 19 percent.
Speaker Change: Let me tell you what I think about this. Year-to-date property catastrophe gross premiums written were up $675 billion or 35%.
Bob Qutub: Year-to-date net premiums written grew by 24%; however, on a grossed-to-net basis, which gives effect to our joint ventures, our net retained grew by about the same as our gross. The overall property catastrophe adjusted combined ratio was 25%, and included 14% each point of favorable development, predominantly from the 21-23 accident years. The current accident year loss ratio was 19%; events in the quarter, including US severe conductive storm activity and the Taiwan earthquake, had a 10% each point impact on this ratio.
Speaker Change: Year-to-date, net premiums written grew by 24%, however, on a gross-to-net basis, which gives effect to our joint ventures, our net retained grew by about the same as our gross.
Speaker Change: The overall property catastrophe adjusted combined ratio was 25% and included 14 percentage points of favorable development, predominantly from the 21 through 23 accident years.
Robert Qutub: Events in the corridor, including U.S. severe conductive storm activity and the Taiwan earthquake, had a 10 percentage point impact on this ratio. The acquisition expense ratio was up by about 2 percentage points driven by the impact of purchase accounting adjustments and reinstatement premium. Moving now to other property, where gross premiums written were up by 22% and net premiums written were up by 24% due to the addition of the Validus portfolio. Other property net earned premiums were similar to the first quarter at $400 million.
Speaker Change: The current accident year loss ratio was 19%. Events in the corridor, including U.S. severe conductive storm activity and the Taiwan earthquake, had a 10 percentage point impact on this ratio.
Bob Qutub: The acquisition expense ratio was up by about two percentage points, driven by the impact of purchase accounting adjustments and reinstatement premiums. Moving now to other property, where gross premiums written were up by 22%, and net premiums written were up by 24% due to the addition of the validist portfolio. Other property net earned premiums were similar to the first quarter at $400 million. Next quarter, we expect other property net premiums earned to be about 360 million as the reductions we made in 2023 to our other property book continued to earn through. The other property adjusted combined ratio was 90%, and current action year loss ratio was 62%.
Speaker Change: The acquisition expense ratio was up by about two percentage points driven by the impact of purchase accounting adjustments and reinstatement premiums.
Speaker Change: Moving now to other property where gross premiums written were up by 22% and net premiums written were up by 24% due to the addition of the Validus portfolio.
Speaker Change: Other property net earned premiums were similar to the first quarter at $400 million. Next quarter we expect other property net premiums earned to be about $360 million as the reductions we made in 2023 to our other property book continue to earn through.
Robert Qutub: Next quarter, we expect other property net premiums earned to be about $360 million, as the reductions we made in 2023 to our other property book continue to earn through. The other property adjusted combined ratio was 90%, and the current accident year loss ratio contained a 6 percentage point total impact from U.S. severe convective storms and the Taiwan earthquake.
Speaker Change: The other property adjusted combined ratio was 90% and current accident year loss ratio was 62%.
Bob Qutub: The current accident year loss ratio contained a 6% each point total impact from US severe conductive storms in the Taiwan earthquake. Current year losses were also higher than expected this quarter due to some non-cat events. Overall, the other property book has been performing consistently well, and we continue to see an additional loss ratio in the low 50s.
Speaker Change: The current action-at-your-loss ratio contained a 6 percentage point total impact from U.S. severe convective storms and the Taiwan earthquake.
Robert Qutub: Current year losses were also higher than expected this quarter due to some non-catapulting. Overall, the other property book has been performing consistently well, and we continue to see a nutritional loss ratio in the low 50s. Moving now to our casualty and specialty portfolio, where gross and net premiums written were up 34% and 41%, respectively. This growth is largely driven by the renewal of the Validus portfolio in addition to some incremental specialty opportunities offset by reductions in professional liability. Casualty and specialty net earned premiums were $1.6 billion, up 52%. In the third quarter, we are expecting net earned premiums to be about $1.6 billion. The Casualty and Specialty Adjusted Combined Ratio is 95.6%.
Speaker Change: Current year losses were also higher than expected this quarter due to some non-CAT events. Overall, the other property book has been performing consistently well, and we continue to see a nutritional loss ratio in the low 50s.
Bob Qutub: Moving now to our casualty and specialty portfolio, where gross and net premiums written were up 34% and 41%, respectively. This growth is largely driven by the renewal of the validist portfolio in addition to some incremental specialty opportunities, offset by reductions in professional liability. Casualty and specialty net earned premiums were $1.6 billion of 52%. In the third quarter, we are expecting net earned premiums to be about $1.6 billion. The casualty and specialty adjusted combined ratio was 95.6%. This included 1.5 percentage points of favorable development, which stemmed from our cyber, credit, and professional liability books. The current accident year loss ratio was 67.9%.
Speaker Change: Moving now to our casualty and specialty portfolio where gross and net premiums written were up 34% and 41% respectively.
Speaker Change: This growth is largely driven by the renewal of the Validus portfolio in addition to some incremental specialty opportunities offset by reductions in professional liability.
Speaker Change: Casualty and specialty net earned premiums were $1.6 billion, up 52%. In the third quarter, we are expecting net earned premiums to be about $1.6 billion.
Robert Qutub: This included 1.5 percentage points of favorable development, which stemmed from our Cyber, Credit, and Professional Liability Bill. The current accident to your loss ratio was 67.9%, and this included a 3.4 percentage point impact from two specific losses within our credit and transactional liability. Note that the casualty and specialty reported underwriting income of $28 million, which reflects a $41 million reduction due to purchase accounting adjustments.
Speaker Change: The casualty and specialty adjusted combined ratio is 95.6%. This included 1.5 percentage points of favorable development which stemmed from our cyber, credit, and professional liability books.
Bob Qutub: This included a 3.4 percentage point impact from two specific losses within our credit and transactional liability books. Note that the casualty and specialty reported underwriting income of $28 million, which reflects a $41 million reduction due to purchase accounting adjustments. We continue to expect a mid-90s casualty and specialty-adjusted combined ratio on average.
Speaker Change: The current accident or loss ratio was 67.9 percent. This included a 3.4 percentage point impact from two specific losses within our credit and transactional liability books.
Speaker Change: Note that the casualty and specialty reported underwriting income of $28 million, which reflects a $41 million reduction due to purchase accounting adjustments.
Robert Qutub: We continue to expect a mid-90s casualty and specialty-adjusted compliant ratio on average. Moving now to fee income and our capital partners business, where fee income was $84 million, up 48% from the comparable quarter. Management fees were $55 million, up 27% largely due to growth in Da Vinci and Fontana. Performance fees were $29 million, with the favorable development in the quarter driving better than expected results.
Speaker Change: We continue to expect a mid-90s casualty and specialty adjusted compliant ratio on average.
Bob Qutub: Moving now to fee income in our capital partners' business, where fee income was $84 million, up 48% from the comparable quarter. Major fees were $55 million, up 27% largely due to growth in Da Vinci and Fontana. Performance fees were $29 million, with the favorable development in the quarter driving better-than-expected results. These continue to be a stable source of income for us, and in the third quarter we expect management fees to remain around $55 million, and performance fees should be in the range of $20 million, absent any large loss of income.
Speaker Change: Moving now to fee income in our Capital Partners business where fee income was $84 million up 48% from the comparable quarter. Management fees were $55 million up 27% largely due to growth in DaVinci and Fontana.
Speaker Change: Performance fees were $29 million, with the favorable development in the quarter driving better-than-expected results.
Robert Qutub: These continue to be a stable source of income for us, and in the third quarter, we expect manager fees to remain around $55 million. And performance fees should be in the range of $20 million, absent any large losses. Moving now to investment or retained net investment income, it was $283 million, up 6% from the first quarter and up 50% from a year ago. This upside from last quarter was driven by a larger asset base, which is benefiting from higher. We had $82 million of retained mark-to-market losses in the quarter, largely driven by increased Treasury rates.
Speaker Change: These continue to be a stable source of income for us, and in the third quarter, we expect management fees to remain around $55 million.
Speaker Change: And performance fees should be in the range of $20 million, absent any large loss events.
Bob Qutub: Moving now to investments, where retained net investment income was $283 million, up 6% from the first quarter and up 50% from a year ago. This upside from last quarter was driven by a larger asset base, which is benefiting from higher interest rates. We had $82 million of retained market market losses in the quarter, largely driven by increased Treasury rates. Overall, retained unrealized losses in our fixed maturity investments are $214 million, or $4.8 per share. Our retained yield to maturity increased to 5.7% from 5.5% last quarter, and we have kept retained duration stable at 3.3 years.
Speaker Change: Moving now to investment, for retained net investment income was $283 million, up 6% from the first quarter and up 50% from a year ago. This upside from last quarter was driven by a larger asset base, which is benefiting from higher interest rates.
Speaker Change: We had $82 million of retained mark-to-market losses in the quarter, largely driven by increased Treasury rates.
Robert Qutub: Overall, retained unrealized losses in our fixed maturity investments are $214 billion, or $4.08 per share. Our retained yield to maturity increased to 5.7% from 5.5% last quarter, and we have kept retained duration stable at 3.3 years. The net retained investment income return was 5.3%. Since the end of the quarter, treasury rates have moderated a bit, and we expect retained net investment income for the third quarter to be about flat. Rates on our Fixed Maturity Portfolio remain very attractive.
Speaker Change: Overall, retained unrealized losses in our fixed maturity investments are $214 billion or $4.08 per share.
Speaker Change: Our retained yield to maturity increased to 5.7% from 5.5% last quarter, and we have kept retained duration stable at 3.3 years.
Bob Qutub: The net retained investment income return was 5.3%. Since the end of the quarter, treasury rates have moderated a bit, and we expect to retain net investment income for the third quarter to be about flat. Rates on our fixed maturity portfolio remain very attractive. Even if future rate cuts are as expected, our portfolio should continue to generate consistent net investment income in the quarters ahead.
Speaker Change: The net retained investment income return was 5.3%. Since the end of the quarter, Treasury rates have moderated a bit, and we expect retained net investment income for the third quarter to be about flat.
Robert Qutub: And finally, turning to expenses, where the operating expense ratio was 4.3%, which is flat compared to the first quarter but down from a year ago. As I've discussed in the past, we expect the operating expense ratio to stay relatively flat through 2024. Corporate expenses were $35 million. This includes $17 million from the validus acquisition, which will continue to taper off through the year. As a reminder, these transaction-related expenses are excluded from operating income.
Speaker Change: Rates on our fixed maturity portfolio remain very attractive. Even if future rate cuts are as expected, our portfolio should continue to generate consistent net investment income in the quarters ahead.
Bob Qutub: And finally, turning to expenses, where the operating expense ratio was 4.3%, which is flat compared to the first quarter put down from a year ago. As I've discussed in the past, we expect the operating expense ratio to stay relatively flat through 2024. Corporate expenses were $35 million. This contained $17 million from the Valedice acquisition, which will continue to taper off through the year. As a reminder, these transaction-related expenses are excluded from operating income.
Speaker Change: And finally, turning to expenses, where the operating expense ratio was 4.3%, which is flat compared to the first quarter, but down from a year ago. As I've discussed in the past, we expect the operating expense ratio to stay relatively flat through 2024.
Speaker Change: Corporate expenses were $35 million. This contains $17 million from the validus acquisition which will continue to taper off through the year. As a reminder, these transaction related expenses are excluded from operating income.
Robert Qutub: And in conclusion, this was a strong court. Significant contributions from each of our three drivers at profit. Underwriting income surpassed $1 billion for the first time, management and performance fees were $84 million for the second quarter in a row, and net investment income rose again and continues to be a stable, significant source of income. And as we look forward, we believe that the superior returns can persist for the remainder of this year and into 2025. And we are in an excellent position to continue delivering superior shareholder value. And with that, I'll now turn the call over to David. Thanks, Bob. And good morning, everyone.
Bob Qutub: And in conclusion, this was a strong quarter, with significant contributions from each of our three drivers of profit. Underwriting income surpassed $1 billion for the first half. Management and performance fees were $84 million for the second quarter in a row, and net investment income rose again and continues to be a stable, significant source of income. And as we look forward, we believe that these superior returns can persist for the remainder of this year and into 2025.
Speaker Change: And in conclusion, this was a strong quarter, with significant contributions from each of our three drivers at profit.
Speaker Change: Underwriting income surpassed $1 billion for the first half.
Speaker Change: Management and performance fees were $84 million for the second quarter in a row and net investment income rose again and continues to be a stable, significant source of income.
Speaker Change: And as we look forward, we believe that these superior returns can persist for the remainder of this year and into 2025. And we are in an excellent position to continue delivering superior shareholder value.
Bob Qutub: And we are in an excellent position to continue delivering superior shareholder value.
David Edward Marra: And with that, I'll now turn the call over to David.
David Marra: Thanks, Bob.
David Marra: And good morning, everyone. As Kevin discussed, our underwriting team has been focused on retaining the combined run of sensory and valedice business at the persistently attractive rates in terms of conditions we have seen over the last two years.
Speaker Change: And with that, I'll now turn the call over to David.
David Edward Marra: As Kevin discussed, our underwriting team has been focused on retaining the combined Renaissance Re and Validus business at the persistently attractive rates we have seen over the last two years. With the majority of renewals now complete, we have achieved this goal, delivering over $3 billion of well-diversified, incremental, enforced premium from the Validus portfolio while deepening our partnerships with brokers and clients. This larger, diversified portfolio puts us in an excellent position to help our clients manage their biggest risks while continuing to produce superior returns and under-recommendation. Importantly, portfolio construction is a constant process.
David: Thanks, Bob. And good morning, everyone. As Kevin discussed, our underwriting team has been focused on retaining the combined Renaissancere and Validus business at the persistently attractive rates in terms and conditions we have seen over the last two years.
Speaker Change: This larger diversified portfolio puts us in an excellent position to help our clients manage their biggest risks, while continuing to produce superior returns on the undirected side.
David Edward Marra: Even at our larger size, we remain nimble with a focus on capturing attractive opportunities as they arise and exercising discipline as needed to preserve superior returns for our shareholders. This morning, I will provide more context on market conditions and quarterly performance within our property and casualty site. Starting with property, where we had a successful mid-year renewal. As Kevin discussed, there was significant new demand, and supply matched demand but did not exceed it.
Speaker Change: This morning I will provide more context on market conditions and quarterly performance within our property and casualty segments.
Speaker Change: Starting with property where we had a successful mid-year renewal.
Speaker Change: As Kevin discussed, there was significant new demand. Supply matched demand but did not exceed it.
David Edward Marra: We retain the combined Renaissance Re-Invalidus portfolio and have grown property catastrophe gross premiums written by 35% year-to-date. This reflects high success in doing the balance portfolio, which is the largest contributor to our growth and is the most efficient way for us to grow into this market. We also achieve some incremental growth from new business in our U.S. capital. Our success in retaining the Validus portfolio is consistent between Q1 and Q2.
Speaker Change: We retain the combined Renaissance Re-Invalidus portfolio and have grown property catastrophe gross premiums written by 35% year to date.
Speaker Change: This reflects high success for renewing the Validus portfolio, which is the largest contributor to our growth and is the most efficient way for us to grow into this market.
Speaker Change: We also achieved some incremental growth from new business in our U.S. cat book.
Speaker Change: Our success in retaining the Validus portfolio is consistent between Q1 and Q2.
David Edward Marra: Reported gross premiums written growth in Q2 is lower than Q1 because the Validus portfolio was more heavily skewed to 1.1 inception than the Renaissance Reboot. The year-to-date figure is indicative of the overall growth. We maintain the strong level of rate adequacy that we have been driving since January 1, 2023, and we believe that the market for property catastrophe reinsurance remains highly attractive. Term and conditions have been stable, and retentions have held. In aggregate, we estimate that the overall rate was down by about 5%, with rates about flat at the bottom of programs and down 5 to 10% at the top.
Speaker Change: Reported gross premiums written growth in Q2 is lower than Q1 because the Validus portfolio was more heavily skewed to 1-1 inception than the Renaissance Rebook. The year-to-date figure is indicative of the overall growth we achieved.
Speaker Change: We maintain the strong level of rate adequacy that we have been driving since January 1st, 2023. And we believe that the market for property catastrophe reinsurance remains highly attractive.
Speaker Change: Terms and conditions have been stable and retentions have held. In aggregate, we estimate that overall rate was down by about 5%, with rate about flat at the bottom of programs and down 5% to 10% at the top.
David Edward Marra: Looking forward to 2025, we expect demand to continue to grow as students adjust their reinsurance budgets to prevailing market conditions and respond to inflation of underlying insured values. While most of this demand will be at the top end of programs, it will also filter down through towers. We are in a superior position to underwrite this additional demand for several reasons. First, our flexible platform with owned and managed balance. This enables us to deploy capital at the top, middle, and low end of towers, providing a single source of large capacity that clients value while allowing us to optimize our net retained portfolio.
Speaker Change: Looking forward to 2025, we expect demand will continue to grow as seedings adjust their reinsurance budgets to prevailing market conditions and respond to inflation of underlying insured values.
Speaker Change: While most of this demand will be at the top end of programs, it will also filter down through towers. We are in a superior position to underwrite this additional demand for several reasons.
Speaker Change: First, our flexible platform with owned and managed balance sheets.
Speaker Change: This enables us to deploy capital at the top, middle, and low end of towers, providing a single source of large capacity that clients value, while allowing us to optimize our net retained portfolio.
Speaker Change: Second, our risk expertise and the strength and durability of our partnerships, which make us a first call market for clients and brokers.
David Edward Marra: Now moving to other properties. As Bob mentioned, there were several events this quarter that drove a higher loss ratio, including severe convective storms in the U.S. and a 7.4-magnitude earthquake in Taiwan. Losses from USPCS events in the first half approached $40 billion, the second highest since 2011.
Speaker Change: Now moving to other property.
Speaker Change: As Bob mentioned, there are several events this quarter that drove a higher loss ratio, including severe convective storms in the U.S. and a 7.4 magnitude earthquake in Taiwan.
Speaker Change: Losses from USPCS events in the first half approached $40 billion, the second highest since 2011. While these non-peak weather events impact the primary market, the effect on our portfolio is muted due to the higher rates and attachment points we achieved in 2023.
David Edward Marra: While these non-peak weather events impact the primary market, the effect on our portfolio is muted due to the higher rates and attachment points we achieved in 2023. The Property Catastrophe Space The other property business was profitable for the quarter and has been performing very well for the last several quarters due to elevated rates. Conservative Portfolio Position. While rate increases for cat-driven other property risk have moderated a bit, we continue to find the business attractive. Now moving to casualty and special.
Speaker Change: in the property catastrophe space. As we have discussed, we believe that the right level of risk now resides with the right part of the capital chain. By and large, insurance companies are working to construct their portfolios to fund these earnings event losses while reinsurers provide cover for more severe capital-intensive events.
David Marra: of Events. The other property business was profitable for the quarter, and has been performing very well for the last several quarters due to elevated rates and conservative portfolio positioning. While rating increases for capture of another property risk have moderated a bit, we continue to find the business attractive. Now moving to Cadillac in specialty, the combined Renaissance Revalvus portfolio provides us with a larger book of business while maintaining a high degree of diversification within the segment. We enjoy a stronger lead market position and deeper partnerships with clients, which will ensure first-call status and access to the best risks in the market.
Speaker Change: The other property business was profitable for the quarter and has been performing very well for the last several quarters due to elevated rates and conservative portfolio positioning. While rate increases for cat-driven other property risk have moderated a bit, we continue to find the business attractive.
David Edward Marra: The combined Renaissance Revalidus portfolio provides us with a larger book of business while maintaining a high degree of diversification within the sector. We enjoy a stronger lead market position and deeper partnerships with clients, which will ensure first call status and access to the best risks in the market. The portfolio provides diversifying returns with meaningful contributions to each of our three drivers of profit, underwriting profit with low correlations and natural catastrophes, fee income from Fontana, and net investment income from reserves generated by the portfolio.
Speaker Change: Now moving to Casualty and Specialty.
Speaker Change: The combined Renaissance Revalidus portfolio provides us with a larger book of business while maintaining a high degree of diversification within the segment.
Speaker Change: We enjoy a stronger lead market position and deeper partnerships with clients which will ensure first call status and access to the best risks in the market.
David Marra: The portfolio provides diverse of buying returns with meaningful contributions to each of our three drivers' profit. Underwriting profit with low correlations in natural catastrophes, the income from Fontana, and net investing income from reserves generated by the portfolio.
Speaker Change: The portfolio provides diversifying returns with meaningful contributions to each of our three drivers of profit, underwriting profit with low correlations and natural catastrophes, fee income from Fontana, and net investment income from reserves generated by the portfolio.
David Marra: An important part of filling our vision, but being the best funder writer, is knowing when to grow and when to reduce. Each business within Cadillac in specialty is at a different point in the cycle, and we continue to re-manage our participation to achieve the best portfolio mix and balance of risk and reward. We see the entire market and gather data on loss development in claims trends as well as forward-looking exposure. We use this information to select between risks in any one year and also to scale our participation at different points in the cycle. Specifically, we grew our Cadillac book in 2020-2021, when the return on risk was most attractive.
David Edward Marra: An important part of fulfilling our vision of being the best underwriter is knowing when to grow and when to reduce. Each business within Casualty and Specialty is at a different point in the cycle, and we continually manage our participations to achieve the best portfolio mix and balance of risk and reward. We see the entire market and gather data on loss development and claims trends as well as forward-looking exposure. We use this information to select between risks in any one year and also to scale our participations at different points in the cycle.
Speaker Change: An important part of fulfilling our vision of being the best underwriter is knowing when to grow and when to reduce.
Speaker Change: Each business within Casualty and Specialty is at a different point in the cycle, and we continually manage our participations to achieve the best portfolio mix and balance of risk and reward.
Speaker Change: We see the entire market and gather data on loss development and claims trends as well as forward-looking exposure. We use this information to select between risks in any one year and also to scale our participations at different points in the cycle.
David Edward Marra: Specifically, we grew our casualty book in 2020 and 2021, when the return on risk was most attractive. However, even though rates were increasing by 50% or more in some cases, we did not lower our reserving loss ratios. This is due to our prudent reserving process, which is structured to recognize bad news quickly and defer good news until the business cycle. In particular, we believe that claims emergence patterns would be volatile following court closures during COVID and that social inflation was likely. Our loss picks are independent from what our clients book and are built up from individual claims data, aggregate market data, and actuarial judgment.
Speaker Change: Specifically, we grew our casualty book in 2020 and 2021 when the return on risk was most attractive. Even though rates were increasing by 50% or more in some cases, we did not lower our reserving loss ratio significantly.
David Marra: Even though rates were increasing by 50% or more in some cases, we did not lower our reserve and loss ratio significantly. This is due to our prudent reserve and process which is structured to recognize bad news quickly and defer good news until the business season. In particular, we believe that claims and merchants' patterns would be volatile following core closures during COVID, and that social inflation was likely to continue. Our loss picks are independent from what our clients book and are built up from individual claims data, aggregate market data, and actuarial judgment. It is still early for these recent years, and the business needs more time to season, but so far they are developing with an expectations.
Speaker Change: This is due to our prudent reserving process, which is structured to recognize bad news quickly and defer good news until the business seasons.
Speaker Change: In particular, we believe that claims emergence patterns would be volatile following court closures during COVID and that social inflation was likely to continue.
Speaker Change: Our loss picks are independent from what our clients book and are built up from individual claims data, aggregate market data, and actuarial judgment. It is still early for these recent years and the business needs more time to season but so far they are developing within expectations.
David Edward Marra: It is still early for these recent years, and the business needs more time to season, but so far, they are developing within expectation. In addition to cycle management and our prudent reserving process, we have made adept use of adverse development coverage. This has resulted in our net reserve pool being overweighted towards the more favorable years, with about 5% of our total reserves exposed to the casualty soft market in 2014.
David Marra: In addition to cycle management and our prudent reserve process, we have made a depth use of adverse development covers. This has resulted in our net reserve pool being overweighted towards more favorable years, with about 5% of our total reserves exposed to the cadmese off market years of 2014 to 2018. Recently, we responded to a deteriorating rate environment in Dino by decreasing this portion of our professional liability business by a meaningful amount. We continue to see rating increases in general liability. In recent years, rates have been keeping up with trend. Currently on some programs, loss inflation is accelerating.
Speaker Change: In addition to cycle management and our prudent reserving process, we have made adept use of adverse development covers.
Speaker Change: This has resulted in our net reserve pool being over-weighted towards the more favorable years with about 5% of our total reserves exposed to the casualty soft market years of 2014 to 2018.
David Edward Marra: More recently, we responded to a deteriorating rate environment in DNO by decreasing this portion of our professional liability business by a meaningful amount. We continue to see rate increases in general liabilities. In recent years, rates have been keeping up with trends. Currently, on some programs, loss inflation is accelerating. We are incorporating this into our pricing in order to ensure we are differentiating between risks and constructing the best portfolio to maintain profitability.
Speaker Change: More recently, we responded to a deteriorating rate environment in D&O by decreasing this portion of our professional liability business by a meaningful amount.
Speaker Change: We continue to see rate increases in general liability.
Speaker Change: In recent years, rates have been keeping up with trend. Currently, on some programs, loss inflation is accelerating. We are incorporating this into our pricing in order to ensure we are differentiating between risks and constructing the best portfolio to maintain profitability in the future.
David Marra: We are incorporating this into our pricing in order to ensure we are differentiating between risks and construction of the best portfolio to maintain profitability in the future.
David Edward Marra: Looking forward, the focus of our book is increasingly on specialty and credit, where we are seeing the best risk-adjusted returns. Within specialty, the second quarter is a relatively quiet renewal period, although positive trends from 1-1 continue with terms and conditions holding, and significant growth emanating from the Validus portfolio. Credit, we continue to see healthy underlying performance. Demand for mortgage insurance has declined in line with lower origination volume, but deals remain attractive, and we have been successful at protecting our lead position. And with that, I'll turn it back to Kevin.
David Marra: Looking forward, the focus of our focus is increasingly towards specialty and credit where we are seeing the best risk-adjusted returns. Within specialty, the second quarter is relatively quiet or an old period, although positive trends from one one continue with terms and conditions holding and significant growth emanating from the value of the portfolio. In credit, we continue to see healthy underlying performance. Demand for morbidity insurance has declined in line with lower origination volumes, but deals with the demand are attractive, and we have been successful at protecting our lead position.
Speaker Change: Looking forward, the focus of our book is increasingly towards specialty and credit where we are seeing the best risk-adjusted returns. Within specialty, the second quarter is a relatively quiet renewal period, although positive trends from 1-1 continue, with terms and conditions holding and significant growth emanating from the balance portfolio.
Kevin: In credit, we continue to see healthy underlying performance. Demand for mortgagory insurance has declined in line with lower origination volumes, but deals remain attractive and we have been successful at protecting our lead position. And with that, I'll turn it back to Kevin.
David Marra: And with that, I'll turn it back together.
Kevin O'donnell: Thanks, David. We delivered another excellent quarter financially driven by strong underwriting fees and net investment income. We had solid mid-year renewals and successfully retained the combined Renaissancere and Validus portfolio while deepening our partnerships with customers. We optimally shaped our underwriting portfolio's balance of risk and return objectives. We repurchased our shares at attractive multiples.
Kevin: Thanks, David.
Kevin: We delivered another excellent quarter financially driven by strong underwriting fee and net investment income.
Kevin: We had solid mid-year renewals and successfully retained the combined Renaissancere and Validus portfolio while deepening our partnerships with customers.
Kevin: We optimally shaped our underwriting portfolio's balance of risk and return objectives. We repurchased our shares at attractive multiples. And lastly, we are confident...
Kevin O'donnell: And lastly, we are confident the current favorable environment will persist into 2025, which will allow us to continue to grow shareholder value at an industry-leading pace. And with that, we'll open it up to questions. Thanks. Thank you. At this time, if you would like to ask a question, please press star, then the number one on your telephone keypad. If you wish to remove yourself from the queue, you may do so by pressing star two.
Kevin: The current favorable environment will persist into 2025, which will allow us to continue to grow shareholder value at an industry-leading pace. And with that, we'll open it up for questions. Thanks.
Speaker Change: Thank you. At this time, if you would like to ask a question, please press star then the number 1 on your telephone 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, pick up your handset for optimal sound quality.
Operator: We'll remind you to please unmute your line when introduced, and if possible, 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 take our first question from Elyse Greenspan with Wells Fargo. Please go ahead. You guys emphasize that you're seeing good growth in the legacy REN as well as in the Validus book of business.
Speaker Change: In the interest of time, we do ask that you please limit yourself to one question and one follow-up. We will take our first question from Elyse Greenspan with Wells Fargo. Please go ahead.
Operator: You know, from outside the company, you know, when you look at what you guys reported last year, some of the information that we have on Validus from disclosures that are out there, you know, I think, you know, some of us struggle a little bit to understand the growth in both businesses. Could you just provide, you know, some more color to help us understand, like, the growth that you are seeing in both businesses, you know, so far this year? Yeah, I'll start, and then I'll ask Dave to give some commentary as well.
Elyse Beth Greenspan: Hi, thanks. Good morning. My first question is a question on premium growth. You guys emphasize that you're seeing good growth in the legacy REN as well as in the Validus book of business.
Elyse Beth Greenspan: From outside the company, when we look at what you guys reported last year, some of the information that we have on Validus from disclosures that are out there, I think some of us struggle a little bit to understand the growth in both businesses. Could you just provide some more color to help us understand the growth that you are seeing in both businesses so far this year?
Speaker Change: Yeah, I'll start and then I'll ask Dave to give commentary as well.
Kevin O'donnell: We're proud of the growth that we've achieved. If you go back to 1.1, we increased the expectations for growth, you know, $2.7 billion to $3 billion with Upside. We have written more than $3 billion.
Speaker Change: We're proud of the growth that we've achieved. If you go back to 1.1, we increased the expectations for growth from, you know, $2.7 billion to $3 billion with Upside. We have written more than $3 billion. A lot of that, as Dave highlighted, comes from the Validus.
Kevin O'donnell: A lot of that, as Dave highlighted, comes from the Validus acquisition. I think the simplest way that we look at growth is on a year-to-date basis rather than a quarter. So if you're looking at the year-to-date numbers, they're very strong growth percentages which reflect that $3 plus billion additional premium. I think the quarterly number is a little bit misleading just because the Validus portfolio was much more weighted to a 1.1 book compared to a second quarter book. And with that, the portfolio came on a little quicker than our own portfolio does. Dave, do you want to touch on that a little bit more?
Kevin: Acquisition
Dave: I think the simplest way that we look at growth is from a year-to-date basis rather than a quarter.
Speaker Change: So if you're looking at the year-to-date numbers, they're very strong growth percentages, which reflect that $3 billion plus additional premium.
Speaker Change: I think the quarterly number is a little bit misleading just because the...
Speaker Change: Validus portfolio was much more weighted to a 1-1 book compared to
Speaker Change: a second quarter book. And with that, the portfolio came on a little quicker than what our, our own portfolio does.
David Edward Marra: Yes, exactly. We got pretty much every line that we wanted out of the Validus portfolio, and then as demand grew, we were able to add some incremental lines beyond that. So we're very happy with the results.
Speaker Change: Okay, if you want to touch a little bit more.
Speaker Change: Yes, exactly. We got pretty much every line that we wanted to out of the ballast portfolio, and then as the demand grew, we were able to add some incremental lines beyond that. So we're very happy with the results. The market is very supportive of the larger Renaissancere partnership of their business.
David Edward Marra: The market is very supportive of the larger Renaissancere partnership of their business, and that's showing up in fully incorporating the Validus portfolio, that's being factored into your last picks. And we just look at that the numbers haven't moved much year over year, you know, except for the noise that you highlighted in the volba. Yeah, Elyse, this is David.
Speaker Change: and that's showing up in fully incorporating the Valos portfolio and also some additional growth.
Speaker Change: Thanks. And then my follow-up is on the specialty casualty segment. You know, if I adjust for the 3.4 points that Bob called out, it seems like your accident year combined ratio ex vulva didn't really move much year-over-year in that casualty specialty book, right? Yet there is a lot of uncertainty right now with economic and social inflation, and we're seeing, you know, a lot of reserve charges stemming from primary companies. How are you – I'm just trying to understand how that's being factored into your loss fix, and we just look at that the numbers haven't moved much year-over-year, you know, ex the noise that you highlighted in the vulva.
David Marra: Yeah, Elyse, this is David. I'll pick off on that one. The couple of things that Bob mentioned that are elevating the current acts in your lost ratio are just claims and subsets of our major classes, which came in this quarter, and they've led to some volatility, and that's normal volatility we might expect in the business. It's nothing that we see as a trend. Overall, we are monitoring casualty trend, like we talked about. We are current years are reporting, developing, according to expectations, and we were confident in our numbers there. We're watching an increasing trend in some areas of general liability.
David Edward Marra: I'll kick off on that one. The couple of claims that Bob mentioned that are elevating the current accident or loss ratio are claims and subsets of our major classes, which came in this quarter, and they led to some volatility. And it's normal volatility we might expect in the business. It's nothing that we see as a trend.
David: Yeah, Elyse, this is David. I'll kick off on that one. The couple of claims that Bob mentioned that are elevating the current accident or loss ratio are claims and subsets of our major classes which came in this quarter, and it led to some volatility, and it's normal volatility we might expect in the business. It's nothing that we see as a trend.
David Edward Marra: Overall, we are monitoring the casualty trend. Like we talked about, our current years are developing according to expectations, and we were confident in our numbers there.
David: Overall, we are monitoring casualty trend. Like we talked about, we, our current years are reported, we're developing according to expectations.
David Edward Marra: We're watching increasing trends in some areas of general liability. Those are localized, still driven by the same type of trends that we've observed for several years, driven by auto losses, some auto losses coming into the umbrella layers. And we're pricing those into our future renewals to make sure we stay ahead of them. And then one really quick one, the 94 million in professional lines business you guys called out as, you know, a return of premium of some sort. Did that have any impact on the casualty specialty margin in the quarter? No, it's not. It's negligible.
David: and we're confident in our numbers there. We're watching increasing trend in some areas of general liability. Those are localized, still driven by the same type of trends that we've observed for several years, driven by auto losses, some auto losses coming into the umbrella layers, and we're pricing those into our future renewals to make sure we stay ahead of them.
David Marra: If those are localized, it's still driven by the same type of trends that we've observed for several years, given by auto losses, some auto losses coming into the umbrella layers, and we're pricing those into our future renewals to make sure we stay ahead of them. And then one really quick one, the 94 million of professional lines business, you guys called out as a, you know, a return of premium of some sort. Did that at any impact on the casualty specialty margin in the quarter? Yeah, that's it. It's negligible. I mean, these are normal adjustments based off of estimates that we have and what we think the client will actually underwrite for risk attaching.
Speaker Change: And then one really quick one, the $94 million of professional lines business you guys called out as a return of premium of some sort, did that have any impact on the casualty specialty margin in the quarter?
David Edward Marra: I mean, these are normal adjustments based on estimates that we have and what we think the client will actually underwrite for risk attaching. The adjustments tend to happen across all lines of businesses, except when you have large swings or large changes in trend, which is what you saw in professional liabilities. It was a negative adjustment, but the impact on underwriting margin is negligible. It's very, There is one question, Elyse. I'd like to go back on growth.
Speaker Change: No, it's not. It's negligible. I mean, these are normal adjustments based off of estimates that we have and what we think.
David Marra: The adjustments tend to happen across all lines of business. Except when you have large swings or large changes in trend, which is what you saw in professional liabilities, it was a negative adjustment. But the impact on underwriting margin is not very mental.
Speaker Change: the client will actually underwrite for risk attaching. The adjustments tend to happen across all lines of business except when you have large swings or large changes in trend, which is what you saw in professional liabilities. It was a negative adjustment, but the impact on underwriting margin is nominal. It's very minimal.
Kevin O'donnell: Your comment on year-over-year comparability and the gross written premium was under Validus' control last year, and it's under our control this year. There was a difference in how they recognized the quota share on a gross written basis. It was recognized all in the quarter that it was written, whereas we'll recognize it over the course of the year. It's a difference.
David Marra: There's the risk one question, at least I'd like to go back on growth. Your comment on your overyear comparability and the gross rate of premium was the undervalidances control last year, and it's under our control this year. There was a difference in how they recognize the quota share on a gross rate of basis. It was recognized all in the quarter that it was written, whereas we'll recognize it over the course of the year. It's a difference. It doesn't change the risk, and it doesn't change the underwriting margin. It just affects the top line optics, and you'll see this this year over last year.
Speaker Change: There is one question, Elyse, I'd like to go back on growth.
Speaker Change: Your comment on year-over-year comparability and the gross written premium was the under Validus' control last year and it's under our control this year. There was a difference in how they recognized the quota share on a gross written basis. It was recognized all in the quarter that it was written.
Kevin O'donnell: It doesn't change the risk, and it doesn't change the underwriting margin. It just affects the top-line optics, and you'll see that this year over last year until you get into the fourth quarter of this year. Thank you. Thank you. We'll take our next question from Josh Shanker with Bank of America. Please go ahead, about the loss ratio or the current year loss ratio in the capital segment, which obviously has deteriorated. And one, two, you had George Floyd and then the Baltimore Bridge disaster. But we didn't have many items on that this quarter. What's going on in the margins there?
Speaker Change: where as we'll recognize it over the course of the year. The difference, it doesn't change the risk and it doesn't change the underwriting margin. It just affects the top line optics and you'll see this this year over last year until you get into the fourth quarter of this year.
David Marra: And so you get into the fourth quarter of this year.
David Marra: Thank you.
Joshua David Shanker: And is it just conservatism giving or hearing from other underwriters about loss trends getting worse for recent acting years? Let me try and address that one, Josh. In my prepared comments, you heard me talk about, well, we acknowledge it was $28 million in underwriting income, and there was $6 million in the first quarter. If you go back and you want to further the bridge, including both of those numbers for casualty with amortization of purchase accounting of over $40 million. And that's why we show an adjusted combined ratio in the mid-90s. That's why it's 95.6 versus 98.
Josh Schenger: We'll take our next question from Josh Schenger with Bank of America.
Speaker Change: Thank you.
Josh Schenger: Please go ahead. Yeah. Thank you.
Speaker Change: Thank you. We'll take our next question from Josh Shanker with Bank of America. Please go ahead.
Robert Qutub: That's really to show the cash-on-cash differential. So I would look through, and you can probably go back and look at the adjusted combined ratio against a billion and a half of net earnings. That's how you get to that number.
Josh Schenger: I'd like to dig in a little bit of David's comments a little bit more and talk about the loss ratio, or the current year loss ratio in the Cavity segment. Obviously, to tear rate it in one, two. You had the George Walk and then the ball for bridge disaster. Well, we didn't have many items in that of this quarter.
Joshua David Shanker: Yeah, thank you. I'd like to dig in a little bit of David's comments a little bit more and talk about the loss ratio or the current year loss ratio in the Calvary segment obviously deteriorated and one two you have the George Floyd and then the Baltimore Bridge disaster
Josh Schenger: What's going on in the margin there? And is there just conservatism giving over hearing other underwriters about loss trends getting worse for the refinancing years?
Speaker Change: Well, we didn't have many items in that this quarter. What's going on in the margins there? And is there just conservatism given what we're hearing from other underwriters about loss trends getting worse for recent accident years?
Bob Qutub: Let me try and address that one. Josh, in my prepare comment, you heard me talk about, while we acknowledge it was $28 million and then the writing income. And there was six million in the first quarter. If you go back and you want to further the bridge. Including both of those numbers for casual fee was amortization of purchase accounting of over $40 million. And that's why we show an adjusted combined ratio in the bid 90s. That's why it's 95.6 versus 98. That's really to show the cash-on-cash differential. So, I would look through, and you can probably go back and look at the adjusted combined ratio against the billion and a half of that are premium.
Speaker Change: Let me try and address that one, Josh. In my prepared comments, you heard me talk about, well, we acknowledge there was $28 million in underwriting income, and there was $6 million in the first quarter, if you go back and want to refer to the bridge.
Speaker Change: Included in both of those numbers for casualty was amortization of purchase accounting of over $40 million.
Speaker Change: And that's why we show an adjusted combined ratio in the mid-90s, that's why it's 95.6 versus 98. That's really to show the cash-on-cash differential. So I would look through and you can probably go back and look at the adjusted combined ratio against the billion and a half of net earned premium. That's how you get to that number.
Bob Qutub: That's how you get to that.
Robert Qutub: And so given that situation, when that person goes out one year from now, it's going to have a step function difference. It will continue to step down each quarter, but by the fourth quarter of next year, it will come off significantly and be probably less than half of that. Okay, I'll try and do that, Matt, mainly in the acquisition ratio. But what about the loss ratio? Specifically, the loss ratio feels elevated relative to expectations, given that there were no casualty caps in the quarter and whatnot. Am I mistaken about that impression?
Speaker Change: And so, given that situation, when that person goes out one year from now, it's going to have a step function difference?
Speaker Change: It will continue to step down each quarter, but by the fourth quarter of next year will come off significantly and be probably less than half of that.
Speaker Change: Okay, I'll try and do that math and then, yep.
Speaker Change: Mainly in the acquisition ratio.
Speaker Change: But what about the loss ratio? Specifically, the loss ratio feels elevated relative to expectations given that there were no casualty caps in the quarter and whatnot. Am I mistaken about that impression?
David Edward Marra: You're right that there were a couple of points, like Bob mentioned; it's a couple of one-off claims that are involved in some sets of our major classes, so there's just inherently more volatility there. Two claims were reported, so we booked those in the current year. It is indicative of the volatility we would expect from time to time in the current year loss ratio. And I think one of the important things is there are events like losses that can happen, and then there's shifts in our curve and changes in trend. None of this has changed our curves,
David: Joshua, this is David. You're right that there were a couple of points like Bob mentioned. It's a couple of one-off claims that are involved in subsets of our major classes, so there's just inherently more volatility there. Two claims were reported, so we booked those in the current year. It is indicative of the volatility we would expect from time to time in the current year loss ratio.
Speaker Change: And I think one of the important things is there's
Speaker Change: event-like losses that can happen and then there's shifts in our curve and changes in trend none of this has changed our curves these are just
Speaker Change: single losses in relatively small books of business.
David Edward Marra: These are just single losses in relatively small books of business. Okay, thank you. Any more calls on that would always be appreciated. And then on the property business side, you know, I was maybe a bit surprised there was any large event disclosure this quarter. And one of the things that were triggered was the number of aggregate covers. I suppose. I thought the market was moving away from aggregate covers over the last couple of years. Can you talk about what your appetite is for writing that business and how well priced it is, given where it was a couple years ago? Hey, Josh, I can comment on that. This is David.
Joshua: Okay, thank you. Any more call on that would always be appreciated.
Qutub: Qutub. And then on the property business, I was maybe a bit surprised there was any large event disclosure this quarter. And one of the things that was triggered was a number of aggregate covers, I suppose. I thought the market was moving away from aggregate covers.
Speaker Change: Can you talk about what your appetite is for writing that business and how well priced it is given where it was a couple of years ago?
David Edward Marra: There's very little appetite in the market for aggregate covers. You know, there are some that attach at proper catastrophic levels, but aggregate covers that will provide the earnings level protection that will respond to the smaller caps that we're seeing happen, the severe convective storms and the other things that happen in the quarter. Those are not really existent in the market, but yet they exist, and you have them in your losses this quarter, yeah? No, I think, You know, we call that the Taiwan earthquake.
Speaker Change: Hey Josh, I can comment on that. This is David.
David: There is very little appetite in the market for aggregate covers. You know, there are some that attach at proper catastrophic levels, but aggregate covers that will provide the earnings level protection that will respond to the smaller caps that we're seeing happen, the severe convective storms and the other things that happen in the quarter, those are not really existent in the market these days.
Speaker Change: But yet they existed and you have them in your losses in this quarter, yeah?
David Edward Marra: And, you know, it was an elevated quarter for PCS events. But it's not coming from what we were, what was written in the market in 22. And prior to that, those low aggregate deals are not a component, a significant component of the loss that, as Dave mentioned, is not really something that comes in from the market. Alright, it seems like there's a threat in the press release as well, I'm sorry. No,
Speaker Change: No, I think...
Speaker Change: We call that the Taiwan earthquake and it was an elevated quarter for PCS events.
Qutub, Keith McCue
David Edward Marra: So some of the Midwest regionals are structured as aggregates, but they're not what would be the traditional aggregate that was exposing reinsurers prior to 2020. They're small, smallish companies that have an aggregate component to their program, but it's not the same low aggregates that were in the market from 22. These are much more appropriately Appropriate level of retentions and narrow, and tend to be more narrow in the geographic footprint. Okay, thanks for the answers.
Speaker Change: Q&A
Speaker Change: No, I know. So some of the Midwest regionals are structured as aggregates, but they're not what would be the traditional aggregate that was exposing re-insurers prior to 2020. They're small, smallish companies that
and the appropriate level of retentions and narrow, tend to be more narrow in the geographic footprint.
Ryan James Tunis: Thank you. We'll take our next question from Ryan Tunis with Autonomous Research. Hey, good morning, guys.
Okay, thanks for the answers.
Yeah.
Thank you. We'll take our next question from Ryan Tunis with Autonomous Research.
Ryan James Tunis: Just a question, I guess, on specialty. So if I look at the current accident, your loss ratio over the past five quarters, we've had kind of two different types of quarters, just three that have been 67 plus, and there are two that have been 63. Is it fair to say that the 63 is more of a favorable scenario where you kind of over earn on the specialty, and the 67 is kind of more like the normal with the type of specialty losses over time that you'd expect? I think the range you noted, Ryan, this is David. The range you noted is the normal volatility that can happen with the diversification of the portfolio.
Good morning, guys. Just a question, I guess, on specialty. So if I look at the current accident year loss ratio over the past five quarters, we've had kind of two different types of quarters. There's three that have been
67 plus and there's two that have been 63.
Is it fair to say that the 63 is more of the favorable scenario where you kind of over earn on the specialty and the 67 is kind of more like the normal with the type of specialty losses over time that you'd expect?
I think the range you noted, Ryan, this is David, the range you noted is the normal volatility that can happen with the diversification in the portfolio. There will always be losses that come in, some ups and some downs in a quarter, some current year, some prior year, and that range is not something that concerns us.
David Edward Marra: There will always be losses that come in, some ups and some downs in a quarter, some current year, some prior year, and that range is not something that concerns us. Got it. And then I guess just for the sake of pattern.
David Edward Marra: Maybe just a little bit more texture on the competitive environment right now in terms of the type of capital you're seeing coming into the market. I mean, there's a lot of cap on issuance this quarter. Not sure what to read it at. But, Yeah, I mean, how has that been evolving?
Got it. And then I guess just for Cameron...
Maybe just a little bit more texture on the competitive environment right now in terms of like the type of capital you're seeing coming into the market. I mean, there's a lot of cap bond issuance this quarter, not sure what to read it at, but
David Edward Marra: Is it still, you know, pretty much as disciplined as it's been? Or are you seeing some changes in capital composition? So, you know, capital is always coming into the industry. You know, we've created a lot of capital that we're happy to deploy into the market. But the you know, what I mentioned in my comments, we also saw 20 billion of new limit purchased. So what we're seeing is a pretty balanced market between the amount of capital that's looking to be deployed and the demand that's coming to the market.
Yeah, I mean, how has that been evolving? Is it still, you know, pretty much as disciplined as it's been? Or are you seeing some changes in the capital composition?
So, you know, the capital is always coming into the industry. You know, we've created a lot of capital that we're happy to deploy into the market, but
The, you know, what I mentioned in my comments, we also saw $20 billion of new limit purchased.
Keith Alfred McCue: Qutub, Keith McCue
David Edward Marra: So I think you know, the reset and one of the things I think is important to touch on the reset and pricing that happened in 23 is persistent in the market. And like any financial market, we're trading around the new level, but we're not on a negative trend back to 22 pricing. You know, I think we always watch supply and demand dynamics. And I think, particularly in a property cap market, it's relatively, it's in a good state of equilibrium.
I think we always watch supply and demand dynamics, and I think particularly in a property cap market, it's in a good state of equilibrium.
David Edward Marra: And Sarkar, you said in your prepared remarks that terms and conditions were relatively unchanged. If there wasn't any change on the margin, like what, what, I guess what you were meaning by that? If there was anything, what was it?
And Sarkar, you said in your prepared remarks that terms and conditions were relatively unchanged.
Um...
If there was any change on the margin, I guess what were you meaning by that? If there was anything, what was incremental?
David Edward Marra: Dave, do you want to touch on that? Yeah, definitely. I mean, the most important thing is that the retentions are held, and the retentions are the piece that allows us to continue to construct the portfolio and be removed from attritional losses. And that's the most important thing that we're focused on. Thank you. Thank you. We'll take our next question from Bob Huang with Morgan Stanley. Please go ahead. Hey, good morning.
Yeah definitely, I mean the most important thing is that the retention is held and the retentions are the piece that allows us to continue to construct the portfolio and be removed from attritional losses and that's the most important thing that we're focused on.
Thank you.
Thank you. We'll take our next question from Bob Huang with Morgan Stanley . Please go ahead.
Bob Huang: I'm going to shift gears a little bit to maybe repurchase, really. So first of all, thank you for the opening remark on repurchase. But I can just dig a little bit deeper on that. A lot of folks are expecting a fairly active hurricane season. It feels a little unusual that you would buy this much shares right ahead of the peak of the hurricane season. Just curious about your tactical approach here. Why not wait until after the hurricane season?
Hey, good morning.
I'm going to shift gears a little bit to maybe repurchase, really, so first of all thank you for the opening remark on repurchase, but if I can just dig a little bit deeper on that, a lot of folks are expecting a fairly active hurricane season.
It feels a little unusual that you would buy this much.
Q&A Session.
Bob Huang: And just given the continuous repurchase you're doing so far, should we kind of interpret this as a level of comfort you have around your balance sheet? Maybe just a little bit more color on the strategy and the tactics around the repurchase. I'll point you back. This is Bob.
Qutub, Keith McCue
Robert Qutub: I'll point you back to my prepared comments. There are a couple drivers that I tried to highlight. You know, we've had seven quarters of profitable results, and that has increased our capital base significantly. So we've had the ability to deploy that capital and still generate 28% return on equity ROE, which I feel great about. We have been freeing up some liquidity with the integration of Validus, and that includes bringing in capital. And so we've seen some attractive opportunities to go back in and buy the capital.
I'll point you back, this is Bob, I'll point you back to my prepared comments. There's a couple drivers that I tried to highlight.
You know, we've had seven quarters of profitable results, and...
That has increased our capital base significantly, so we've had the ability to deploy that capital and still generate 28% return ROE, which I think feels great.
Qutub, Keith McCue
Robert Qutub: And as I said in my closing comments in that section, we have the luxury of being able to grow into attractive markets that Kevin and David talked about with also the ability to buy back shares at good value. Okay, so there's really no... And nothing's changed in our capital allocation process. Okay, no, I really appreciate that. Thank you. That's actually all for me.
Kevin and David talked about was also the ability to buy back shares at good value.
Okay, so there's really no... Nothing's changed in our capital allocation process.
Okay, no, really appreciate that. Thank you. That's actually all for me.
Bob Huang: Thank you. We'll take our next question from Yaron Kinar with Jeff Rees. Please go ahead. Thank you. Good morning.
Thanks.
Thank you. We'll take our next question from Yaron Kinar with Jeff Rees. Please go ahead.
Yaron Joseph Kinar: I want to go back to growth for a second. And I realize it may be difficult for us as outsiders to figure out what organic growth was like given the possibly different seasonality in the Valdez book. But nonetheless, I think we are seeing a considerable slowdown in organic growth. And I'm wondering, does that tie to your comments about moving maybe to higher tail risk? And if so, can you offer us maybe a way to think about more of an apples to apples comparison of growth and the opportunities that you're going after in property?
Thank you. Good morning. I want to go back to growth for a second, and I realize it may be difficult for us as outsiders to figure out what organic growth was like, given the maybe different seasonality in the Valdez book, but nonetheless, I think we are seeing considerable slowdown in organic.
And I'm wondering, does that tie to your comments about moving maybe to higher tail risk? And if so, can you offer us maybe a way to think about more of an apples-to-apples comparison of growth and the opportunities that you're going after in property?
Yaron Joseph Kinar: Yeah. No, thanks for the question, Yaron. The way we think about building our portfolios is we look at it on a pro forma basis and then try to design a portfolio that has the kind of best Set of Returns Across the Full Distribution of Outcomes.
yeah no thanks for the question Aaron we
The way we think about building our portfolios is we look at it on a pro forma basis and then try to design a portfolio that has kind of the best.
Kevin O'donnell: Growth certainly played a big part in that this year. Capital management, the way we structured the risk on our partner balance sheets, and the way we used our seed capital. So I would say there's not a lot that's changed in our appetite for how we built the portfolio. Your question about organic and inorganic, I think we were disappointed to say the size of the portfolio that we would likely create. There is a very heavy overlap between what Validus wrote and what Renry wrote prior to the acquisition.
set of returns across the full distribution of outcomes.
Growth certainly played a big part in that this year. Capital management, the way we structured the risk on our partner balance sheets and the way we used our seeded.
So I would say there's not a lot that's changed in our appetite for how we built the portfolio. Your question between organic and inorganic, you know, I think we've been disappointed to
say, you know, the size of the portfolio that we would likely create. There is a very heavy overlap between what
Kevin O'donnell: That's one of the reasons we like the portfolio so much. So I would say that, you know, our ability to land, you know, three plus billion dollars of premium could categorize that as more organic growth because there are always changes across what Validus' legacy wrote and what Renry's legacy wrote. But we think it's a cleaner way to talk about it as largely attributing it to the Validus portfolio. Okay, and then maybe shifting to casualty and specialty.
Validus wrote and what Ren Re wrote prior to the acquisition. That's one of the reasons we like the portfolio so much.
So, I would say that, you know, our ability to land...
You know, three plus billion dollars of premium.
We could categorize that as more organic growth because there's always changes across what Validus legacy wrote and what Ren Re legacy wrote, but we think it's a cleaner way to talk about it as largely attributing it to the Validus portfolio.
Okay, and then maybe shifting to casualty and specialty.
David Edward Marra: I am curious, just given the, or maybe let me reframe this, you did mention that the reserve weighting is for the more favorable and more recent accident years. That being said, we are seeing some industry pressure emerge for accident years 21 through 23, particularly for anything auto-related and then GL. So can you maybe talk about how you're seeing those accident years develop? Hi, this is David.
I am curious, just given the...
Let me reframe this, you did mention that the reserve weighting is for the more favorable and more recent accident years, that being said we are seeing some industry pressure emerge for accident years 21 through 23, particularly for anything auto related and then GL, so can you maybe talk about how you're seeing those accident years develop?
David Edward Marra: Like I said in my prepared comments, those accident years are developing within our expectations. They are still green, and we need to continue to invest in them. But that's a good sign so far. When we construct our overall portfolio and want to ensure that it's resilient to things like inflation, there are several things that we think about. One, we have to construct the portfolio to avoid the risks like commercial auto that are really most in the crosshairs of the plaintiff's bar.
Hi, this is David. Like I said in my prepared comments, those accident years are developing within our expectations. They are still green and we need to continue to let them season, but that's the good sign so far. When we construct our overall portfolio and want to ensure that it's resilient to things like inflation, there's several things that we think about.
One, we have to construct the portfolio to avoid the risks like commercial auto that are really most in the crosshairs of the plaintiff's bar. We also then use cycle management like we talked about in order to have the highest weighted portion of our risk when return on risk is the best.
David Edward Marra: We also then use cycle management, like we talked about, in order to have the highest weighted portion of our risk when return on risk is the best. We've used adverse development covers in order to manage risk in some areas. But then there's also the reserving process. We recognized bad news early.
We've used adverse development covers in order to manage risk in some areas, and it depends also on the reserving process.
David Edward Marra: We didn't take down our loss picks significantly, even though rates were going up and would have pointed to a potentially lower expected loss ratio. That just leads to an overall stronger pool of reserves, which is more resilient in an inflationary environment. And maybe just to clarify, when you say the, you've not really seen the acting years 21 through 23 develop much, and they are still green.
Qutub, Keith McCue
David Edward Marra: That's true for GL and any auto-related reserves as well? We don't really write commercial auto. So it's more, it's more liability. Commercial auto would be a subset of general liability, but we don't write money. Yeah, I was just thinking about access liability.
And maybe just to clarify, when you say the, the, you've not really seen the acting years 21 through 23 develop much, and they are still green, that's true for GL and any auto related reserves as well?
We don't really write commercial auto so it's more it's more liability. Commercial auto would be a subset of general liability but we don't write money.
Yeah, I was just thinking through access liability. Okay. Thank you.
David Edward Marra: Okay. Thank you. Thank you. We will take our next question from Brian Meredith with UBS. Please go ahead.
Thank you. We will take our next question from Brian Meredith with UBS. Please go ahead.
Brian Robert Meredith: Yeah, thank you. I'd like to clarify quickly. So you didn't have any adverse developments in 2020 to 2023 this quarter in Calgary. We're going to have puts and takes, you know, across the portfolios, but nothing significant that was really anything to read into, Brian, but it's always going to be puts and takes, why are those unusual in the business that you write? Yeah, it's a good question.
Yeah, thank you. Just to clarify quickly, so you didn't have any adverse development on 2020-2023 this quarter, in Calgary especially?
We're going to have puts and takes, you know, across the portfolios, but nothing significant that was really anything to read into, Brian , but it's always going to be puts and takes.
I'm just curious, on a casualty specialty, I appreciate you calling out the couple of losses that happened, but I'm just curious, when I think of those types of losses, what type of losses? I'm just curious.
Wouldn't they typically be kind of in your loss expectations, it's the type of business that you guys write? Or is the Calzadine Specialty Business you've got, you know, something that will have these but-fours, you know, fairly regularly? I'm just trying to understand that a little bit more, as to why these are unusual in the businesses you write.
David Edward Marra: I think, you know, there's always an actuarial judgment as to whether when a loss comes in, whether it's contemplated in the curve or not, these are kind of weird losses, and they're in relatively small portfolios. So when thinking about how we initially built the curves for those, the development growth, these really were extraordinary and outside of it. So we decided to book them above the attritional rate. There's nothing, um, it's not, it's not...
It's a good question. I think, you know, there's always an actuarial judgment as to whether when a loss comes in, whether it's contemplated in the curve or not. These are kind of weird losses, and they're in relatively small portfolios. So when thinking about how we initially built the
The curves for those, the development growth, these really were something extraordinary and outside of it, so we decided to book them above the above the attritional.
David Edward Marra: I don't consider that unusual. And I would say if these were a bigger portfolio and more traditional losses, they would have been just absorbed within the attritional. That makes sense. I want to just follow up quickly.
There's nothing, um, it's not, it's not.
I don't consider that unusual and I would say if these were a bigger portfolio and more traditional losses, they would have been just absorbed within the attritional.
David Edward Marra: David, I think you mentioned that the way the valid is kind of renewals happened kind of affected the second quarter. What's going to happen with the third quarter? Is Dallas more heavily weighted to a third quarter less, you know, will that have an impact on growth in the third quarter? Yeah, especially with reference to PropertyCat. The book is pretty much 100% renewed.
That makes sense. I wanted just a quick follow-up. David, I think you mentioned that the way the Vallis kind of renewals happened kind of impacts the second quarter. What's going to happen with third quarter? Is Vallis more heavily weighted towards third quarter or less? Will that have an impact on growth in the third quarter?
Josh Schenger: Yeah, especially with reference to property cat, the book is pretty much 100% renewed, so the written premium that we see in that percentage growth is closest property for annual. Great, thank you. Thank you, Brian.
Yeah, especially with reference to PropertyCat, the book is pretty much 100% renewed, so the written premium that we see in that percentage growth is the closest proxy for annual.
David Edward Marra: So the written premium that we see in that percentage growth is the closest proxy for annual growth. Great. Thank you. Thank you. We'll take our next question from Meyer Shields with KB. Go ahead. Pardon me.
Great. Thank you.
Meyer Shields: Thank you. We'll take our next question from Mayor Shields, with KB to go ahead.
Thank you for having me.
Thank you. We'll take our next question from Meyer Shields with KB. Go ahead. Pardon me. Thank you. Just to follow up on that, is there any way of quantifying sort of the difference in gross return premium based on the accounting differences that you have with legacy dollars?
Meyer Shields: Partly, thank you.
Meyer Shields: Thank you. Just to follow up on that, is there any way of quantifying sort of the difference in gross return premium based on the accounting differences that you have with legacy dollars?
Meyer Shields: Just to call up on that, is there any way of quantifying sort of the difference in growth or premium of the accounting differences that you have with, like if you doubt it? No, we haven't talked about that. We did the biggest correction that was made on that. Joshua was in the purchase accounting when we started that in the fourth quarter and then into the first quarter. By the way, we reflect, you know, first quarter, for example, we've shown a lot higher on that side than we will show them. Okay, all right. All right.
Meyer Shields: No, we haven't talked about that. The biggest correction that was made on the adjustment was in the purchase accounting when we started that in the fourth quarter and then into the first quarter. But it would reflect, you know, the first quarter, for example, would have shone a lot higher on the validate side than we would have. The way I intuitively think about it is that ours is slower.
No, we haven't talked about that. We, the biggest correction that was made on the adjustment was in the purchase accounting when we started that in the fourth quarter and then into the first quarter.
But it would reflect, you know, first quarter, for example, would have shown a lot higher on the ballot size than we would have shown.
Meyer Shields: I'm going to go ahead and tune it and think about it, as far as it's slower. You know, those things like think about excess of loss, it comes in in the quarter from a written standpoint that it's written. Whereas quarter shares come in over time, they use the quarter shares; it's similar to excess of loss on the written side. That's all lumped into the renewal period.
The way I intuitively think about it is, ours is slower.
Robert Qutub: You know, they'll see, like, think about the excess of loss, and it's all lumped into the renewal period. Right, we're getting a lot of questions in terms of differences in premium production compared to expectations and looking for a way of ballparking that. But the second question, I guess, Kevin, you made some comments about moving. One thing I'll say is we haven't changed our accounting. This is the way we've always done it.
[inaudible]
Meyer Shields: Right, we're just getting a lot of questions in terms of different things in premium production can protect expectations, and I was looking for a way out of ballparking that. But second question, I guess. Kevin, you made some comments about moving one thing. I'll say, we haven't changed our accounting; this the way we've always gone it.
It's all lumped into the renewal period.
Right, we're getting a lot of questions in terms of differences in premium production compared to expectations and I was looking for a way of ballparking that.
But second question, I guess, Kevin, you made some comments about moving... One thing I'll say, we haven't changed our accounting. This is the way we've always done it.
Meyer Shields: Yeah, I completely understand. I was looking a little deeper into your comments about maybe moving away from some of the lower layer risk, in terms of expected returns that are there and maybe how impactful that is on potential premiums as this new approach is implemented. I missed the part about the premium.
Kevin O'donnell: No, let's go understand. I hope you have a little deeper to your comments about maybe moving away from some of the lower layer risk. And in terms of expected returns that are there and maybe how impactful that is on the premiums as this new approach you've implemented. And I've missed the part about the premium. Yeah, so as you move away from those risks, I presumably the change and approaching some premiums that we had last year are not an old manifest this year. Yeah, so there's a start kind of at the industry level and to. Our execution, you know, as they commented, you know, in 23 retention increase pretty substantially.
I completely understand. Let me go a little deeper into your comments about maybe moving away from some of the lower-layer risks.
Kevin O'donnell: Yeah, so as you move away from those risks, presumably, the change in approach to some premiums that we had last year is not going to manifest this year. Yeah, so there's a start kind of at the industry level and to our execution. You know, as Dave commented, you know, in 23, retentions increased pretty substantially.
Yeah, so as you move away from those risks, presumably the change in approaching some premiums that we had last year are not going to manifest this year.
Yeah, I told you there's a...
Qutub, Keith McCue
Kevin O'donnell: And prices increase; both of those provide a buffer to the income statement, whose risk is more remote, and we have more premium to cover for when losses emerge. Our portfolio shaping, then, which it. I'm really coming in with regard to using different vehicles, so we deployed up salon to a greater degree this year that comes through seated premium. We outsized our seated. From where we originally had targeted in our first broke warm up. And then the balance of risk between us and our partner balance sheets more broadly was optimized to, you know, again, steep in the risk curve.
Kevin O'donnell: And prices increased. Both of those provide a buffer to the income statement because risk is more remote, and we have more premium to cover for when losses emerge. Our portfolio shaping then, which really came in with regard to using different vehicles. So we've deployed Upsilon to a greater degree this year, and that comes through Seeded Premium. We upsized our Seeded budget from where we originally had targeted in our first pro forma. And then the balance of risk between us and our partner balance sheets more broadly was optimized to, you know, again, steepen the risk curve so that if there are smaller events, as I highlighted, we will have a lower market share compared to larger events. And that's what we mean by steepening.
from where we originally had targeted in our first proforma.
And then the balance of risk between us and our partner balance sheets more broadly was optimized to, you know, again, steepen the risk curve so that if there's smaller events, as I highlighted, we will have a lower market share compared to larger events.
Kevin O'donnell: So that if there's smaller events, as I highlighted, we will have a lower market share compared to larger events. And that's what we mean by steepening, so the income statement will have a lower percentage market share exposure than the balance sheet, but both are down from a percent of equity base. So, you know, the demand has been a bit of a seesaw, filming back where market hasn't been able to, you know, they added more desire to first discover than they had wallets to purchase it. I think as rates are coming through on the primary market, you know, we're seeing people being executing on their desire to purchase more limit, you know, it's been very constructive for us with particularly top layer and for mere, you know, you've also seen elevated CAD product issuance as well.
Kevin O'donnell: So the income statement will have a lower percentage market share exposure than the balance sheet, but both are down from a percent of equity basis. Okay, understood. Thank you so much.
And that's what we mean by steepening, so the income statement will have a lower percentage market share exposure than the balance sheet, but both are down from a percent of equity basis.
Okay, understood. Thank you so much.
Charlie Lidier: Thank you. We will take our next question from Charlie Lidier with Citigroup. Please go ahead.
Thank you.
Thank you. We will take our next question from Charlie Lidier with Citigroup. Please go ahead.
Charlie Lidier: Thank you. So one large broker recently noted in the insurance media that reinsurers might be willing to write lower down layers at one and property and specialty, effectively starting to provide the Marines with protection layers. Can you talk about whether you're seeing that in the market being discussed and maybe whether your appetite may change as well given the more diversified book of business and third third party capital? Yeah, I think, you know, buyers would like to have lower retentions.
Thank you. So, one large broker recently noted in the insurance media that reinsurers might be willing to write lower down
at 1-1 in property and specialty, effectively starting to provide the Marines protection layers. Can you talk on whether you're seeing that in the market being discussed and maybe whether your appetite may change as well given the more diversified book of business and third party capital?
Kevin O'donnell: So there's always, you know, from a broker's perspective, an opportunity to sell something there. I think the market, if there are lower layers sold, will be disciplined. So I'm not particularly concerned about an overall shift to the retention levels that were available in 2022.
Yeah, I think, you know.
Buyers would like to have lower retentions. So there's always
It's a pleasure to be here.
Qutub, Keith McCue
Kevin O'donnell: You know, if there's buy-downs on programs, we're happy to look for them, and we also have different vehicles that might be a better home for them rather than our own balance sheet. I wouldn't say we're seeing that actively at this point, but there's always conversations about where the retention is, and I think the broker's seizing that as an opportunity where they potentially have an opportunity for some growth there. Dave, do you have anything?
I wouldn't say we're seeing that actively at this point, but there's always conversations about where the retention is, and I think the broker's seizing that as an opportunity where they potentially have an opportunity for some growth there. Dave, do you have anything? No, I agree. I think most of the demand will come as new top players.
David Edward Marra: No. I agree. I think most of the demand will come as new top players continue to expect that to happen. We're able to play across the spectrum.
David Edward Marra: So we have capital for the top layers, and then we're able to optimize our network position throughout the tower as that suits us. Got it. Thanks. And I guess, different question: just if we look at the operating non-controlling interest that you disclosed in the sub kind of as a percentage of operating income, it seems like that was at the lowest level. I think it's been since you began disclosing this. Can you talk about what's driving that or if there's anything underlying that that's notable? Yeah, just a second, Yaron. Hey, give me a second here.
continue to expect that to happen.
We're able to play across the spectrum, so we have capital for the top layers and we're able to optimize our network position throughout the tower as that suits us.
Got it, thanks. And I guess, different question, if we look at the operating non-controlling interest that you disclosed in the sub, kind of as a percentage of operating income,
Charlie Lidier: Let me just pull something out here. That's a compliment. NCI is always a little tricky. I think this has to do a little bit with our sessions or the risk sharing we're doing with some of our third-party capital partners, particularly DaVinci, but why don't we come back to you on that? That's kind of a technical question for us to kind of wrestle through. We will take our next question from Mike Zaremski with BMO. Please go ahead. Hey, thanks. Good morning.
Give me a second here, let me just pull something up here.
That's a compliment. MCI is always a little tricky. I think this has to do a little bit with our sessions or the risk-sharing we're doing with some of our third-party capital partners, particularly DaVinci, but why don't we come back to you on that. That's kind of a technical question for us to kind of wrestle through.
Bye-bye.
Michael David Zaremski: Now back to the, Can you get you said demand in the US went up by 20 billion, I believe, can you give us what the denominator was? And so like, do you do expect the pace of demand to actually increase potentially by 25? When we think about those dynamics, or, you know, maybe from a perspective around the actual demand growth versus historical, thanks. Unknown Speaker Okay.
We will take our next question from Mike Zaremski with BMO. Please go ahead.
Thanks. Good morning. Now, back to the
Commentary you gave on...
So teens increases, a lot of labor inflation, so it makes sense.
You're kind of talking about from an outlet viewpoint that demand remains.
Kelsey on a, on a, in, in 25.
Can you give us, you said the demand in the U.S. went up by $20 billion, I believe. Can you give us what the denominator was?
Do you expect the pace of demand to actually increase potentially in 2025 when we think about those dynamics or, you know, maybe some perspective around the actual demand growth versus historical?
Unknown Speaker: Thanks. So, you know, I think the demand has been a bit of a see-saw coming back where the market hasn't been able to, you know, that they have more desire to purchase cover than they have the wallet to purchase it. And I think as rates are coming through on the primary market, you know, we're seeing people executing on their desire to purchase more limit. It's been very constructive for us, particularly Top Layer and Premier. You've also seen elevated CAD product issuance as well. I would say that the market in the U.S. for property CAD limits is probably just above, right around 160 billion.
Sure.
So, you know, the demand has been a bit of a see-saw coming back where market hasn't been able to, you know, they have more desire to purchase cover than they had wallet to purchase it.
And I think as rates are coming through on the primary market.
We're seeing people being executing on their desire to purchase more limit. You know, it's been very constructive for us with particularly Top Layer and Vermeer.
Kevin O'donnell: I would say that the market in the US for property CAD limits, probably just above, just right around 160 billion. So, you know, it's probably what's at a 15% growth rate or something like that. Got it.
We hope you've also seen elevated cat product issuance as well. I would say that the market in the U.S. for property cat limits...
Unknown Speaker: So, you know, it's probably at a 15% growth rate or something like that quarter, but maybe you can just describe what caused it to be up this quarter. I think I tried to cover that in my prepared comments. The asset levels have grown, and with the higher rates we were able to achieve, https://www.youtube.com [inaudible] So it's the asset side that you didn't guide us that we need to get to. Thank you. Thank you. We'll take our next question from Andrew Kligerman with TV Securities. Please go ahead.
probably just above, right around 160, 160 billion, so you know it's probably what's at a 15% growth rate or something like that.
Kevin O'donnell: That's helpful.
Bob Qutub: In switching gears to investment income, and I hope this is a fair question, but if I look at the guidance you guys gave on the call last quarter, you talked about retaining investment can be relatively flat. It wasn't flat. I went up despite, I believe, you know, healed going down a bit since you gave that.
Got it. Okay.
That's helpful. Switching gears to investment income, and I hope this is a fair question, but if I look at the guidance you guys gave on the call last quarter, you talked about
Bob Qutub: And I, maybe so you can, you know, I know you're giving flat-ish guidance again for next quarter, but maybe you can just describe what caused it to be up this quarter. The thing, I think I tried to cover that in my prepared comments. The answer levels have grown. And with the high rates, we were able to achieve $15,000,000 more of the retaining investment portfolio. It's also a little bit of an exchange with the duration state about the same. So, it was the asset side that you didn't guide you that week. Thank you.
Retained investment can be relatively flat.
It wasn't flat. It went up, despite, I believe, yields going down a bit since you gave that. I know you're giving sladdish guidance again for next quarter, but maybe you can just describe what caused it to be up this quarter.
Thanks. I think I tried to cover that in my prepared comments. The asset levels have grown and with the higher rates we were able to achieve 15, 10, 15 million dollars more in the retained investment portfolio plus a little bit of an exchange.
with the duration state about the same.
Andrew Scott Kligerman: We'll take our next question from Andrew Kilgerman with TV security.
Andrew Kilgerman: Please go ahead. Hey, thanks for getting me in. Quick follow-up on Brian's question earlier on casual key, and it was an interesting response. You said there were weird losses in relatively small portfolios. Any chance you could give a little texture on the types of planes and the limits that you paid out. On these claims. I think that's more detailed and probably makes sense. What we're trying to do is it is an understanding of how the business is performing. You know, if you look at our casualty portfolio, there's, you know, GL, there's some big lines in there that are relatively, I'm optimistic, and then there's transactions that come up for people who are trying to come up creative products and build portfolios.
Andrew Scott Kligerman: Hey, thanks for getting me in. Quick follow-up on Brian's question earlier on casualty, and it was an interesting response. You said there were weird losses in relatively small portfolios. Any chance you could give a little texture on the types of claims and the limits that you paid out on those claims? Yeah.
Thank you.
Thank you. We'll take our next question from Andrew Kligerman with TV Securities. Please go ahead.
Thanks for getting me in. Quick follow up on Brian's question earlier on casualty. And it was an interesting response. You said there were weird losses in relatively small portfolios.
Any chance you could give a little texture on the types of claims and the limits that you paid out on those claims?
David Edward Marra: I think that's more detailed and probably makes sense. What we're trying to give is an understanding of how the business is performing. You know, if you look at our casualty portfolio, there's, you know, GL, there's some big lines in there that are relatively homogeneous, and then there's transactions that come up for people who are trying to come up with creative products and build portfolios. Then, and one of them was really in that category.
Yeah, um...
I think that's more detailed and probably makes sense. What we're trying to give is an understanding of how the business is performing.
You know, if you look at our casualty portfolio, there's, you know, GL, there's some big lines in there that are relatively homogenous. And then there's transactions that come up for people who are trying to come up creative products and build portfolios.
David Marra: The, and one of them is really in that category. It was an emerging business where we were working with them to come up with a way for us to provide some capacity to see if the market would develop more broadly.
Unknown Executive: It was, Unknown Executive, Meyer Shields, Robert Qutub, David Marra, Renaissancere Holdings Ltd. Okay, thanks for that. Maybe more broadly on the same topic. Anyway, you have such a broad casualty portfolio, but anyway, to kind of get a sense of the average limits that you're writing, and maybe the range of limits. Hi, this is David. I'll take that one.
The, um, and one of them was really in that category. It was, um,
David Marra: So, it's a very small portfolio and unique loss and an unfortunate loss in an area that we were looking to see if we can make the pie bigger for the reinsurance market and sell some additional types of coverage. Okay, thanks for that.
Emerging business where we were working with them to come up with a way for us to provide some capacity to see if the market would develop more broadly. So a very small portfolio and unique loss and an unfortunate loss in an area that we were looking to see if we could make the pie bigger for the reinsurance market and sell some additional types of coverages.
David Marra: And then maybe more broadly on topic. Any way to, and you have such a broad casual keyboard for you, but in any way to kind of get a sense of the average limits that you're writing and maybe the range of limits.
Okay, thanks for that. And then maybe more broadly on the same topic.
Any way, and you have such a broad casualty portfolio, but any way to kind of get a sense of the average limits that you're writing and maybe the range of limits?
David Marra: Hi, this is David. I'll take that one. So we write a broad spread of casualty across general liability and professional liability. A lot of that business is quoted share, so if an insurer puts out a $10 million limit and we have 10% of that, then we have $1 million on each of their risks. It's a portfolio that had a lot of that in it, and then gets aggregated up like an incident to homogenous groups that all that then can be tracked, all is want to be. When we look at this, when we make those risk decisions, we're seeing the entire market, and then we're building up our view of risk, both from the top down and bottom up, and then placing our bets or constructing our portfolio in order to have the highest return on risk.
David Edward Marra: So we write a broad spread of casualty across general liability and professional liability. A lot of that business is quota share, so if an insurer puts out a $10 million limit and we have 10% of that, then we have $1 million on each of their risks. It's a portfolio that has a lot of that in it, and then it gets aggregated up, like Kevin said, into homogenous groups that can then be tracked all as one.
Hi, this is David. I'll take that one.
So, we write a broad spread of casualty across general liability and professional liability. A lot of that business is quota share, so if an insurer puts out a $10 million limit and we have 10% of that, then we have $1 million on each of their risks.
David Edward Marra: When we look at this, when we make those risk decisions, we're seeing the entire market, and then we're building up our view of risk, both from the top down and bottom up, and then placing our bets or constructing our portfolio in order to have the highest return on risk. So it's less about any one limit, and it's more about how we structure the portfolio within a class and over time. Thanks a lot.
It's a portfolio that has a lot of that in it, and then gets aggregated up, like Kevin said, into homogenous.
Qutub, Keith McCue
David Marra: So it's less about any one limit, and it's more about how we structure the portfolio within a class and over time. Okay, thanks a lot. Thanks.
building up our view of risk, both from the top down and bottom up, and then placing our bets or constructing our portfolio in order to have the highest return on risk. So it's less about any one limit, and it's more about how we structure the portfolio within a class and over time.
David Edward Marra: We'll take our next question from David Modimatum with Evercore. Please go ahead. Hey, thanks. Good morning.
David Kenneth Motemaden: Look at our next question from David Motumatum with Evercore.
David Motemaden: Please go ahead. Hey, thanks for the morning. Thanks for squeezing me in.
David Edward Marra: Thanks for squeezing me in. I just was hoping you could elaborate a little bit on the casualty book and how closely you guys have been working with decedents just to stay up on loss activity and actual to expected losses within those portfolios. Any changes you've made just given the distortions in the environment would be interesting to learn.
Okay, thanks a lot.
Thanks.
David Motemaden: I just was hoping you could elaborate a little bit on the casualty book and how closely you guys had been working with the students just to stay up on your loss activity and actual to expect it within those portfolios. Any changes you may just give in the distortions in the environment would be interesting to learn? Definitely. It's a great question in this part of what we do in our day-to-day underwriting process to be tracked: actual versus expected. We also are able to benchmark clients' data against the whole market, and that is an advantage we have over, say, an insurance company that may only have access to their own data.
We'll take our next question from David Modimatum with Evercore. Please go ahead.
Hey, thanks. Good morning. Thanks for squeezing me in. I just was hoping you could elaborate a little bit on the casualty book and how closely you guys have been working with decedents, just to stay up on
David Edward Marra: Definitely. It's a great question, and it's part of what we do in our day-to-day underwriting process. We track actual versus expected. We are also able to benchmark clients' data against the whole market, and that is an advantage we have over, say, an insurance company that may only have access to its own data. We see the entire market and collate that data, and then develop our independent view.
You know, loss activity and actual to expected within those portfolios. Any changes you've made just given the distortion in the environment would be interesting to learn.
Definitely, it's a great question and it's part of what we do in our day-to-day underwriting process. We track actual versus expected. We also are able to benchmark clients' data against the whole market and that is an advantage we have over, say, an insurance company that may only have access to their own data. We see the entire market and collate that data and then develop our independent view. It is really an essential piece of how we think about scaling our participations over time and then picking between risks. It's shown up in things like avoiding commercial auto, the recent reductions in DNO as the rates have reduced. That's a portfolio shift that we've made and things like that is a constant part of the underwriting process.
David Marra: We see the entire market and co-late that data and then develop our independent view. It is a really essential piece of how we think about scaling our participants over time and then picking between risks. That's showing up in things like avoiding commercial auto. There are recent reductions in, you know, as the rates have reduced. That's a portfolio shift that we've made, and the things like that as a constant part of the underwriting process. Got it. Thank you.
David Edward Marra: It is really an essential piece of how we think about scaling our participations over time and then picking between risks. It's shown up in things like avoiding commercial auto, recent reductions, and as rates have reduced, that's a portfolio shift that we've made, and things like that are a constant part of the underwriting process.
David Edward Marra: And then, maybe just lastly, you spoke about having a higher dollar value of Southeast wind risk but lower on a percentage of equity basis. Could you just talk about why you're not willing to take that up on a percentage of equity basis if returns are so solid? Is that just more active management ahead of a potentially active win season? Some color around that would be helpful.
Kevin O'donnell: And then just maybe just lastly, you spoke about having a higher dollar value of Southeast win risk, but lower on a percentage of equity basis. Could you just talk about why you're not willing to take that up on a percentage of equity basis if turns or so solid? Is that just more active management out of the potentially active win season, or some color around that would be helpful? Yeah, I think it was what we're trying to do is get the best set-up returns across the full distribution of outcomes. You know, we actually had more success than we anticipated in some of the retro purchasing that we had.
Got it. Thank you.
And then just, maybe just lastly, you spoke about having a higher dollar value of Southeast wind risk, but lower on a percentage of equity basis.
Could you just talk about why you're not willing to take that up on a percentage of equity basis if returns are so solid? Is that just more active management ahead of a potentially active wind season or some color around that would be helpful.
David Edward Marra: Yeah, I think it was. What we're trying to do is get the best set of returns across the full distribution of outcomes. You know, we actually had more success than we anticipated in some of the retro purchasing that we had. So in looking at that, we were able to kind of leverage it into a steeper curve, which I think a small piece of this would be, you know, our thoughts on an active wind season.
Yeah, I think it was...
Kevin O'donnell: So in looking at that, we were able to kind of approach into a steeper curve, which I think a small piece of this would be our thoughts on an active win season, but it didn't hurt to think that the income saved us a little bit more protected going into what's an active season. But it really was about our ability to feed transparently out, you know, the book we're writing and the things that we're using to hedge it can shift the curve and look at the returns across that distribution. So it's very small pieces. The is the elevated frequency expected, and a big piece of it was it was a way to shape the portfolio. Don't answer to her.
What we're trying to do is get the best set of returns across the full distribution of outcomes.
We actually had more success than we anticipated in some of the retro-purchasing that we had.
David Edward Marra: But it didn't hurt to think that the income statement was a little bit more protected going into what's an active season. But it really was about our ability to see transparently how, you know, the book we're writing and the things that we're using to hedge it can, you know, shift the curve and look at the returns across that distribution. So it's very small pieces, the elevated frequency expected.
So in looking at that, we were able to kind of leverage into a steeper curve.
which I think...
A small piece of this would be, you know, our thoughts on an active wind season, but it didn't hurt to think that the income statement is a little bit more protected going into what's an active season, but it really was about.
Qutub, Keith McCue
David Edward Marra: And a big piece of it was that it was a way to shape the portfolio to enhance return. Understandable, thank you. Actually, I think we can go back to Charlie's question from earlier regarding the NCI. Yeah, Charlie, I think going back to the NCI. Look, nothing's changed in our relationship with any of our vehicles. We still have the same principles in which we match the risk with the capital that that JV is subscribed to. For example, when you look at DaVinci, they've actually benefited from the profitability that we've seen. In a low-catastrophe environment, we've seen the NCI that accretes to our joint venture partners actually increased.
David Marra: Thank you.
David Marra: I think we can come back to Charlie's question from earlier regarding the NCI. Yeah, Charlie, I think going back to the NCI and look at nothing's changed in our relationship with any of our vehicles. We still have the same principles in which we match the risk with the capital that that JV is subscribed to. Actually, like, for example, when you look at DaVinci, they've actually benefited from the profitability that we've seen and the low catastrophe environment we've seen. The NCI that accretes to our joint venture partners has actually increased. You know, like DaVinci has increased by 225.9 to 300 million.
Is the elevated frequency expected? And a big piece of it was, it was a way to shape the portfolio to enhance returns.
Understood. Thank you.
I think we can go back to Charlie's question from earlier regarding the NCI. Yeah, Charlie, I think going back to the NCI,
Look at nothing's changed in our relationship with any of our vehicles. We still have the same
Robert Qutub: You know, like, DaVinci has increased from... [inaudible] And there are no further questions at this time. I'll turn the floor back over to Kevin O'Donnell for any additional or closing remarks. Thank you for joining today's call. Hopefully, what came across is our excitement and enthusiasm for the portfolio that we created and the opportunities for, you know, continued strong performance. So, thank you for joining the call, and we look forward to speaking to you next quarter.
and the low catastrophe environment we've seen.
David Marra: You can see it in the supplemental, with the 59 million Eurobeer to 150 million Eurobeer quarters. So the value proposition for our joint venture has been reflected as well of what you've seen in our results as well.
The NCI that accretes to our joint venture partners has actually increased, the elective NCI has increased from five, five.
225 million to 300 million. You can see it in the supplemental, went from 59 million year over year to 150 million year over year quarter. So value proposition for our joint ventures has been reflected as well of what you've seen in our results as well.
Unknown Executive: And there are no further questions at this time.
Kevin O'donnell: I'll turn the floor back over to Kevin O'Donnell for any additional or closing remarks. Thank you for joining today's call. Hopefully, what came across is our excitement and enthusiasm for the portfolio that we created and the opportunities for, you know, continued strong performance.
And there are no further questions at this time. I'll turn the floor back over to Kevin O'Donnell for any additional or closing remarks.
Unknown Executive: So thank you for joining the call, and we look forward to speaking you next quarter. Thank you.
Thank you for joining today's call. Hopefully what came across is our excitement and enthusiasm for the portfolio that we created and the opportunities for, you know, continued strong performance. So thank you for joining the call and we look forward to speaking to you next quarter.
Robert Qutub: Thank you and this concludes the Renaissance Re Second Quarter 2024 earnings call and webcast. Please disconnect your line at this time and have a wonderful day. [inaudible] © BF-WATCH TV 2021 www.mytrendyphone.co.uk © BF-WATCH TV 2021, [inaudible] Alanis Morissette, Yaron Kinar, Yaron Kinar, Yaron Kinar, Yaron Kinar, Yaron Kinar, Yaron, ?? ?? ?? ?? ?? ?? ?? ?? [inaudible] © BF-WATCH TV 2021 ?? ?? ?? ?? ?? [inaudible]
Unknown Executive: And this concludes the Renaissance 3rd quarter, 2024 earnings call and webcast. Please disconnect your line at this time and have a wonderful day.
Thank you and this concludes the Renaissance Re Second Quarter 2024 Earnings Call and Webcast. Please disconnect your line at this time and have a wonderful day.
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Unknown Executive: Jamminder Bhullar, Brian Meredith, David Motemaden, Jamminder Bhullar, Brian Meredith, Jamminder Bhullar, Brian Meredith, David Motemaden
TAYLOR SCANLON
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