Q1 2025 RenaissanceRe Holdings Ltd Earnings Call
My name is Madison and I will be your conference operator today at this time I would like to welcome everyone to the Renaissance REIT first quarter 2025 earnings conference call and webcast. After the prepared remarks, we will open the call for your questions instructions will be given at that time lastly, if you should need operator.
Madison: My name is Madison, and I will be your conference operator today.
Madison: At this time, I would like to welcome everyone to the Renaissance Re First Quarter 2025 Earnings Conference Call and Webcast. After the prepared remarks, we will open the call for your questions. Instructions will be given at that time. Lastly, if you should need operator assistance, please press star zero. Thank you.
Speaker Change: [noise] assistance. Please press star zero. Thank you I will now turn the call over to Keith Mccue Senior Vice President of Finance and Investor Relations. Please go ahead.
Keith McCue: I will now turn the call over to Keith McCue, Senior Vice President of Finance and Investor Relations. Please go ahead. Thank you, Madison.
Speaker Change: Thank you Matt and.
Keith McCue: Good morning, and welcome to Renaissance Reis first quarter earnings Conference call. Joining me today to discuss our results are Kevin O'donnell, President and Chief Executive Officer, Bob <unk> Executive Vice President and Chief Financial Officer, and David Maura Executive Vice President and group Chief Underwriting Officer first somehow.
Kevin O'donnell: Good morning and welcome to Renaissancere's first quarter earnings conference call.
Kevin O'donnell: 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. 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.
Keith McCue: Keeping matters our discussion today will include forward looking statements, including new and updated expectations for our business and results of operations.
Keith McCue: According to note that actual results may differ materially from the expectations shared today additional information regarding the factors shaping these outcomes can be found in our SEC filings and in our earnings release during todays call. We will also present non-GAAP financial measures.
Keith McCue: Filiation to GAAP metrics and other information concerning non-GAAP measures, maybe found in our earnings release and financial supplement which are available on our website at <unk> Dot com.
Kevin O'donnell: 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 renly.com.
Kevin: Now I'd like to turn the call over to Kevin Kevin.
Kevin O'donnell: And now, I'd like to turn the call over to Kevin. Kevin. Thanks, Keith. Good morning, everyone. And thank you for joining today's call.
Keith McCue: Yeah.
Keith McCue: Yes.
Keith McCue: Thanks, Steve.
Speaker Change: Good morning, everyone and thank you for joining today's call.
Speaker Change: I want to begin the call today by acknowledging the unprecedented degree.
Kevin O'donnell: I want to begin the call today by acknowledging the unprecedented degree of uncertainty in the broader economic environment. The institutions and norms of the post-war period are increasingly being questioned and in some instances disrupted. There are few, if any, historic analogs to what we are currently experiencing. Against this backdrop, we believe Renaissancere is positioned to outperform. We have limited exposure to the political and economic shocks reverberating around the world.
Speaker Change: Certainty on the broader economic environment, the institutions and norms of the postwar period are increasingly being questioned.
Speaker Change: Instances disrupted.
Speaker Change: There are few if any historic analogs to what we're currently experiencing.
Speaker Change: Against this backdrop, we believe Renaissance remains positioned to outperform we.
We have limited exposure to the political and economic shocks reverberating around the world.
Our business is best described as anti correlated to the current macroeconomic environment, especially when compared to business models that require a predictability and consistency.
Kevin O'donnell: Our business is best described as anti correlated to the current macro economic environment, especially when compared to business models that require predictability and consistent What do I mean by that? As the world becomes more volatile and the value of many assets decrease, we become more valuable. We are paid to assume volatility and are intentionally designed to withstand it. Consequently, we seek the volatility that others shun, and as a result, increased volatility for us equates to greater opportunity. In an increasingly volatile world, our customers should want more of the protection that we provide and be willing to pay more for this protection.
Speaker Change: What do I mean by this.
Speaker Change: The world becomes more volatile and the value with many assets decrease.
Speaker Change: We become more valuable.
Speaker Change: We are paid to assume volatility and are intentionally designed to withstand it.
Speaker Change: Consequently.
Speaker Change: We seek to volatility that others, Sean and as a result.
Speaker Change: And as a result increased volatility for us equates to greater opportunity.
Speaker Change: In an increasingly volatile world our customers should one or more of the protection that we provide and be willing to pay more for this protection.
Speaker Change: This is the type of environment, where our business can thrive.
Kevin O'donnell: This is the type of environment where our business can thrive.
Speaker Change: With the capital market.
Speaker Change: Currently fixated on tariffs inflation and recession risk.
Kevin O'donnell: With the capital market currently fixated on tariffs, inflation and recession risk, I'd like to address head on their expected impact or lack thereof to our business. As a financial services provider, we do not require inputs or produce products that are subject to trade tariff. Our property catastrophe business is not directly impacted by tariffs and is highly recession resistant. This is also true for traditional casualty lines that we write and most of our specialty lines. The largest risks that participants protect against, such as hurricanes and earthquakes, do not correlate to financial cycles. They need to be protected against in good economic times as well as in bad.
Speaker Change: To address head on their expected impact or lack thereof to our business.
Speaker Change: As a financial services provider, we do not require inputs or produce products that are subject to trade tariffs.
Speaker Change: Our property catastrophe business is not directly impacted by tariffs and is highly recession resistant.
Speaker Change: It is also true for traditional casualty lines that we write and most of our specialty lines.
Speaker Change: The largest risks that.
Speaker Change: Protects against such as Hurricanes, and earthquakes do not correlate to financial cycles.
Speaker Change: Need to be protected against in good economic times as well as in bed.
Speaker Change: And as you know we are one of the largest providers of this protection.
Kevin O'donnell: And as you know, we are one of the largest providers of this protection. Of course, the potential for elevated inflation could increase the cost of rebuilding after large natural catastrophes. Post event loss inflation is something we include in all of our property models. To the extent that tariffs and inflation exasperate demand surge, we have the tools to price for the impact.
Speaker Change: Of course, the potential for elevated inflation could increase the cost of rebuilding after large natural catastrophes.
Speaker Change: Post event loss inflation is something we include in all of our property models.
Speaker Change: To the extent that tariffs and inflation exasperate demand search we have the tools to price for the impact.
Speaker Change: There are a few niche specialty lines.
Speaker Change: We write that may be directly impacted by tariffs or a reduction in trade it the.
Kevin O'donnell: There are a few niche specialty lines, we write that may be directly impacted by tariffs or a reduction in trade. The most obvious are trade credit and political risk. I say may be impacted because so far none of them appear to be. Furthermore, these lines have many built in protections to limit exposure to systemic shock.
Speaker Change: The most obvious or trade credit and political risk as they may be impacted because so far none of them appear to be fair.
Speaker Change: Furthermore, these lines many built in protections to limit exposure to systemic shock.
Speaker Change: Regarding recession risk, we believe previous downturns are particularly instructive and demonstrating our immunity to business cycle disruptions for the most part insurance is necessary or required purchase and by extension demand for reinsurance will persist.
Kevin O'donnell: Regarding recession risk, we believe previous downturns are particularly instructive in demonstrating our immunity to business cycle disruption. For the most part, insurance is necessary or a required purchase, and by extension, demand for reinsurance will persist. In previous recessions, our reinsurance premiums were largely unaffected.
Speaker Change: In previous recessions, our reinsurance premiums were largely unaffected.
Speaker Change: A recession scenario could of course impact our investments that said we are positioned.
Kevin O'donnell: A recession scenario could, of course, impact our investment. That said, we have positioned our portfolio relatively conservatively in order to protect against the potential for recession. As Bob will cover in more detail, most of our investments are in high-quality, fixed-income securities with relatively limited exposure to both high-yield and equities. In fact, we have used the recent dislocations as an opportunity to increase our allocations moderately to risk assets such as equities and high-yield. We also add some hedges to inflation and geopolitical risk in place, such as being long gold futures. This supported our strong mark-to-market performance this quarter and highlights our broader and integrated approach to portfolio construction across the entire balance sheet.
Speaker Change: Polio relatively conservatively in order to protect against the potential for recession.
Bob: As Bob will workout.
Bob: As Bob will cover in more detail most of our investments are in high quality fixed.
Bob: Fixed income securities with relatively limited exposure to both high yield and equities in fact, we have used the recent.
Bob: Dislocations as an opportunity to increase our allocations moderate relief to risk assets, such as equities and high yield.
Bob: We also had some hedges to inflation and geopolitical risk in place such as being long gold futures. This supported our strong mark to market performance this quarter and highlights our broader and integrated approach to portfolio construction across the entire balance sheet.
Bob: Shifting now to a discussion of the first quarter the world experienced multiple large catastrophes, including California, wildfires and the American Airlines tragedy.
Kevin O'donnell: Shifting now to a discussion of the first quarter, the world experienced multiple large catastrophes including California wildfires and the American Airlines tragedy. Against this backdrop, our performance this quarter was strong in an environment categorized by significant capital market disruptions and elevated first quarter catastrophes. We reported a modest operating loss. On a net-gap basis, which drives book value, we made a profit. This was due to the benefit of our diversification and the favorable impact of mark-to-market gains in our investment portfolio. As a result, our primary metric, tangible book value per share plus accumulated dividends, increased quarter over quarter despite the catastrophe losses and return of $380 million to shareholders through dividends and share repurchases.
Bob: Against this backdrop our performance this quarter was strong.
Bob: In an environment adequate categorized by significant capital market disruptions and elevated first quarter catastrophes, we reported a modest operating loss.
Bob: On a net GAAP basis, which drives book value, we made a profit.
Bob: This was due to the benefit of our diversification and the favorable impact of mark to market gains in our investment portfolio.
Bob: As a result, our primary metric tangible book value per share plus accumulated dividends increased quarter over quarter. Despite the catastrophe losses and return of $380 million to shareholders through dividends and share repurchases.
Bob: It's worth taking a step back to put our performance this quarter into perspective as.
Kevin O'donnell: It's worth taking a step back to put our performance this quarter into perspective. As we have increased income diversification over the past two decades, we have reduced the impact of large loss activity on our results. Losses that used to impact annual results to a significant extent now only impact quarterly results to a limited extent.
Bob: As we have increased income diversification over the past two decades, we have reduced the impact of large loss activity on our results.
Losses that used to impact annual results to a significant extent now only impact quarterly results to a limited extent.
Bob: For example.
Bob: In 2005.
Kevin O'donnell: For example... in 2005. The year of hurricanes Katrina, Rita and Wilma, we recorded a net negative impact from large events of $892 million, which was 82 percentage points on our combined ratio and resulted in annual operating return on equity of negative 13%.
Bob: The year of Hurricanes Katrina Rita Wilma, we recorded a net negative impact from large events of $892 million, which was 82 percentage points on our combined ratio and resulted in annual operating return on equity of negative 13%.
Bob: In 2017.
Bob: The year Hurricane Harvey Irma and Maria as well as California, wildfires, we recorded a net negative impact from large events of $720 million.
Kevin O'donnell: in 2017. the year of Hurricane Harvey, Irma and Maria, as well as California wildfires. We recorded a net negative impact from large events of $720 million, which was 59 percentage points on our annual combined ratio. and resulted in an annual operating return on equity of negative eight percent. In 2022, the year of Hurricane Ian and Winter Storm Elliot, we recorded a net negative impact from large events of $808 million, which was 20 percentage points on our annual combined ratio, but this time resulted in an annual operating return on equity of a positive 6%.
Bob: Which was 59 percentage points on our annual combined ratio.
Bob: Resulted in an annual operating return on equity of negative 8%.
Bob: In 2022, a year Hurricane and winter Storm Elliot, we recorded a net negative impact from large events of $808 million, which was 20 percentage points.
Bob: Our annual combined ratio, but this time resulted in an annual operating return of equity on equity of a positive 6%.
Bob: Contrast, these annual results with the first quarter of 2025.
Kevin O'donnell: Contrast these annual results with the first quarter of 2025. are after-tax net... The negative impact was $700 million. This is similar in absolute magnitude to the losses we experienced in each of the previous years I just described. It added about 53 percentage points to our quarterly combined ratio. Hypothetically, this works out to 13 points on our annual combined ratio. In addition, we reported an operating return on equity in the quarter of negative 3%, and assuming average CAD activity for the remainder of the year, we remain on track to deliver solid full-year ROEs. So you can see a clear trend.
Bob: Our after tax net.
Bob: The negative impact with $700 million.
Bob: This is similar in absolute magnitude to the losses, we experienced in each of the previous year as I just described.
Bob: It added about 53 percentage points to our quarterly combined ratio hypothetically. This works out to 13 points on our annual combined ratio.
Bob: In addition, we reported an operating return on equity in the quarter of negative, 3% and assuming average cat activity for the remainder of the year.
Bob: We remain on track to deliver solid full year Roe.
Bob: So you can see a clear trend.
Bob: Similarly sized losses have had a reduced impact on our combined ratio over the years declining from 82% in 2005% to 59% in 2017 and 20% in 2022 to now 13%.
Kevin O'donnell: Similarly, size losses have had a reduced impact on our combined ratio over the years, declining from 82% in 2005 to 59% in 2017 and 20% in 2022 to now 13%. At the same time, operating returns on equity have consistently increased.
Bob: At the same time operating returns on equity have consistently increased.
Bob: We believe this chronology powerfully demonstrates the strength of our three drivers of profit in times of extreme events.
Kevin O'donnell: We believe this chronology powerfully demonstrates the strength of our three drivers of profit in times of extreme events and macroeconomic instability, in other words, anti-correlation.
Andrew: Andrew macroeconomic instability.
Bob: In other words anti correlation.
Bob and David will address renewals in our go forward outlook in more detail shortly but before turning it over I'd like to share a few comments on our approach to business and capital management overall.
Kevin O'donnell: Bob and David will address renewals and our go forward outlook in more detail shortly.
Kevin O'donnell: But before turning it over, I'd like to share a few comments on our approach to business and capital management overall. To begin, the fact that the wildfires occurred in the first quarter do not change our strategy for the year. Large events occur randomly over time and the fact that they occurred in January should not and does not impact strategic decision making any more than if they occurred in December. Reinsurance pricing remains attractive. There is ample lead and demand in markets and our focus is squarely on continuing to grow business where it makes sense.
Bob: We began the fact.
Bob: That the wildfires occurred in the first quarter do not change our strategy for the year.
Bob: Large events occur randomly over time, and the fact that they occurred in January should not and does not impact strategic decision, making any more than if they occurred in December.
Bob: Reinsurance pricing remains attractive there is ample latent demand in markets and our focus is squarely on continuing to grow business, where it makes sense.
Bob: That said, we believe the best strategy to grow tangible book value per share in the current environment is to preserve margin.
Kevin O'donnell: That said, we believe the best strategy to grow tangible book value per share in the current environment is to preserve margin. Our willingness and ability to assume the risk that others shun is best channeled into margin preservation.
Bob: Our willingness and ability to assume the risk that other Sean is best channeled into margin preservation.
Bob: From a capital management perspective, we have the excess capital and liquidity necessary to continue repurchasing shares.
Kevin O'donnell: From a capital management perspective, we have the excess capital and liquidity necessary to continue repurchasing share. We repurchased $360 million of shares during the first quarter. Since the end of the quarter and during the recent market sell-off, we continued repurchasing at very attractive prices. This is another example of our anti-correlation, providing us opportunities to proactively grow shareholder value when others pull back.
Bob: We repurchased $360 million of shares during the first quarter.
Bob: Since the end of the quarter and during the recent market sell off we continue to repurchasing at very attractive prices.
Bob: This is another example of our anti correlation providing us opportunities to proactively grow shareholder value when others pullback.
Speaker Change: That concludes my initial comments I'll turn it over now to Bob to discuss our financial performance for the quarter before David provides more detail update on underwriting.
Kevin O'donnell: That concludes my initial comments.
Bob Qutub: I'll turn it over now to Bob to discuss our financial performance for the quarter before David provides more detailed update on underwriting. Thanks, Kevin. And good morning, everyone. This quarter, against the backdrop of one of the largest insured losses in history, we reported an annualized return on average common equity of 7% with a modest operating loss. This is a strong result. Absorbing the California wildfires in our quarterly earnings demonstrates the diversification of our business and the strength of our three drivers of profit. In fact, we even grew our primary metric tangible book value per share plus change in accumulated dividends.
Bob: Thanks, Kevin and good morning, everyone. This.
Bob: This quarter against the backdrop of one of the largest insured losses in history, we reported an annualized return on average common equity of 7% and a modest operating loss.
Bob: This is a strong result, absorbing the California wildfires in our quarterly earnings demonstrates the diversification of our business and the strength of our three drivers of profit.
Bob: In fact, we even grew our primary metric tangible book value per share plus change in accumulated dividends. This is particularly notable given we also repurchased one 5 million shares in the quarter for $361 million.
Bob Qutub: This is particularly notable given we also repurchased 1.5 million shares in the quarter for $361 million. As you would expect, each of our three drivers of profit responded differently to the large events of the quarter. Our underwriting income was impacted significantly and we reported a $771 million loss. fees were also suppressed, although to a lesser extent with fee income of $30 million. And finally, net investment income remains strong at $405 million or $279 million on a retained basis, helping to partially offset the losses of the quarter. Net investment income has been a steady contributor to our results, especially over the last two years.
Bob: As you would expect each of our three drivers of profit responded differently to the large events of the quarter.
Bob: Our underwriting income was impacted significantly and we reported a $771 million loss.
Bob: Fees were also suppressed although to a lesser extent with fee income of $30 million and.
Bob: And finally net investment income remained strong at $405 million or $279 million on a retained basis, helping to partially offset the losses in the quarter.
Bob: Net investment income has been a steady contributor to our results, especially over the last two years. In fact, if you look back at our 2024 results are retained net investment income was over $1 1 billion comparing this to our average common equity in 2024, you'll see that retained net investment income contribute.
Bob Qutub: In fact, if you look back at our 2024 results, our retained net investment income was over $1.1 billion. Comparing this to our average common equity in 2024, you'll see that retained net investment income contributed 12 percentage points to our overall return on average common equity. And I expect this to continue into 2025.
Bob: And 12 percentage points to our overall return on average common equity.
And I expect this to continue into 2012.
Bob: 25.
Bob: As usual I'll provide a more detailed discussion of these three drivers of profit and I'll also touch on capital management, including our successful debt raise and expenses.
Bob Qutub: As usual, I'll provide a more detailed discussion of these three drivers of profits, and I'll also touch on capital management, including our successful debt rate and expenses. First, however, I'll provide some brief comments on tax. As you know, Bermuda's 15% corporate income tax came into effect at the beginning of the quarter. Based on our positive pre-tax earnings in Bermuda, we booked a corresponding Bermuda corporate income tax. That said, overall, we reported an income tax benefit of $45 million. This was primarily driven by a $37 million release of a valuation allowance against a specific deferred tax pass.
Bob: First however, I'll provide some brief comments on tax.
Bob: As you know Bermuda is 15% corporate income tax came into effect at the beginning of the quarter.
Bob: Based on our positive pre tax earnings in Bermuda, we booked a corresponding Bermuda corporate income tax expense.
Bob: That said overall, we reported an income tax benefit of $45 million.
Bob: This was primarily driven by a $37 million release of evaluation allowance against a specific deferred tax asset.
Bob: Moving now to our first driver of profit underwriting.
Bob Qutub: Moving now to our first driver of profit, Underwright. In addition to the California wildfires, there were several smaller specialty events that impacted our underwriting results, including the American Airlines tragedy and two refinery fires. Altogether, large losses in the quarter led to an after-tax net negative impact of $703 million, including $633 million from the California wildfire. The impact of tax effectively reduced our losses by $126 million this quarter. We have broken this tax impact out in the net negative impact table in our earnings release. On a pre-tax basis, the net negative impact from the California wildfires remains consistent with what we discussed with you last quarter at approximately $750 million.
Bob: In addition to the California wildfires, there were several smaller specialty events that impacted our underwriting results, including the American Airlines tragedy and two refinery fire.
Bob: Altogether large losses in the quarter led to an after tax net negative impact of $703 million, including $633 million from the California wildfires.
Bob: The impact of tax effectively reduced our losses by $126 million. This quarter, we have broken this tax impact out and the net negative impact table in our earnings release.
Bob: On a pre tax basis, the net negative impact from the California wildfires remains consistent with what we discussed with you last quarter at approximately $750 million.
Bob: Our overall combined ratio of 128%, including a 52 six percentage point impact from these large losses.
Bob Qutub: Our overall combined ratio of 128%, including a 52.6 percentage point impact from these large losses. The California wildfires also led to significant reinstatement premiums, which drove up both gross and net premiums written compared to last year. Moving now to some specific commentary on our property segment starting with the property catastrophe where gross premiums written were up 24% to $1.7 billion. And net premiums written were up 33% to $1.4 billion. As I mentioned, this growth was driven by $338 million of gross reinstatement premiums from the California wildfire. Without these reinstatement premiums, gross and net premiums were roughly flat quarter to quarter.
Bob: California wildfires also led to significant reinstatement premiums, which drove up both gross and net premiums written compared to last year.
Bob: Moving now to some specific commentary on our property segment, starting with the property catastrophe, where gross premiums written were up 24% to $1 7 billion and net premiums written were up 33% to $1 4 billion.
Bob: As I mentioned this growth was driven by $338 million of gross reinstatement premiums from the California wildfires.
Bob: Without these reinstatement premiums gross and net premiums were roughly flat quarter to quarter.
Bob: As David discussed on our last call. We grew certain property catastrophe lines at one one which offset some of the rate decline at the renewal this quarter our property catastrophe combined ratio was 176%.
Bob Qutub: As David discussed on our last call, we grew certain property catastrophe lines at one one, which offset some of the rate decline at the renewal. This quarter, our property catastrophe combined ratio was 176. This reflected a current action-to-year loss ratio of 170% and 8 points of favorable development from prior year events. Our property catastrophe current year results included a 159 percentage point impact from large loss events driven by the California wildfire. Finally, the acquisition expense ratio declined from Q1 2024 primarily due to the impact of reinstatement premiums and the reversal of profit commission. Moving to other property where we had a profitable quarter, even after the impact of the California wildfires, our combined ratio was 84% and the adjusted combined ratio was 82%.
Bob: This reflected a current accident year loss ratio of 170% and eight points of favorable development from prior year events.
Bob: Our property catastrophe current year results included a 159 percentage point impact from large loss events driven by the California wildfires.
Bob: Finally, the acquisition expense ratio declined from Q1, 2024, primarily due to the impact of reinstatement premiums and the reversal of profit commissions.
Bob: Moving to other property, where we had a profitable quarter, even after the impact of the California wildfires, our combined ratio was 84% and the adjusted combined ratio was 82%. This reflected a current accident year loss ratio of 85% and 33 points of favorable development from prior year event.
Bob Qutub: This reflected a current accident year loss ratio of 85% and 33 points of favorable development from prior year events in our attritional budget. Our other property current year results included a 30 percentage point impact from large loss events in the quarter also driven by the California wildfire.
Bob: And our Attritional book.
Bob: Our other property current year results included a 30 percentage point impact from large loss events in the quarter also driven by the California wildfires.
Bob: Going forward, we expect an attritional loss ratio in our other property book in the mid <unk> mid fifties.
Bob Qutub: Going forward, we expect a nutritional loss ratio in our other property book in the mid mid From a premium perspective, other property gross and net premiums written were both down roughly 15% from the comparable quarter. As we have discussed, this was predominantly driven by lower rates within the portfolio. Net premiums earned in the other property were $365 million, up 6%. In the second quarter, we expect net premiums earned to be approximately $380 million.
Bob: From a premium perspective other property gross and net premiums written were both down roughly 15% from the comparable quarter as.
Bob: As we have discussed this was predominantly driven by lower rates within the portfolio.
Bob: Net premiums earned in the other property were $365 million up 6% in the second quarter, we expect net premiums earned to be approximately $380 million.
Bob: Turning now to our casualty and specialty portfolio, where our gross and net premiums written were down modestly at 4% and 3% respectively.
Bob Qutub: Turning now to our casualty and specialty portfolio, where our gross and net premiums written were down modestly at 4% and 3% respectively. Within classes, gross premiums written in general casualty were up 16%, professional liability down 36%, and other specialty down 11%. These movements were primarily driven by prior year premium adjustments. We typically make these types of adjustments on quota share deals based on annual reporting by seasons of actual premiums. In credit, the 16% gross premium written increase was driven by growth on existing mortgage deals. Our net earned premiums in Casualty and Specialty were $1.5 billion, down 2%.
Bob: Within classes gross premiums written in general casualty were up 16% professional liability down 36% and other specialty down 11%.
Bob: These movements were primarily driven by prior year premium adjustments, we typically make these types of adjustments on quota share deals based on annual reporting by seasons of actual premiums written.
Bob: In credit the 16% gross premium written increased was driven by growth on existing mortgage deals.
Bob: Our net earned premiums in casualty and specialty were $1 5 billion down 2% looking ahead to the second quarter. We expect net earned premiums of $1 5 billion.
Bob Qutub: Looking ahead to the second quarter, we expect net earned premiums of $1.5 billion. As a result of several large events in our specialty book, including the California wildfires, American Airlines tragedy, and two refinery fires, we reported a casualty and specialty combined ratio of 111% and an adjusted combined ratio of 109%. This included a 9.2 percentage point impact from large events in the quarter and approximately 2 percentage points from the premium adjustment I just discussed along with some non-recurring items. These other items partially drove the elevated acquisition expense ratio. Going forward, we expect a casualty and specialty combined ratio in the high nine.
Bob: As a result of several large events in our specialty book, including the California, Wildfires American Airlines tragedy, and two refinery fires reported the casualty and specialty combined ratio of 111% and adjusted combined ratio of 109%.
Bob: This included a nine two percentage point impact from large events in the quarter and approximately two percentage points from the premium adjustment I just discussed along with some nonrecurring items.
Bob: These other items, partially drove the elevated acquisition expense ratio this quarter.
Bob: Going forward, we expect a casualty and specialty combined ratio in the high 90%.
Of course similar to this quarter, we may experience Catholic volatility from time to time in our specialty book, which could increase this ratio in certain quarters.
Bob Qutub: Of course, similar to this quarter, we may experience cat-like volatility from time to time in our specialty book, which could increase this ratio in certain Moving now to our second driver, fee income, and our capital partners business, where fees were also impacted by the events of the quarter, and we reported $30 million of fee income, down 64% from the first quarter last year. Management fees were $46 million, down 18% as a result of the reduced management fees in Da Vinci, which we anticipate recovering over time. Performance fees were negative $16 million, driven by the reversal of previously recognized commissions in Da Vinci and our structured reinsurance products.
Bob: Moving now to our second driver of fee income in our capital partners business, where fees were also impacted by the events of the quarter and we reported $30 million of fee income down 64% from the first quarter last year.
Bob: Management fees were $46 million down 18% as a result of the reduced management fees and da Vinci, which we anticipate recovering overtime performance fees were negative $16 million driven by the reversal of previously recognized commissions and da Vinci and structured reinsurance.
Bob: Products looking ahead absent large losses, we expect management fees to be around $45 million in the second quarter before returning to a more typical run rate of $50 million in the third quarter.
Bob Qutub: Looking ahead, absent large losses, we expect management fees to be around $45 million in the second quarter before returning to a more typical run rate of $50 million in the third quarter. Similarly, we anticipate beginning to recognize performances toward the end of the second quarter.
Bob: Similarly, we anticipate beginning to recognize performance fees towards the end of the second quarter.
Bob: Moving now to our third driver of profit net investment income.
Bob Qutub: Moving now to our third driver of profit, Net Investment Inc. Our investment portfolio delivered excellent results this quarter with total retained investment return of $607 million. Retained net investment income was $279 million with a small drag due to payment of wildfire. We experienced retained mark-to-market gains of $328 million due to lower treasury yields in the quarter, as well as gains from inflation and geopolitical-related hedges. Late last year, in anticipation of increasing economic uncertainty, we increased our investment portfolio's resilience to inflation. We did this by managing the shape of the yield curve through de-emphasizing the long end of the Treasury market.
Bob: Our investment portfolio delivered excellent results this quarter with total retained investment return of $607 million.
Bob: Retained net investment income was $279 million with a small drag due to payment of wildfire claims.
Bob: We experienced retained mark to market gains of $328 million due to lower treasury yields in the quarter as well as gains from inflation and geopolitical related hedges.
Bob: Late last year.
Bob: In anticipation of increasing economic uncertainty, we increased our investment portfolio's resilience to inflation we.
Bob: We did this by managing the shape of the yield curve through deemphasizing. The long end of the Treasury market. We also increased our long position in commodity mainly goal as an inflationary and geopolitical hedge.
Bob Qutub: We also increased our long position in commodities, mainly gold, as an inflationary and geopolitical hedge. As we have discussed with you in the past, we actively manage our investment portfolio to support book yields. This relatively conservative posture enabled us to lean into opportunities presented in the market. Specifically, we took advantage of market volatility to increase our exposure to global equities and increase our credit exposure, focusing on investment grade and high yield. At the end of the quarter, our retained yield to maturity was 5.1%, down from 5.3%, and retained duration was 3.1 years, down from 3.4 in the previous quarter.
Bob: As we have discussed with you in the past, we actively manage our investment portfolio to support book yield this.
Bob: This relatively conservative posture enabled us to lean into opportunities presented in the market specifically.
Bob: Advantage of market volatility to increase our exposure to global equities and increase our credit exposures focusing on investment grade and high yield.
Bob: At the end of the quarter, our retained yield to maturity was five 1% down from five 3% and retained duration was three one years.
Bob: Down from three four in the previous quarter.
Bob: We reduced duration when yields approach the lower end of the recent range in anticipation of rising rates at the longer end of the curve.
Bob Qutub: We reduce duration when yields approach the lower end of the recent range in anticipation of rising rates at the longer end of the curve. In the second quarter, we expect retained net investment income to be about flat from Q1.
Bob: In the second quarter, we expect retained net investment income to be about flat from Q1.
Bob: Moving now to other highlights in the quarter, starting with capital management.
Bob Qutub: Moving now to other highlights in the quarter starting with capital management. First, we continued repurchasing shares steadily through the quarter, buying back 1.5 million shares for $361 million at an average price of $242 per share. From April 1st through April 21st, we purchased an additional 278,000 shares for $65 million at an average price of $235. Since we began repurchasing shares in mid-2024, we have bought back 4.5 million shares for $1.1 billion at an average price of $246 a share. To put this in perspective, in aggregate, we have repurchased approximately half the total shares we issued for the Valois acquisition less than two years ago.
Bob: First we continued repurchasing shares steadily through the quarter buying back one 5 million shares for $361 million at an average price of $242 per share.
Bob: From April one through April 21, we repurchased an additional 278000 shares for $65 million at an average price of $235 a share.
Bob: Since we began repurchasing shares in mid 2024, we have bought back four 5 million shares for $1 1 billion at an average price of $246 a share.
Bob: To put this in perspective.
Bob: In aggregate, we have repurchased approximately half the total shares we issued with the Dallas acquisition less than two years ago. This.
Bob: This active approach to returning value to shareholders demonstrates the strength of our earnings and our ability to execute highly accretive acquisitions for the benefit of our investors.
Bob Qutub: This active approach to returning value to shareholders demonstrates the strength of our earnings and our ability to execute highly accretive acquisitions for the benefit of our investors. remain in a strong capital position, which is largely unchanged from the prior quarter. Consequently, we have the ability to continue deploying capital into underwriting opportunities while also repurchasing our shares at attractive valuations. Also this quarter, we successfully raised $800 million of debt, which included $500 million of 5.8% Renaissance Re Senior notes. and $300 million of $5.95 DaVinci Senior. These deals were significantly oversubscribed and we achieved our tightest spread to 10-year U.S.
Bob: And a strong capital position, which is largely unchanged from the prior quarter. Consequently, we have the ability to continue deploying capital into underwriting opportunities.
Bob: Also repurchasing our shares at attractive valuations.
Bob: Also this quarter, we successfully raised $800 million of debt.
Bob: Which included $500 million of five 8% Renaissance <unk> senior notes.
Bob: And $300 million.
Bob: A $5 95 da Vinci senior notes.
Bob: These deals were significantly oversubscribed, and we achieved our tightest spreads to 10 year U S. Treasuries to date of 130 basis points for Renaissance re and.
Bob Qutub: Treasuries to date of 130 basis points for Renaissancere and 170 basis points for DaVinci. In addition, on April 1st, 2025, we will be repaid in full our $300 million, 3.7% senior notes at maturity. Our $150 million of DaVinci 4.75% senior notes will be repaid at maturity on May 1st.
Bob: 170 basis points for da Vinci.
Bob: In addition on April one 2025, we repaid in full our $300 million three seven senior notes at maturity of $150 million of da Vinci for 75% senior notes will be repaid at maturity on may 1st.
Bob: Turning now to expenses in the first quarter, our operating expense ratio was three 7% down from four 3% compared to the first quarter of 2024.
Bob Qutub: Turning now to expenses in the first quarter operating expense ratio was 3.7% down from 4.3% compared to the first quarter of 2020. This decline was due to reduced performance-based compensation expenses and the impact of reinstatement. Looking forward, we expect a normal run rate for operating expenses to be just about 5% as we continue to invest in the and Clarence. In a quarter with significant catastrophe activity, our earnings were resilient. This demonstrates the strength of our three drivers of profit. While our quarterly underwriting income and fees were impacted by the large events, investments delivered excellent results.
Bob: This decline was due to reduced performance based compensation expenses and the impact of reinstatement premiums looking forward, we expect a normal run rate for operating expenses to be just above 5% as we continued to invest in the business.
Bob: And finally in a quarter with significant catastrophe activity. Our earnings were resilient. This demonstrates the strength of our three drivers of profit while our quarterly underwriting income and fees were impacted by the large events investments delivered excellent results were.
Bob: We remain in a strong capital position and can continue to lean into underwriting opportunities while repurchasing our shares in summary, we're in a great position to navigate current macroeconomic environment and expect to continue to deliver value to our shareholders and with that I'll now turn it over to David.
Bob Qutub: We remain in a strong capital position and can continue to lean into underwriting opportunities while repurchasing our shares.
Bob Qutub: In summary, we're in a great position to navigate current macroeconomic environment and expect to continue to deliver value to our shareholders.
David Marra: And with that, I'll now turn it over. Thanks, Bob.
Speaker Change: Thanks, Bob and good morning, everyone as Kevin discussed we are in a period of heightened macroeconomic volatility. It is at times of uncertainty that Renaissance reas expertise partnership approach and coordination across teams differentiates us as a reinsurance leader.
David Marra: And good morning, everyone. As Kevin discussed, we are in a period of heightened macroeconomic volatility. It is at times of uncertainty that Renaissance Re's expertise, partnership approach and coordination across teams differentiates us as a reinsurance leader. Throughout the quarter, our underwriting teams were focused on supporting our clients and solving their risk challenges. This included conducting ground-up loss assessments for the California wildfires and helping clients rapidly pay claims. planning for and executing a successful renewal in Japan. preparing for the second quarter property renewals and navigating a concentrated capital renewal period with a continued focus on claims trends.
David: Throughout the quarter, our underwriting teams are focused on supporting our clients in solving their risk challenges. This included conducting ground up loss assessments for the California, wildfires and helping clients rapidly pay claims.
David: Planning for and executing a successful renewal in Japan.
David: Preparing for the second quarter property renewals and navigating a concentrated casualty renewal period with a continued focus on claims trends.
David: Each class of business, we write we provide expert underwriters lead market quote and coordinated consistent delivery of capacity over the long term.
David Marra: Across each class of business we write, we provide expert underwriters, lead market quotas, and coordinated, consistent delivery of capacity over the long term. As a result, we are often rewarded with differentiated access to programs and attractive signings. This was evident in the most recent January 1st renewal. Despite competition, we successfully deployed more capacity in property catastrophe and grew limit on over 40% of U.S. CAT renewals. We also maintained our strong position in specialty and credit and shaped the portfolio by reducing in casualty lines as discussed last quarter. Beyond risk selection, we differentiate ourselves in the way that we build efficient portfolios of risk.
David: As a result, we are often rewarded with differentiated access to programs and attractive signings. This was evidenced in the most recent January 1st renewal.
David: By competition, we successfully deployed more capacity and property catastrophe and grew limit on over 40% of U S. Cat renewals. We also maintained our strong position in specialty and credit and shape the portfolio by reducing in casualty lines as discussed last quarter.
David: Beyond risk selection and we differentiate ourselves in the way that we build efficient portfolios of risk. This includes matching the right risk with the right capital and using our diversified underwriting portfolio to create three distinct drivers of profit and underwriting fee and investment income.
David Marra: This includes matching the right risk with the right capital and using our diversified underwriting portfolio to create three distinct drivers of profit in underwriting fee and investment income.
David: You can see the benefit of this approach in our results. This quarter as we were able to absorb one of the largest catastrophe losses in history and our quarterly earnings.
David Marra: You can see the benefit of this approach in our results this quarter, as we were able to absorb one of the largest catastrophe losses in history in our quarter.
David: Now moving to a more detailed discussion of our two segments and starting with property.
David Marra: Now moving to a more detailed discussion of our two segments and starting with property. We are deep in the process of quoting mid-year renewals, and in some instances have already bound lies. Many of the clients impacted by the wildfires have traded with us for decades. Fire is a primary peril covered by the programs and we have written this business property. We have learned from recent events and incorporated new information into our models in time for future renewal. Our confidence in our view of risk, access to efficient capital, and willingness to quote earlier than others makes us a first-call market for the best clients and gives us opportunities for differentiated terms and privacy.
David: We are keeping the process of quoting midyear renewals and in some instances have already bound lines.
Many of the clients impacted by the wildfires have traded with us for decades.
David: Players are primary apparel covered by their programs and we've written this business profitably.
David: We have learned from recent events and incorporate new information into our models and time for Q2 renewals are.
David: Our confidence in our view of risk access to efficient capital and willingness to quote earlier than others makes us a first call market to the best clients and gives us opportunities for differentiated terms of private deals.
David: Supply and demand are more balanced than in January one and trading conditions are more favorable.
David Marra: Supply and demand are more in balance than in January 1st, and trading conditions are more favorable. The market remains attractive, and we have appetite to continue growing in property catastrophe, and we plan to deploy additional limit through mid-year.
David: The market remains attractive and we have appetite to continue growing in property catastrophe and we plan to deploy additional limit through mid year. Our primary focus however is on margins.
David Marra: Our primary focus, however, is on March. To our underwriting system, REMS, each underwriter can see the return on capital on a deal-by-deal and even layer-by-layer basis, and the effect on our portfolio in real time. This empowers our underwriters to make disciplined, margin-focused decisions that benefit our shareholders. As expected, the 4-1 property renewals in Japan were orderly, and we are pleased with the portfolio we underwrote. The Japan market trades separately from the U.S., and rates were down about 10%. At these levels, the business is still attractive and we largely retained our share.
David: Through our underwriting system Rems each underwriter can see the return on capital on a deal by deal and even layer by layer basis, and the effect on our portfolio in real time.
David: This empowers our underwriters to make disciplined margin focused decisions that benefit our shareholders.
David: As expected the four one property renewals in Japan were orderly and we're pleased with the portfolio, we underwrote the Japan market trade separately from the U S and rates were down about 10%.
David: At these levels the business is still attractive and we largely retained our share.
David: Shifting to a discussion of other property this business has been performing well.
David Marra: Tipping to a discussion of other property, this business has been performing well. That said, recent profitability has attracted more competition and rates are decreasing. In upcoming renewals, we will use our suite of tools, including seeded reinsurance, to construct a book which is complementary to property catastrophe and accretive to our overall underwriting portfolio.
David: Recent profitability has attracted more competition and rates are decreasing.
David: And upcoming renewals, we will use our suite of tools, including seeded reinsurance to construct a book, which is complementary to property catastrophe and accretive to our overall underwriting portfolio.
Speaker Change: Moving now to the California wildfires as Bob explained we reported a post tax net negative impact from the California wildfires of $633 million.
David Marra: Moving now to the California wildfires. As Bob explained, we reported a post tax net negative impact from the California wildfires of $633 million. The majority of this loss was in our property segment with a small amount in our special That said, there are two primary factors which could reduce our loss. First, subrogation. This may be available in the future to offset some loss from the Eaton wildfire. The Eaton fire makes up about one-third of our industry estimate. It is too early to predict the potential benefit of subrogation to our results. But in the meantime, our approach is not to book any subrogation benefit until we are confident.
Speaker Change: The majority of this loss was in our property segment with a small amount in our specialty book.
Speaker Change: There are two primary factors, which could reduce our loss.
Speaker Change: The first subrogation this might be available in the future to offset some loss from the Eaton wildfire to eat and fire makes up about one third of our industry estimate it is too early to predict the potential benefit of subrogation to our results, but in the meantime, our approach is not to book any subrogation benefits until we are confident in its receipt.
Speaker Change: Second hospital offset is recruitment of California Fair plan assessments, the California insurance Commissioner approved a $1 billion assessment uninsured to cover claims from the wildfires. These.
David Marra: The second possible offset is recruitment of California Fair Plan Assessors. The California Insurance Commissioner approved a $1 billion assessment on insurers to cover claims from the wildfires. These assessments increase losses of our students and are covered under summary insurance programs. Part of these assessments may be recoupable from underlying policyholders, which would reduce the reinsurance obligation. Similar to subrogation, however, potential recoupment is not factored into our loss estimate and we are until we are confident.
Speaker Change: These assessments increased losses of our seasons and are covered under some reinsurance programs part of these assessments may be recoupable from underlying policyholders, which would reduce the reinsurance obligations.
Speaker Change: Similar to subrogation, however, potential recruitment is not factored into our loss estimate and we are until we are confident accuracy.
Speaker Change: Moving now to casualty and specialty.
Speaker Change: As Bob mentioned, we reported an adjusted combined ratio of 109%, which included provisions for several large losses in our specialty book.
David Marra: Moving now to casualty inspection. As Bob mentioned, we reported an adjusted combined ratio of 109%, which included provisions for several large losses in our specialty book. These losses are unrelated to our ongoing focus on casualty trends. Our view of general liability trends and current loss ratios remains stable. In addition to the California wildfires, the specialty losses also included two large refinery fires impacting our marine energy book, and the American Airlines tragedy at Reagan National Airport impacting our aviation. We expect that the American Airlines loss will be a significant event for the aviation market. Similar to the wildfires, there may be potential for subrogation.
Speaker Change: These losses are unrelated to our ongoing focus on casualty trends our.
Speaker Change: Our view of general liability trends and current loss ratios remained stable in the quarter.
Speaker Change: In addition to the California wildfires. The specialty losses also included two large refinery fires impacting our marine and energy book and the American Airlines tragedy at Reagan National Airport impacting our aviation book.
Speaker Change: We expect that the American airlines loss will be a significant event for the aviation market.
Speaker Change: Similar to the wildfires there may be potential for subrogation.
Speaker Change: We will not book this until we are confident in its receipt.
David Marra: We will not book this until we are confident. While we experienced heightened frequency in our specialty book this quarter, this is not indicative of any longer-term trend. As a reminder, much of our specialty book is excessive loss. We expect cat-like activity from time to time and reserve for these losses on an event basis. Overall, our specialty book has been performing well, and the aviation and marine and energy markets have been profitable.
Speaker Change: While we experienced heightened frequency at our specialty book this quarter does not indicative of any longer term trend as a reminder, much of our specialty book, it's excess of loss, we expect catalytic activity from time to time in reserve for these losses on an event basis.
Speaker Change: <unk>, our specialty book has been performing well in the aviation and marine and energy markets have been profitable.
Speaker Change: More broadly as we discussed last quarter in the casualty and specialty segment makes a significant contribution to operating income across our three drivers of profit, particularly considering the significant float it generates for our investment portfolio.
David Marra: More broadly, as we discussed last quarter, the Academy and Specialty segment makes a significant contribution to operating income across our three drivers of profit, particularly considering the significant flow it generates for our investment portfolio.
Speaker Change: Moving now to a discussion of the four one renewals and the outlook for the mid year.
David Marra: Moving now to a discussion of the 4.1 renewables and the outlook for the mid-year. Trends from 1.1 continue in our casualty and specialty business. Specifically, in casualty, we have been encouraged to see that insurance companies are recognizing increased trend in general liability and taking steps to improve their claims handling and realize greater underlying ratings. Given the heightened scrutiny around the impact of social inflation on general liability profitability, I wanted to take a minute to expand on this and provide our assessment of the evolving state of the market and increasing sophistication of the claims handling practices of our state.
Speaker Change: And trends from one one continue in our casualty and specialty business specifically.
Speaker Change: Casualty, we have been encouraged to see that insurance companies are recognizing increased trend in general liability and taking steps to improve their claims handling and realize greater underlying rate increases.
Speaker Change: Given the heightened scrutiny around the impact of social inflation on general liability profitability I wanted to take a minute to expand on this and provide our assessment of the evolving state of the market and increasing sophistication of the claims handling practices of our seasons.
Speaker Change: This is where we have an advantage as a reinsurer.
David Marra: This is where we have an advantage as a reinsurer. We are better placed to identify best practices because we have a broad overview of the market and can see the differentiated approaches of our customers. I think about the market response in two stages. First was to reduce policy limits and increase rates. Second is Enhanced Claims. Starting with the first stage, in 2019, there was growing recognition that general liability lines were increasingly challenged. Insurers responded by reducing policy limits with the intent of limiting severity in the event. With lower capacity in the market, rates increased over 50%.
Speaker Change: We are better placed to identify best practices, because we have a broad overview of the market and can see the differentiated approaches of our customers.
Speaker Change: Think about the market response in two stages.
Speaker Change: First was to reduce policy limits and increase rates.
Speaker Change: Second is enhanced claims momentum.
Speaker Change: Starting with the first stage in 2019, there is growing recognition that general liability lines, where increasingly challenged.
Speaker Change: Insurers responded by reducing policy limits with the intent of limiting severity in the event of a claim.
Speaker Change: With lower capacity in the market rates increased over 50% we grew into this market.
Speaker Change: The rate increases however, we held our reserving loss ratios relatively flat to reflect our view of uncertainty.
David Marra: We grew into this market. Despite the rate increases, however, we held our reserving loss ratios relatively flat to reflect our view of uncertainty. Moving to the second stage, in 2022, courts began to reopen following the COVID pandemic, and we saw a shift in claims management practices to quickly settling. This was intended to reduce the potential for very large awards from nuclear verdicts. The reduction in limits I discussed encourage this behavior. Rates were still increasing during this period, but at a reduced level of 6 to 8. More recently, it became clear to us that social inflation trends remained at their pre-COVID pace of about 10 to 12%.
Speaker Change: Moving to the second stage in 2022 courts began to reopen following the Covid pandemic and we saw a shift in claims management practices to quickly settling claims. This was intended to reduce the potential for very large awards from nuclear verdicts.
Speaker Change: The reduction in limits I discussed encourage this behavior.
Speaker Change: Rates were still increasing during this period, but at a reduced level of six 8%.
Speaker Change: More recently, it became clear to us that social inflation trends remained at their pre COVID-19 pace of about 10% to 12%.
Speaker Change: <unk> responded to this in late 2024 as rate increases began to accelerate to at least 15%.
David Marra: The market responded to this in late 2024 as rate increases began to accelerate to at least 15%. rates are now cumulatively up over 200% since the start of 2019. Trends, however, is also cumulative, and much of that 200% has been needed to keep up. Rather than quickly settle, certain insurers were more willing to fight problematically. Our casualty book is quota share, which means we take a percentage share of each policy our client writes throughout the year, both of premiums and of losses. Given this and the wide disparities we observe in how customers are currently managing claims, we look to select those with the most robust claims management approach.
Speaker Change: Alright, Sir now cumulatively up over 200% since the start of 2019 trend. However is also cumulative and much of that 200% has been needed to keep up.
Speaker Change: At the end of 2024 claims defense strategies, we're also becoming more sophisticated.
Speaker Change: Rather than quickly settle certain insurers were more willing to fight problematic claims.
Speaker Change: Our casualty book is quota share, which means we take a percentage share of each policy our client rates throughout the year both of premiums and losses.
Speaker Change: Given this and the wide disparities, we observe in our customers are currently managing claims we look to select those with the most robust claims management approach.
Speaker Change: That said it will take time to see the effects of a stronger claims defense strategies come through results and for profitability to improve rates need to continue increasing at 15% or greater throughout 2025.
David Marra: That said, it will take time to see the effects of stronger claims defense strategies come through results. And for profitability to improve, rates need to continue increasing at 15% or greater throughout 2020. The market movements I just described since 2019 are a good example of why we say casualty needs have diminished over a 10-year time frame. Trends take time to discern, and underwriting and claims actions take time to demonstrate their positive effects. We are taking all the right actions to manage general liability through this cycle. Success will take time to emerge in the data, but we are pleased with the progress and confident that general liability is on track for improved profitability.
Speaker Change: The market movements I just described since 2019 are a good example of why we say casualty music managed over a 10 year timeframe trends take time to discern and underwriting and claims actions take time to demonstrate the positive effects. We were taking all the right actions to manage general liability through this cycle.
Speaker Change: <unk> will take time to emerge in the data we are pleased with the progress and confident that general liabilities on track for improved profitability in the meantime, we are taking a cautious approach. We will continue to reduce exposure to general liability and are not reflecting the additional rate above trend in our loss picks.
David Marra: In the meantime, we are taking a cautious approach. We will continue to reduce exposure to general liability and are not reflecting the additional rate above trend in our losses.
Speaker Change: Moving now to professional liability after several quarters of rate decreases primary capacity is starting to withdraw from the market. Although it is too soon to tell if this will drive disciplined and the class.
David Marra: Moving now to professional liability, after several quarters of rate decreases, primary capacity is starting to withdraw from the market, although it is too soon to tell if this will drive discipline in the classroom. We continue to monitor the market, but remain cautious and have reduced our exposure in recent months. Specialty, we continue to find most lines of business attractive. We grew significantly in specialty with the recent Valois acquisition and have excellent access to strong programs. While there has been some increased competition, we aim to hold our existing lines, deploy capacity on the best programs, and optimize our portfolio across profitable classes.
Speaker Change: We continue to monitor the market, but remain cautious and have reduced our exposure in recent years.
Speaker Change: In specialty we continue to find most lines of business attractive we grew significantly in specialty with the recent validus acquisition and our excellent access to strong programs.
Speaker Change: While there has been some increased competition, we aim to hold our existing lines deploy capacity on the best programs and optimize our portfolio across profitable classes.
Speaker Change: Finally on credit we are closely monitoring the global economic environment for any potential impacts to our credit book and believe we are prudently positioned in the event of a recession, while tariffs may impact volume in course of trade. We do not expect this to lead to significant losses at this stage.
David Marra: Finally, in credit, we are closely monitoring the global economic environment for any potential impacts to our credit book and believe we are personally positioned in the event of a recession. While tariffs may impact volume and course of trade, we do not expect this to lead to significant loss.
Speaker Change: So in closing this quarter, we demonstrated the strength of our platform and three drivers of profit as we absorbed one of the largest insured losses in history.
Kevin O'donnell: So in closing, this quarter we demonstrated the strength of our platform and three drivers of profit as we absorbed one of the largest insured losses in history. As we look toward mid-year renewals, the underwriting market remains attractive across most of the lines we write. We have excellent access to business and our underwriters remain margin-focused, building a portfolio that supports strong returns for our shareholders.
Kevin: As we look towards mid year renewals the underwriting market remains attractive across most of the lines be right. We have excellent access to business and our underwriters remain margin focused building a portfolio that supports strong returns for our shareholders and with that I'll turn it back to Kevin.
Kevin O'donnell: And with that, I'll turn it back to Kevin. Thanks, Steve. Our results this quarter demonstrate the strength of our three drivers of profit. We remain in excellent capital and liquidity position despite one of the largest catastrophic losses in history. Looking ahead, the underwriting market remains attractive across most lines that we write in, and we are well-placed to access opportunities at the mid-year renewal. While the world struggles with increased macroeconomic uncertainty, we believe our anti-correlation will insulate our business and allow us to benefit from increased risk aversion. Finally, interest rates remain robust, which bolsters our net investment income, and we continue to expand our fee generating capital partners business.
Kevin: Thanks, Dave.
Kevin: Our results this quarter demonstrate the strength of our three drivers of the profit.
Kevin: We remain in excellent capital and liquidity position, despite one of the largest catastrophic losses in history.
Kevin: Looking ahead, the underwriting market remain attractive across most lines that we write and we are well placed to access opportunities at the mid year renewals.
Kevin: While the world struggles with increased macroeconomic uncertainty, we believe our antique correlation will insulate our business and allow us to benefit from increased risk aversion.
Kevin: Finally interest rates remain robust, which bolsters, our net investment income and we continue to expand our fee generating capital partners business and with that we'll open it up for questions. Thank you.
Madison: And with that, we'll open it up for questions. Thank you. And at this time, if you would like to ask a question, please press star one on your telephone keypad. If you wish to remove yourself from the queue, you may do so by pressing star two. We remind you to please unmute your line when introduced, and if possible, pick up your handset for optimal sound quality.
Kevin: And at this time, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: If you wish to remove yourself from the queue. You may do so by pressing star Kim We remind you to please on mute your line when introduced and if possible pick up your handset for optimal sound quality and the interest of time, we ask that you. Please limit yourself to one question and one follow up we will now take our first question from Elyse Greenspan with Wells Fargo.
Madison: In the interest of time, we ask that you please limit yourself to one question and one follow up.
Elyse Greenspan: We'll now take our first question from Elyse Greenspan with Wells Fargo. Please go ahead. Hi, thanks. Good morning. My first question is on the mid-year renewals. I was just hoping you could expand just on how you're expecting, you know, California fires, right, the loss we saw this year to impact the mid-years, right, that are, you know, very heavily concentrated in Florida. And if you have any, you know, any data points to support, I guess, perhaps some better pricing during the mid-years, and how do you think this could triangulate into, you know, growth opportunities for Renry?
Speaker Change: Please go ahead.
Kevin: Yeah.
Kevin: Hi, Thanks.
Speaker Change: Good morning. My first question is on the mid year renewals.
Kevin: And he had pumping.
Kevin: And just on and how you're expecting California fires My philosophy saw the huge impact of midyear is way better very heavily concentrated in Florida. I think you have any you know.
Kevin: Any data points to support I guess, perhaps.
Kevin: Better pricing.
Kevin: The midyear is and how do you think this kind of.
Kevin: Triangulate into growth opportunities for Henry.
Speaker Change: Thanks, Lisa let me start with some broader comments and I'll turn it over to Dave.
Kevin O'donnell: Thanks, Elyse.
David Marra: Let me start with some broader comments and I'll turn it over to Dave. I think it's important to help you guys understand, you know, the change in rates. What we focus on is the adequacy of rates. And, you know, I think since, particularly since starting with property from 2023, we increased rates on the property portfolio by 50%, we increased retentions, and we changed terms and conditions. And what we've said since then is like any financial market, there'll be ups and downs. But I think the important thing is from a rate adequacy perspective, the property market is in exceptional shape compared to where it has been historically.
Speaker Change: It's important to help you guys understand the change in rates, while we focus on is the adequacy of rates.
And.
Speaker Change: It seems.
Speaker Change: Particularly starting with property from 2023.
Speaker Change: We increased rates on our property portfolio about 2%, we increased retentions and we.
Speaker Change: Change terms and conditions and what we've said since then there's like any financial market there'll be ups and downs, but I think the important thing is from a rate adequacy perspective, the property market is in exceptional.
Speaker Change: Compared to where it has been historically.
Speaker Change: From the casualty, Dave did a good out good job outlining where casualty as we're seeing lots of green shoots for improved casualty with rate increase and better claims management. So we feel really confident there in specialty continues to be well rated and in very strong shape. So I'll turn it over to Dave to talk more specifically about the upcoming.
David Marra: From the casualty, Dave did a good job outlining where casualty is. We're seeing lots of green shoots for improved casualty with rate increase and better claims management. So we feel really confident there and specialty continues to be well rated and in very strong shape.
David Marra: So I'll turn it over to Dave. to talk more specifically about the upcoming Yeah, thanks, Kevin. We feel really good about where the cat market is and the opportunities ahead. And like Kevin said, the rates and retentions are some of the most attractive we've seen. Whether rates are up or down a bit, it's less reliant on that. It's more we're confident that those trading conditions will continue. We have seen some renewals and we're encouraged by the trading conditions. It is more in favor of reinsurers than it was at 1.1. Supply and demand are more in balance than what we saw at 1.1.
Dave: Yes, Thanks, Kevin we feel really good about where the cat market is and the opportunities ahead and like Kevin said that rates and Retentions are some of the most attractive we've seen.
Speaker Change: Whether the rates are up down up or down a bit.
Speaker Change: Is less reliant on that it's more we are confident that those trading conditions will continue we have seen some renewals and we're encouraged by the trading conditions. It is.
Speaker Change: More in favor of reinsurers than it was at one one supply demand are more in balance than what we saw at one one but there is growing demand and we've been able to construct a really nice portfolio. So far with the bulk of the renewals yet to come we will have to go through those but there's a lot more renewals that are loss impacted going on to Florida.
David Marra: There is growing demand and we've been able to construct a really nice portfolio so far. With the bulk of the renewals yet to come, we'll have to go through those. But there's a lot more renewals that are loss impacted. Going on to Florida, demand is growing in Florida and pricing is strong, so it will be an opportunity. We have seen more risk move back into the private market from citizens depopulating. That does increase demand. And the Florida Hurricane Cap Fund is increasing where it attaches, so that increases demand down below. So all that plays to our strengths.
Speaker Change: And is growing in Florida and pricing is strong so it will be an opportunity.
Speaker Change: We have seen more risk move back into the private market from citizens Depopulating that does increase demand and the Florida Hurricane Cat fund is increasing whereas attaches so that increases demand envelope. So all of that plays to our strengths.
Speaker Change: We'll be able to be able to provide solutions with the new demand private deals and things like that.
David Marra: We'll be able to provide solutions with the new demand, private deals and things like that.
Speaker Change: Other property is more challenged on the rate side.
David Marra: Other property is more challenged on the rate side. We had a reduction this year. We're expecting additional competition there. We're fully confident we can construct an attractive portfolio using seeded reinsurance. But we're going to be deploying more of our cap capacity on the property cap side. And general liability is on good track, which is going to take time.
Speaker Change: We had reduction this year, we're expecting additional competition there.
Speaker Change: Fully confident we can construct an attractive portfolio using seeded reinsurance, but we're going to deploy more of our cat capacity on the property cat side and general liability is on good track, which is going to take time like we said.
Speaker Change: Thanks, Tom and then my follow up is on casualty specialty.
Elyse Greenspan: Thanks, and then my follow up is on casualty specialty, right? I mean, you guys did raise the combined ratio guidance there, right to the high 90s from prior was made to high 90s. So can you just spend, you know, some time talking about, you know, what what changed specifically this quarter that, you know, caused you to, you know, raise the combined ratio target for that business? Yeah, I think I'll start again with my comments. It was Dave pointed out the casualty market is better this quarter than last quarter and has been improving. We've seen elevated trend, but the trend has been stable at the 10 to 12%.
Speaker Change: Scared me combined with some confidence for <unk>.
Speaker Change: Hi, 90 is from Nate.
Speaker Change: Mid to high <unk>.
Speaker Change: And.
Speaker Change: Some time talking about what what.
Speaker Change: What changed specifically this quarter that caused you to.
Speaker Change: The combined ratio target for that business.
Speaker Change: Yes.
Speaker Change: I think I'll start again with my comments it was Dave pointed out the casualty market is better this quarter than last quarter and has been improving we've seen elevated trend, but the trend has been stable at the 10% to 12%.
Speaker Change: Rates continue to come in strong, but we're going to be slow in recognizing the improvements that we're absorbing to make sure that those improvements are clearly demonstrated.
Kevin O'donnell: Rates continue to come in strong, but we're going to be slow in recognizing the improvements that we're observing to make sure that those improvements are clearly demonstrated in the development patterns and the data. So, I think when looking at the casualty market, it is a better market than we have been in.
Speaker Change: In the development patterns in the data so I think when looking at the casualty market. It is a better market than we have been in a.
Speaker Change: Right.
Speaker Change: Rates continue to look good, but I'll turn it over to Dave for more specific comments.
David Marra: Rates, you know, rates continue to look good, but I'll turn it over to Dave for more specific comments. Yeah, thanks, Kevin. The casualty market is doing everything it should be to manage this part of the cycle. I think it's been responsive over the last few stages of the cycle, kind of like I went through and how the market raised a rate and reduced one in 2019. And now there's another need to improve planes management. Companies are making solid investments in that, it's the right time to be fighting the plaintiffs bar, but that will take time to emerge.
Dave: Yes, thanks, Kevin.
Dave: The market is doing everything it should be to manage this part of the cycle I think it's been responsive over the last few stages of the cycle kind of like I went through in how we market raised on a rate and reduced went in 2019 and now there is another need to improve claims management companies are making solid investments in that it's the right time to be fighting the plaintiff's bar, but that will.
Dave: Take time to emerge and similar to how we didn't recognize that good news until it's showed up and reserving loss ratios. After 2020, we're gonna be taken a conservative approach until we see that coming through the data.
Elyse Greenspan: And similar to how we didn't recognize that good news until it showed up in reserving loss ratios after 2020, we're going to be taking a conservative approach until we see that going through the data. Thank you.
Josh Shanker: Thank you and we'll take our next question from Josh Shanker with Bank of America. Please go ahead.
Josh Shanker: And we will take our next question from Josh Shanker with Think of America. Please go ahead. Yeah, the It's relatively stable.
Josh Shanker: Yes. Thank you very much I wanted to talk about the balance of.
Josh Shanker: Cat losses being picked up by da Vinci near the third party vehicles has the proportion of third party.
Josh Shanker: Yes.
Josh Shanker: Ownership of the Cat volume increased dramatically at January one it does seem like the common shareholder portfolio was more resilient in the face of a very large loss.
Josh Shanker: Yes.
Josh Shanker: It's relatively stable.
Josh Shanker: So if you reflect back one of the things we did when we bought Validus is we did reduce the share of risk that went to da Vinci, but increase the size of the debenture because of the acquisition of Validus.
Kevin O'donnell: So if you reflect back, one of the things we did when we bought Validus is we did reduce the share of risk that went to DaVinci, but increased the size of DaVinci because of the acquisition of Validus. Since then, it's been relatively consistent as to how much we're sharing with Validus. You recall last year, we did change our seeded purchases as we've I underwrote the Validus portfolio onto the right balance sheets, so we continue to benefit from that. But I would say the portfolio is relatively stable with the allocation to DaVinci Oak from, I think you're asking basically over the one renewal, and it stays relatively stable right now.
Josh Shanker: Since then.
Josh Shanker: Been relatively consistent as to how much we're sharing with validus, you'll recall last year, we did change our ceded purchases as we.
Josh Shanker: Underwrote the validus portfolio onto the right balance sheets. So we continue to benefit from that but I would say the portfolio is relatively stable.
Josh Shanker: With the allocation to da Vinci or from I think you were asking basically over the one one renewal.
Josh Shanker: <unk> relatively.
Josh Shanker: Stable right now and our plan is not to change it materially as we go forward, there's always some movement in it with ownership, but it's not a material shift.
Bob Qutub: And our plan is not to change it materially as we go forward. There's always some movement in it with ownership, but it's not a material shift. All right.
Josh Shanker: Alright, and then on.
Josh Shanker: Historically progressed 30 years, you've put up a pretty conservative number with major events have happened enough time passes that you feel comfortable that you reserve adequacy for that loss would be some reserves and that's been a big source of earnings long term and then went big had happened thinking happens all over again, but in this quarter.
Bob Qutub: And then historically for the last 30 years, you've put up a pretty conservative number when major events have happened. Enough time passes that you feel comfortable that you reserve adequately for that loss and you release some reserves. And that's been a big source of earnings long term. And then when a big cat happens, the same thing happens all over again. But in this quarter, the balance of the favorable balance came from the other property segment, not really the cat segment.
Josh Shanker: Balance of the favorable bump came from the other property segment not really the segments and if people are trying to figure out you know the.
Bob Qutub: And if people are trying to figure out, you know, the behaviors of Ren Re as you've transitioned away from being a cat company into a more diverse company, can you talk about what went into the reserve release and other property? And is there any read through about how you're managing that book business and how you're managing the reserves on casualty and specialty? Yes, nothing's changed in our reserving. You know, we You know, even just looking at the wildfires, we make our best assessment, and we've talked many times about having a top-down approach and a bottom-up approach.
Josh Shanker: Behaviors of remedy as you've transitioned away from being a cat company into a more diverse company can you talk about what went into the reserve release in the other property and is there any read through.
Josh Shanker: About how you're managing that book of business and how you're managing that reserves on casualty and specialty.
Josh Shanker: Yeah, So nothing has changed in our reserving.
Josh Shanker: We.
Josh Shanker: Even just looking at the wildfires, we make our best assessment, we've talked many times about having a top down approach and a bottom up approach dropped down we're looking at the industry event bottom up we're looking at each client individually and then coming up with our assessment.
Bob Qutub: Top-down, we're looking at the industry event. Bottom-up, we're looking at each client individually and then coming up with our assessment.
Josh Shanker: I'll turn it over to Bob to talk a little bit more specifically about the split between the reserve changes this quarter.
Bob Qutub: I'll turn it over to Bob to talk a little bit more specifically about the split between the reserve changes this quarter. Yeah, on the favorable development and property came in, about a third of it went into the property CAT, and the other two-thirds was in the proportional side of the other property, and that's a mix between CAT-exposed and non-CAT-exposed. It's part of a review process that we'll go through on an annual basis, and there was just more releases that came out of that process on the other property. So, it's not a targeted focus. It's a byproduct of the process that we go through and look at the events on an annual basis.
Bob: On the favorable development in property came in about a third of it went into the property cat.
Bob: The other two thirds was in the proportional side or the other property and that's a mix between cat exposed and non cat exposed as part of a review process that will go through on an annual basis and there was just more releases that came out of that process on the other property well, it's not a targeted focus it's the byproduct of the process that we go through and look at the events on that.
Bob: Annual basis.
Speaker Change: Thank you and we'll take our next question from Jenny Ping in their place with Jpmorgan. Please go ahead.
Bob Qutub: Thank you.
Jimmy Bhullar: And we will take our next question from Jimmy Bhullar with JP Morgan. Please go ahead. Hey, good morning.
Jenny Ping: Hey, good morning.
Speaker Change: Just had a couple of questions on the or.
Kevin O'donnell: I just had a couple of questions on your casualty and specialty business. So first on the reserve development this quarter, it was modestly positive. Can you go into some details on whether there was some adverse in certain lines and positives and other lines that offset that, just any color there? And then just relatedly, if you could talk about your confidence in your casualty reserves overall, a lot of your students have had adverse development in recent years. Your reserves have generally been divided but neutral or slightly positive for the last several quarters.
Jenny Ping: Casualty and specialty business so first on.
Jenny Ping: The reserve development this quarter. It was modestly positive can you go into.
Jenny Ping: Some details on whether there was some adverse in certain lines and positive the other lines that offset that just any color. There and then just relatedly. If you could talk about your <unk>.
Jenny Ping: But then in your casualty reserves overall.
Jenny Ping: A lot of your seasons have had adverse development in recent years Youll reserves have generally been divided the neutral or slightly positive for the last several quarters.
Jenny Ping: Yeah.
Jenny Ping: So let me start with the second part of your question then I'll turn it over to Dave for the first part of your question.
David Marra: So, So, let me start with the second part of your question, and I'll turn it over to Dave for the first part of your question. If you look at how to manage a casualty specialty portfolio, it is, firstly, you need good underwriting, and then you need a good process to manage the decisions you made from underwriting to make sure that your reserves are tracking any change in trend, which are different from the underwriting decisions you made at time zero. We've done a good job on both the underwriting. We have a diversified portfolio. There's always classes that have changes in the reserving patterns which we're reflecting, but on balance, the portfolio in casualty specialty is well-balanced and has performed well.
Dave: If you look at it how to manage the casualty specialty portfolio. It is firstly you need good underwriting and then you need a good process to manage the decisions you've made from underwriting to make sure that your reserves are tracking any change in trend, which are different from the underwriting decisions. You made at time zero, we've done a good job on both the underwriting we have.
Dave: Our diversified portfolio Theres always classes that at <unk>.
Dave: Changes in the reserving patterns, which were reflecting but on balance the portfolio in casualty specialty is well balanced and has performed well.
Dave: So when I think about the casualty specialty business. It's one of the reasons in which in my comments I'm able to highlight the resilience of the overall platform because we have greater diversification across our three drivers of profit because of the beneficial addition of the casualty portfolio. We are highly confident in the construction of the casualty.
Kevin O'donnell: So, when I think about the casualty specialty business, it's one of the reasons in which, in my comments, I'm able to highlight the resilience of the overall platform. It's because we have greater diversification across our three drivers for profit because of the beneficial addition of the casualty portfolio. We are highly confident in the construction of the casualty portfolio, and in order to be highly confident, we need to be highly confident in the reserves supporting it.
Dave: Portfolio and in order to be highly confident we need to be highly confident in the reserve supporting it.
Dave: Yes, I can talk more about the specific reserves I think.
David Marra: Yeah, I can talk more about the specific reserves. I think, obviously, there's a lot of actuarial rigor that goes into the estimates, but if you step out of that, I think a reserve analysis in two parts. It's, did we get the underwriting right? And then, did we get the reserving process right? And the answer to both of those in our case is yes. We have been making the right decisions on the underwriting side. We've been able to allocate the capacity to the best risks and grow when we should, reduce when we should, use adverse development covers, avoid being overweight, any one problematic class.
Obviously, there's a lot of actuarial rigor that goes into the estimates, but if you step out of that I think our reserve analysis in two parts. It's can we get the underwriting right and then just to get the reserving process right and the answer to both of those in our cases, yes, we have been making the right decisions on the underwriting side.
Dave: We've been able to allocate the cap halfway to the best risks and grow and we should reduce only when we should use adverse development covers avoid being overweight anyone problematic class general liability has had.
David Marra: You know, general liability has had a... The other classes have had more favorable results, but the balance was there, so the segment has been profitable. We've had some favorable development. And also, that's part of getting the reserving process right. Also, like we talked about after 2020, when rates were increasing in casualty, we didn't immediately take that benefit. We have taken some of that and then reversed that to make sure that our more recent years are strongly reserved, but we're comfortable with where those are.
Dave: Less favorable results. The other classes have had more favorable results, but the balance was there. So the segment has been profitable we've had sustained favorable development. It also that's part of getting the reserving process right.
Dave: Also like we talked about after 2020 when rates are increasing in casualty, we didnt immediately take that benefit and we have taken some of that and then reverse that to make sure that our more recent years are strongly reserved but we're comfortable with where those are.
Dave: Okay, and if I can just ask one more.
David Marra: Okay, and if I could just ask one more, just on your comments on overall market conditions, obviously, prices have come down, but it seems like they're still very adequate, but they have been coming down for the past couple of years. What's different about this market than in prior soft markets that would suggest that this is not the beginning of sort of a multi-year decline in prices? Well, you're saying prices have been down for several years. Oh, there. My point was 2023 prices went up a lot since then they've come down a little bit, but off of a very, very high level.
Dave: And just on your comments on overall market conditions.
Dave: Obviously prices have come down, but it seems like there so.
Dave: Very adequate but.
Dave: He had been coming down for the past couple of years, what's different about this market.
Dave: By yourself markets that would suggest that.
Dave: It does not have the beginning of a multiyear decline in pricing.
Dave: Well, you're saying prices have been down for several years.
Dave: Linda.
Linda: Oh they are.
Speaker Change: My point, though is 2023 prices went up a lot since then they've come down a little bit but off of a very very high level.
Speaker Change: But there was a concern in the market amongst investors that this is the beginning of.
Kevin O'donnell: But there's a concern in the market amongst investors that this is the beginning of an ongoing decline in pricing and reinsurance over the next few years. Okay. There's something structurally different in the market that might prevent it or not. Yeah, the If you go back to 2023, the reason for the change wasn't in response to a loss. It was in a response from tiresome results of underwriting dropping down too low, too many aggregate covers, an expansion of terms over a long period of time. The reset at 2023 was not only a change in price of 50%, it was resetting to levels which are much more sustainable from a terms and conditions perspective, and most importantly, from a retention perspective.
Speaker Change: An ongoing decline in pricing and reinsurance over the next few years okay.
Speaker Change: Okay.
Speaker Change: Let me start from the different in the market that might prevent that or not.
Speaker Change: Yes.
Speaker Change: If you go back to 2023, the reason for the change wasn't in response to a lawsuit.
Speaker Change: And our response.
Speaker Change: From tiresome results of underwriting dropping down too low too many aggregate covers.
Speaker Change: An expansion of terms over a long period of time.
Speaker Change: The reset 20 agree was not only a change in price of 50%. It was resetting to levels, which are much more sustainable from.
Speaker Change: Terms and conditions perspective, and most importantly from a retention perspective, what was happening before.
Speaker Change: Was an unsustainable chain of risk transfer to retro that was too low reinsurance protecting income statements and primary companies not pushing through rate.
Kevin O'donnell: What was happening before was an unsustainable chain of risk transfer to retro that was too low, reinsurers protecting income statements and primary companies not pushing through rate. What we have now is a much more stable and much more historically normal environment where the primary companies have pushed through rate. better reflected deductibles in the insurance product. Reinsurers have moved into balance sheet protection and retro has dropped out of the low aggregate coverage that reinsurers were buying. So right now the market is much more stable than where it was and much more historically normal than where it was prior to 2023.
Speaker Change: <unk> now has a much more stable and much more historically normal environment, where the primary companies have pushed through rate.
Speaker Change:
Speaker Change: Better reflected deductibles in the insurance product reinsurers have moved into balance sheet protection and retro has dropped out of the low aggregate covers that reinsurers for buying so right now the market is much more stable than where it was in much worse.
Speaker Change: Stork, we normal than where it was prior to 'twenty three with that and what we've consistently said is we think the market like any financial market will trade around the level that we're at and that's our belief going into this year is that there'll be some trading up and down in different classes, but the level of rate that has been established in the market is.
Kevin O'donnell: With that and what we've consistently said is we think the market like any financial market will trade around the level that we're at and that's our belief going into this year is that there'll be some trading up and down in different classes but the level of rate that has been established in the market is not going to trend down. So it's not like we went up a ski slope and we're back going to ski down. We've kind of walked up to the top of a mesa and we're going to walk across the top of the mesa at this new level.
Speaker Change: Not going to trend down so it sounds like we went up a ski slope and we're going.
Speaker Change: Going to ski down we've got to walk up to the top of our Mesa and we're going to walk across the top of the Mesa at this new.
Speaker Change: New level, sometimes there'll be a little up sometimes it would be a little down, but there's no indication that the market is trending back to pre 2003 levels.
Kevin O'donnell: Sometimes it'll be a little up, sometimes it'll be a little down but there's no indication that the market is trending back to pre-23 level.
Speaker Change: Thank you and we will take our next question from Bob <unk> with Morgan Stanley. Please go ahead.
David Motemaden: Thank you.
Bob Wong: And we will take our next question from Bob Wong with Morgan Stanley. Please go ahead. Hi, good morning.
Bob <unk>: Hi, good morning.
Speaker Change: Maybe just a few things shifting gears, a little bit first one on capital allocation.
Bob Wong: Maybe just a few things, shifting gears a little bit. First one on capital allocation. You talked about repurchasing shares, continuing to repurchase shares. You also talked about green insurance still being attractive. If we were to rank the importance of each of your business and share repurchase on capital allocation, yeah, in terms of capital allocation, how would we rank them? Is it property catastrophe first, other property second? Where would casualty fall? Where would buyback fall? Just curious how you would think of them from an order of importance. Thanks for the question.
Bob <unk>: About repurchasing shares.
Speaker Change: Thanks, Dan you also talked about reinsurance.
Bob <unk>: There will be an attractive.
Bob <unk>: If we want to rank them.
Bob <unk>: Importantly, each of your business and the share repurchase on capital allocation.
Bob <unk>: In terms of capital allocation I would rank them.
Bob <unk>: Prop.
Bob <unk>: Property catastrophe birth other property back then where would casualty fall wherewith by backlog I'm. Just curious how you would think of them from a.
Bob <unk>: The order of importance.
Bob <unk>: Thanks for the question.
Bob <unk>: We're fortunate to be in a capital and liquidity position that we are unencumbered pursuing everything.
Kevin O'donnell: We're fortunate to be in a capital and liquidity position that we are unencumbered from pursuing everything. We can grow our business. We have capital for that. And at the same time, we purchase shares. But more specifically, the reason we are focused on margin preservation is because our ability to grow the portfolio in a way that maintains the capital exposure and therefore the efficiency in the portfolio at the level we've achieved with the Validus acquisition is not the same as it has been. I think in this business, if you try to grow the same amount every year, you're likely to fail.
Bob <unk>: We can grow our business, we have capital for that and at the same time repurchase shares but more specifically the reason we are focused on margin preservation is because our ability to grow the portfolio.
Bob <unk>: Way that maintains the capital exposure and therefore the efficiency in the portfolio at the level. We have achieved with the Validus acquisition is not the same as it has been I think in this business. If you try to grow the same amount every year, you're likely to fail, it's a ratcheted equilibrium market, where there's opportunities to grow.
Kevin O'donnell: It's a ratcheted equilibrium market where there's opportunities to grow and you need to take it. And then there's opportunities where you need to think about how you're preserving the capital exposed to maintain the margin. So right now, the biggest area of growth is top layers within the property tax base where people are continuing to purchase more cover. That does create opportunities for us through the stack. But for the ability for us to keep that fully deployed at the efficiency we've achieved in the portfolio is more challenged right now. So we'll look to do it. But you're asking me to prioritize them.
Bob <unk>: And you need to take it and then theres opportunities, where you need to think about how you're preserving the capital exposed to maintain the margin. So right now the biggest area of growth is top layers within the property cat space, where people are continuing to purchase more cover that does great opportunities for us through the stack.
Bob <unk>: But for the ability for us to keep that fully deployed at the efficiency that we've achieved in the portfolio.
Bob <unk>: Is more challenged right now so we will look to do it but youre asking me to prioritize them I'm not sure that I can because I don't need to because we have the capital to do it all.
Kevin O'donnell: I'm not sure that I can because I don't need to because we have the capital to do it all. Okay, got it. No, that's very helpful.
Bob <unk>: Okay got it now that's very helpful.
Bob <unk>: Second one.
Speaker Change: I might have missed this all apologies in advance you talked about now having exposure to gold.
Bob Qutub: Second one, I might have missed it. So apologies in advance. You talked about now having exposure to gold in the market. Did you disclose how big of a position that is in terms of the risk you're taking there? We did not. And it's, I think it's important to highlight this does not reflect any change in the way we think about our investments. You know, we think about our investments in over the long term and contemplation of the enterprise risk that we have. But we thought it was wise because of the high degree of uncertainty to do something that was a little bit different to make sure that should there be shocks that are unknowable at time zero, we had some hedge in place in the portfolio.
Speaker Change: In the market did you disclose how big of a position that is in terms of.
Speaker Change: Like the rest of our taking there.
Speaker Change: We did not and it's.
Speaker Change: I think it's important to highlight this does not reflect any change in the way, we think about our investments.
Speaker Change: About our investments over the long term in contemplation of the enterprise risks that we had but we thought it was wise because of the high degree of uncertainty to do something that was a little bit different to make sure that should there be.
Speaker Change: <unk> that are unknowable at time zero, we had some hedge in place in the portfolio and that's really what we've done.
Speaker Change: Okay.
Bob Qutub: And that's really what we've done. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: And then we will take our next question from Meyer Shields with <unk>. Please go ahead.
Meyer Shields: And we will take our next question from Meyer Shields with KPW. Please go ahead. Great, thanks so much.
Speaker Change: Great. Thanks, so much I wanted to talk about mid year renewals I just wanted to get a sense for Renaissance and your own sort of proprietary.
David Marra: I want to talk about mid-year renewals. I just want to get a sense, for Renaissance and your own proprietary pricing tools, how relevant is the fact that so many mid-year seedings are going to be loss impacted as opposed to loss free over the last 12 months?
Speaker Change: <unk> pools, how relevant is the fact that so many.
Speaker Change: Mig you're feeding are gonna be loss impacted both philosophy or last 12 months.
Speaker Change: Okay.
Speaker Change: Hi, Mike This is David so it's definitely a relevant on each individual deal I think.
David Marra: Hi, Meyer, this is David. So it's definitely relevant on each individual deal. I think when when there's a deficit in the deal, it's a client, they're very loyal to the renewal reinsurance providers. So we're usually significant providers of these clients, some of the clients that we sell wildfire coverage to in particular, are some of the blue chip clients we've done business with for multiple decades. So that'll be a piece of the negotiation. And it makes it very likely that we'll be able to have good results and continue trading with them. I think the other thing that I'll mention, though, about trading into the post loss environment, with Hurricane, that's a normal course of business.
Speaker Change: When when there is a deficit in the deal. It's a clients are very loyal to the renewal.
Speaker Change: Reinsurance providers so.
Speaker Change: We're usually significant providers of these clients some of the clients that we sell wildfire covers two in particular are some of the blue chip clients, we've done business with for multiple decades, so that'll be a piece of the negotiation.
Speaker Change: And it makes it very likely that we'll be able to have good results and continue trading with them I think the other.
Speaker Change: Other thing that I'll mention though about trading into the post loss environment.
Speaker Change: With with Hurricane that's a normal course of business, we already talked about the Florida opportunities, but post wildfire, we have updated our models and Thats, where we can do that quicker than anyone else in the market. We've updated our wildfire model learned from the last event and can be quoting big lines growing on some deals that are exposed to wildfire.
David Marra: We already talked about the Florida opportunities. But post wildfire, we have updated our models. And that's where we can do that quicker than anyone else in the market. We've updated our wildfire model, learned from the last event, and can be quoting big lines, you know, growing on some deals exposed to wildfire. And it's just, that's what we're able to do. We're working with risk sciences, working with our underwriting team. Our tail is normally steeper than the vendor models, we've been able to make improvements, and put that with confidence.
Speaker Change: And.
Speaker Change: That's what we're able to do we work on with <unk> Sciences, working with our underwriting team.
Speaker Change: Our tail is normally steeper than the vendor models, we've been able to make improvements and copel.
Speaker Change: That with confidence.
Speaker Change: Okay.
Speaker Change: Just going back and it's very helpful information I'm wondering whether being.
David Marra: Okay.
David Marra: I'm wondering whether being loss-impacted is a predictor of future losses or is it just part of the recoupment mechanism embedded in reinsurance? Yeah, it Within our modeling, we're reflecting where we think expected loss comes from on a geographic basis by peril. So, in thinking about the discussions that we have with clients at renewal, one of the first discussions is, are we or are you surprised by the level of loss, in this instance in California, from these wildfires? Does that mean that they're more likely to have a wildfire next time or is their book differently shaped?
Speaker Change: Being loss impacted.
Speaker Change: In a predictor of future losses or is it just part of the.
Speaker Change: And mechanism embedded in reinsurance.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Within our modeling and we're reflecting on where we think expected loss comes from on a geographic basis by apparel.
Speaker Change: And thinking about the discussions that we have with clients that renewal one of the first discussions as are we or are you surprised by the level of loss in this instance in California from this.
Speaker Change: These wildfires.
Speaker Change: Does that mean that they are more likely to have a wildfire next time or is there a book differently shaped, we try to clean that out of it but most often it comes too is the information that we've been given accurately reflecting the experience that they are achieving.
David Marra: We try to glean that out of it, but most often it comes to is the information that we've been given accurately reflecting the experience that they're achieving. In many cases, it is. In some cases, there's more to talk about. But I wouldn't say that we look at it as if you've done poorly in event A, you're going to do poorly in event B. Thank you.
Speaker Change: In many cases it is in some cases, there's more to talk about but I wouldn't say that we look at it as if you've done poorly in the event that you're going to do poorly in FMT.
Speaker Change: Thank you and we will take our next question from Mike <unk> with BMO. Please go ahead.
Mike Zaremski: And we will take our next question from Mike Zaremski with BMO. Please go ahead. Okay, thanks.
Mike: Okay. Thanks.
Speaker Change: Specifically on the.
David Marra: Questions specifically on the Florida property cap marketplace. There's some kind of positive commentary coming out of Citizens, for example, on the reforms, bending the loss curve. Any views there, now that we've seen a year plus of data coming through, that you think could maybe hopefully benefit the loss ratio, or is the industry kind of taking that into account? As they bottle out risk at mid-year and pricing?
Speaker Change: The Florida.
Speaker Change: <unk> cat marketplace.
Speaker Change: There's still some kind of.
Speaker Change: Positive commentary coming out of citizens for example on the reforms bending the loss curve any any news there now that we've seen.
A year plus kind of a data coming through.
Speaker Change: Thank you.
Speaker Change: Maybe I'll.
Speaker Change: Ultimately benefit the loss ratio or the industry by taking that talent is there.
Speaker Change: While out.
Speaker Change: Risks.
Speaker Change: And pricing.
Speaker Change: Yes. This is David thanks.
Speaker Change: Thanks for the question there are farmers have had a positive impact on Florida claims.
David Marra: Yeah, this is David. Thanks for the question. The reforms have had a positive impact on Florida claims. It's still fairly early stages. We have had two hurricane events last year, and those are early stages of being settled. So while it's positive directionally, we are and we take a favorable view of the Florida market because of the opportunities I mentioned. It's just a piece of the overall analysis. to turn you in the right direction.
Speaker Change: It's still fairly early stages, we have had two hurricane events last year and those are early stages of being settled so while it's positive directionally, we are and we take a favorable view of the Florida market because of the opportunities I mentioned, it's just a piece of the overall.
Speaker Change: Alastair.
Alastair: But trending in the right direction.
Speaker Change: I guess just.
Speaker Change: A follow up do you feel that reinsurers are kind of the.
David Marra: I guess just, you know, to follow up, do you feel that reinsurers are kind of going to try to involve that benefit or there could be, you know, a period of time where it needs time to develop more to join to a better understanding? Well, you know, I could focus more on what we do. And the way we approach it is we are in touch with our clients. We're gathering information. It's similar to, it's a much shorter lead time than say, what, what casualty takes to move. But it does take time to be able to analyze the actual effects of changes in claims management.
Pricing benefit.
Speaker Change: Benefit.
Speaker Change: Are there is there could be.
Speaker Change: Karen it's time or.
Speaker Change: They need time to develop more.
Speaker Change: I understand it.
Speaker Change: Well I can focus more on what we do and the way we approach. It is we are in touch with our clients.
Speaker Change: We're gathering information is similar to it's a much shorter lead time than say, what with casualty takes to move but it does take time to be able to analyze the actual effects of changes in claims management.
Speaker Change: I said it is headed in the right direction and we've seen positive signs, but it's still quite early after the last couple of events.
David Marra: Like I said, it's headed in the right direction. And we've seen positive signs. But it's still quite early after the last couple events.
Speaker Change: A lot of the impact and the benefit of these changes has been to the attritional loss ratios into the profitability of the <unk>.
Bob Qutub: Yeah, a lot of the impact and the benefit of these changes has been to the nutritional loss ratios and to the profitability of the domestic Florida companies. Obviously, how it impacts GATT is a little different, but we definitely think it's directly beneficial.
Speaker Change: Domestic Florida companies, obviously that would impact Scott is a little different but we definitely think it's directionally beneficial.
Speaker Change: Okay. That's helpful.
Speaker Change: Lastly, just moving.
Speaker Change: Taxes.
Bob Qutub: Lastly, just moving to taxes, I heard the comment about the evaluation allowance this quarter, but I'm just curious, on a billboard basis, do we put in a number that's a little above $15, or just $15, because you might have some non-US, I'm sorry, non-Bermuda income, or how do we think about the placeholder we should put in, given the new reform? You're thinking about right in some jurisdictions, we have a higher rate than 15%. It's our dominant rate here. But we may have, you know, we have exposure in the US, which is a little bit higher rate.
Speaker Change: Dr Tom and above.
Speaker Change: Our valuation allowance this quarter, but I was just curious on a go forward basis. So we put in another that's a little above 15 15.
<unk>.
Speaker Change: About 15, because you might have some non U S. Sorry, non Bermuda income or how do we think about the other place although we should put in.
Speaker Change: Yes.
Speaker Change: Thinking about it right in some jurisdictions, we have a higher rates of 15% that Brian has its our dominant ray here.
Speaker Change: We may have you know we have exposure in the U S, which is a little bit higher rates. So bottling just about 15 is probably the right way to go.
Bob Qutub: So modeling just above 15 is probably the right way to go. Thank you.
Speaker Change: Thank you and we'll take our next question from Andrew Anderson with Jefferies. Please go ahead.
Andrew Anderson: And we will take our next question from Andrew Anderson with Jefferies. Please go ahead. Hey, good morning. Maybe just back on the casualty and specialty segment, and perhaps I'm a little confused on the combined ratio piece. But you're saying on the one hand, there was no change to GL trends and current loss ratios, but the combined ratio guide did move up to high 90s. So was there a change on specialty or on professional liability? Yeah, let me let me start. It's a good question. I think I tried to cover this in the prepared comments. You know, we had nine points of specialty, I mean, specialty losses, wildfires, airlines and refineries.
Andrew Anderson: Hey, good morning, maybe just back on the casualty and specialty segment, and perhaps I'm a little confused on the combined ratio piece, but.
Speaker Change: Youre, saying on the one hand, there was no change to GL.
Speaker Change: Trends in current loss ratios, but the combined ratio guide did move up to high <unk>. So was there a change on specialty or on professional liability.
Yeah, Let me let me start it's a good question I think I tried to cover this in the prepared comments, we had nine points of specialty I mean specialty losses wildfires Airlines in refineries I did talk in there. There was a couple of other points you can see in the acquisition ratio was elevated.
Kevin O'donnell: I did talk in there, there was a couple other points you can see in the acquisition ratio was elevated, that we're going to be in the mid to upper 90s, we're looking at the 90s, because there's going to be, you know, ups and downs. We did increase remember last year, the loss rate, you know, it's printing at 67, which is consistent with last year. So that's what we feel good about.
Speaker Change: We're going to be in the mid to upper Ninety's, we're looking at the nineties, because there's going to be ups and downs, we did increase remember last year.
Speaker Change: Loss rate.
Speaker Change: Printing at 67, which is consistent with last year. So that's why we feel good about and the mix of our business as a byproduct.
David Marra: And the mix of our business is a byproduct of, you know, how we've underwritten the book, and what both David and Kevin have spoken Okay, and then lastly, just how are you kind of thinking about ILS and non-cat bond ILS into the second half of the year and perhaps impact on renewals? um It's not going to materially impact us from a competitive standpoint. Obviously, we have a large capital partners business. One of the headwinds in that business that I know others are facing is the allocation to alternatives is is under stress. So the ability to bring new capital to the market may be a little bit more challenged.
Speaker Change: How we've underwritten the book.
Speaker Change: Both David and Kevin has spoken to.
Speaker Change: Yeah.
Speaker Change: Okay, and then lastly, just how are you kind of thinking about ILS and non cat bond ILS into the second half of the year and perhaps impact on renewals.
Speaker Change:
Speaker Change: It's not going to materially impact us from a competitive standpoint.
Speaker Change: Obviously, we have a large.
Speaker Change: Capital partners business, one of the headwinds that business that I know others are facing is the allocation to alternatives.
Speaker Change: Alternatives is.
Speaker Change: <unk>.
Speaker Change: Is under stress so the ability to bring new capital to the market, maybe a little bit more challenged we're in a fortunate position, where we generally are not in the same stresses that the market experiences because our offering is different so from our standpoint, our third party capital footprint will be.
Kevin O'donnell: We're in a fortunate position where we generally are not in the same stresses that the market experiences because our offering is different. So from our standpoint, our third party capital footprint will be stable to up for the rest of the year. And I'm not particularly concerned about ILS impacting our ability to price or compete in the market for the rest of the year. Thank you.
Speaker Change: Stable to up for the rest of the year and I am not particularly concerned about ILS impacting our ability to price our compete in the market for the rest of the year.
Speaker Change: Okay.
Speaker Change: Thank you and we will take our next question from Wes Carmichael with Autonomous Research. Please go ahead.
Wes Carmichael: And we will take our next question from Wes Carmichael with Autonomous Research. Please go ahead. Hey, good morning, and thanks for sitting in.
Wes Carmichael: Hey, good morning, and thanks for fitting me in.
Wes Carmichael: In your prepared remarks, I think you mentioned subrogation regarding California.
Kevin O'donnell: In your prepared remarks, I think you mentioned segregation regarding California, and too early to book any benefit, but could you maybe just talk about your expectations for timing if it does occur in the future? And perhaps the same question on timing of potential fair plan recoupments too. um We, I think it would be false precision for us to give you timing on a process that is handled, you know, in California by the regulator. At this point, the Eaton fire hasn't even, the source of ignition for the Eaton fire has not been confirmed, so it's very difficult to predict the timing as to when there'll be more clarity as to what's going to happen in the California market for insurers and then ultimately the benefit that'll accrue to us.
Wes Carmichael: Too early to book any benefit but could you maybe just talk about your expectations for timing if it does occur in the future and perhaps the same question on timing of potential fair claim recruitment too.
Wes Carmichael: We.
Wes Carmichael: I think it would be false precision for us to give you a timing on a process that is handled in California by the regulator at this point in fire.
Wes Carmichael: It Hasnt even can.
Source of ignition for Eaton fire has not been confirmed so.
Very difficult to predict the timing as to when.
Wes Carmichael: There'll be more clarity as to what's going to happen in the California market for insurers and that ultimately the benefits that will accrue to us. So I wish I could give you a more precise answer but I think it would be false precision at this point.
Kevin O'donnell: So I wish I could give you a more precise answer, but I think it would be false precision at this point.
Speaker Change: Okay fair enough and Kevin and I think in your comments you noted that if you assumed average or normal cat activity for the remainder of the year do you think you can still deliver solid ROE for 2025, just wondering if you can contextualize that in terms of tomorrow range or any kind of color there might be helpful for us.
Kevin O'donnell: Okay, fair enough.
Kevin O'donnell: And Kevin, I think in your comments, you noted that if you assumed average or normal cat activity for the remainder of the year, do you think you can still deliver a solid ROE for 2025? Just wondering if you can contextualize that in terms of some ROE range or any kind of color there might be helpful for it. There's a lot of uncertainty with the rest of the year, but this might be helpful, that if the wildfires happened in December of 24 rather than the January of 25. Our ROE for 2024 still would have been above 15%.
Speaker Change: But obviously, there's a lot of uncertainty with the rest of the year, but this might be helpful that if the wildfires happened.
Speaker Change: In December of 'twenty, four rather than the January 25.
Speaker Change: Our ROE for 'twenty four is still would have been above 15%.
Speaker Change: So looking at the way, we're constructing our portfolio I feel confident that our portfolio. This year is going to look similar to next year. So the year may not but if so the decisions we're making.
Kevin O'donnell: So looking at the way we're constructing our portfolio, I feel confident that our portfolio this year is going to look similar to next year. So the year may not, but if the decisions we're making put us in a position for what I think is going to be on an expected basis, a healthy return, and maybe that's a way to contextualize.
Speaker Change: Put us in a position for what I think is going to be an unexpected basis, a healthy return and maybe that's a way to contextualize it.
Speaker Change: I appreciate the color.
Speaker Change: Sure.
Kevin O'donnell: Appreciate the call. Thank you.
Thank you and we will take our next question from David <unk> with.
David Marra: And we will take our next question from David Motemaden with Evercore. Please go ahead. Hey, thanks for squeezing me in. Just wanted to follow up on the 6-1 renewals. So I hear you on the desire to preserve margin there and deploy capital efficiently. Do you think that there are enough opportunities there where we could see an acceleration in CAT from the flattish growth that you saw at 1-1?
Speaker Change: With Evercore. Please go ahead.
Speaker Change: Hey, Thanks for squeezing me in.
Speaker Change: Wanted to follow up on the six one renewals. So I hear you on the desire to preserve margin there.
Speaker Change: And deploying capital efficiently.
Speaker Change: Do you think that there.
Speaker Change: There are enough opportunities, there, where we could see an acceleration in.
Speaker Change: In cat.
Speaker Change: From the flattish growth that you saw at one one.
Speaker Change: So.
Speaker Change: I'll start.
Kevin O'donnell: So I'll start and give some perspective. The market's growing. So I think what we said at 1.1 is we thought about $10 billion of new cat demand. Most of that will be towards the top of programs. We think that is actually a bit higher now. The decision we're making is we have allocated more capital for growth should we decide to execute on it is something that we will make deal-by-deal decisions as we go through the renewal. The concern that we have is increasing the exposed capital and reducing the efficiency of the portfolio. The opportunity to write is going to be profitable.
Speaker Change: Give some perspective.
Speaker Change: The market's growing so I think what we said at one one as we thought about $10 billion of new cat demand most of that'll be towards the top of programs. We think that is actually a bit higher now.
Speaker Change: The the decision, we're making as we we have allocated more capital for growth should we decide to execute on it is something that we will.
Deal by deal decisions as we go through the renewal of.
Speaker Change: The concern that we have is increasingly exposed to capital and reducing the efficiency of the portfolio.
Speaker Change: The opportunity to a REIT is going to be profitable.
It is going to increase the efficiency of our portfolio, which is more questionable. So when we're looking at how to construct a portfolio that is resilient not only in 25 and 26% 27, the best way for us to do that is to manage capital.
Kevin O'donnell: It is going to increase the efficiency of our portfolio, which is more questionable.
Kevin O'donnell: So when we're looking at how to construct a portfolio that's resilient, not only in 25, but in 26 and 27, the best way for us to do that is to manage capital as aggressively as we can by pushing it into the market, managing it through share repurchases, but not looking at what's immediately available, but making sure that the portfolio is positioned well from a margin perspective to continue to provide the broadest coverage possible into 26, 27. Got it. Thank you.
Speaker Change: <unk> kind of by pushing it into the market.
Speaker Change: Managing it through share repurchases, but not looking at what's immediately available then making sure that the portfolio is positioned well from a margin perspective to continue to provide the broadest coverage possible into 'twenty six 'twenty seven to 28.
Speaker Change: Got it thank you.
Speaker Change: Thank you and we will take our next question from Alex Scott with Barclays. Please go ahead.
Bob Qutub: And we will take our next question from Alex Scott with Barclays. Please go ahead. Hey, thanks for taking the question. On capital, I just wanted to see if you could give us a look at how you're thinking about your capital position, you know, ability to grow. Thank you for listening. um Looking at all our metrics, we do not feel constrained to grow or to buy shares back from a liquidity or capital position across the platform. I'll turn it over, Bob, for more color on the capital. Regarding the depth of it, it's a good question. Thank you.
Alex Scott: Hey, Thanks for taking the question on.
Speaker Change: On capital I, just wanted to see if you could.
Give us a look at how you're thinking about your <unk>.
Speaker Change: Capital position ability to grow.
Speaker Change: Just considering you guys don't provide quite as much run like PMO isn't that kind of thing sometimes hard to tell like how much capacity firepower you have with them.
So if you could elaborate at all.
Speaker Change:
Speaker Change: Looking at all our metrics.
Speaker Change: We do not feel constrained to grow or to buy shares back from our liquidity our capital position across the platform.
Bob <unk>: Turn it over to Bob for more color on the capital.
Bob <unk>: Adding the depth of it it's a good question, but you know our capital position is commensurate with our strong earnings.
Bob Qutub: But you know, our capital position is commensurate with our stronger you know, that we've demonstrated over the last two years. We've been building earnings with the acquisition of Validus and all three drivers of profit. I talked about the strength of the investment portfolio at 12% ROE contributor to last year's returns and that expectation going into 2025. So the three drivers of profit are performing and they're generating capital and it gives us the ability to deploy into the business, which is our preference, but to also return it and attract. Got it. That's helpful.
Bob <unk>: We've demonstrated over the last two years, we've been building earnings with the acquisition of Validus.
Bob <unk>: And all three drivers of profit I talked about the strength of the investment portfolio at 12%.
Bob <unk>: ROE contributor to last year's returns in that expectation going into 2025. So the three drivers of profit are performing and they are generating capital and what gives us the ability to deploy into the business, which is our preference but to also return at attractive prices.
Bob <unk>: Got it.
Bob <unk>: That's helpful.
Bob <unk>: As a follow up I just wanted to ask about the mortgage business seemed like that was despite you leaned into this.
Bob Qutub: And as a follow up, I just want to ask about the mortgage business. Seems like that was a spot you leaned into in CNS this quarter and just interested what the opportunity is there. Yeah, thanks for the question. So in terms of the premium growth, there is a bit of noise in the way the premium comes through the quarterly results. So if you think about it on a longer term, we have reduced our mortgage exposure, making the book more resilient to a recession, mainly by moving up in towers and avoiding some of the lower credit quality items. So I wouldn't view that as a change if the main trajectory has been to be resilient to a recession.
Bob <unk>: This quarter.
Bob <unk>: Just interested what the opportunities are.
Bob <unk>: Yes, thanks for the question.
Bob <unk>: In terms of the premium growth there is a bit of noise in the way the premium comes through the quarterly results. So if you think about it on a longer term, we have reduced our mortgage exposure, making the book more resilient to a recession, mainly by moving up in towers and avoiding some of the lower credit quality items. So I wouldn't view that as a change the main trajectory has been up to our beers.
Bob <unk>: Willing to a recession.
Bob <unk>: Got it okay. Thank you.
Bob Qutub: Got it. Okay, thank you. Thank you.
Bob <unk>: Thank you and it appears that we have no further questions. At this time I will now turn the program back to Kevin O'donnell for any closing remarks.
Madison: And it appears that we have no further questions at this time.
Kevin O'donnell: I will now turn the program back to Kevin O'Donnell for any closing remarks. Thanks for joining today's call. Looking at the first quarter, there's volatility and uncertainty. I feel as if Renry demonstrated good execution through that. And I think as that continues over the course of the year, I feel as if we have great opportunities to continue to build shareholder value. So thanks for joining today's call. We look forward to talking to you next quarter.
Bob <unk>: Thanks for joining today's call.
Bob <unk>: Looking at the first quarter, there is volatility and uncertainty I feel as if run rates demonstrated good execution through that and I think as that continues over the course of the year I feel as if we have great opportunities to continue to build share.
Bob <unk>: Shareholder value. So thanks for joining today's call and we look forward to talking to you next quarter.
Bob <unk>: Yeah.
Bob <unk>: This concludes the Renaissance REIT first quarter 2025 earnings conference call and webcast. Please disconnect. Your line at this time and have a wonderful.
Madison: This concludes the Renaissancere First Quarter 2025 Earnings Conference Call and Webcast. Please disconnect your line at this time and have a wonderful.