Q3 2025 RenaissanceRe Holdings Ltd Earnings Call
Speaker #2: By your program is about to begin . If you have a need assistance during your conference today , please press star Zero . Good morning .
Speaker #2: My name is Stephanie and I'll be your conference operator today . At this time , I'd like to welcome everybody to Renaissance Re .
Speaker #2: Third quarter 2020 Earnings Conference Call and Webcast. After the prepared remarks, we will open the call for your questions. Instructions will be given at that time.
Speaker #2: Lastly , if you should need operator assistance , please press star zero . Thank you . I will now turn the call over to Keith McCue Senior Vice President of Finance and Investor Relations .
Speaker #2: Please go ahead .
Speaker #3: Thank you . Stephanie . Good morning and welcome to Renaissance Third Quarter earnings conference call . Joining me today to discuss our results are Kevin O'Donnell , President and Chief Executive Officer .
Speaker #3: Bob Kutub , Executive Vice President and Chief Financial Officer . And David Maher , Executive vice president and chief operating officer . To begin some housekeeping matters .
Speaker #3: Our discussion today will include forward looking statements , including new and updated expectations for our business and results of operations . It's important to note that actual results may differ materially from the expectations shared today .
Speaker #3: Additional information regarding the factors shaping these outcomes can be found in our SEC filings and in our earnings release . During today's call , we will also present non-GAAP Financial Measures .
Speaker #3: 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 renrenshaw.com .
Speaker #3: And now I'd like to turn the call over to Kevin . Kevin .
Speaker #4: Thanks , Keith . Good morning , everyone , and thank you for joining today's call . Before we begin , I want to take a moment to acknowledge the devastating impact of Hurricane Melissa being in Bermuda .
Speaker #4: We are familiar with the challenges of hurricanes, but the scale of this storm is unprecedented. Our thoughts are with the people of Jamaica.
Speaker #4: Haiti and Cuba at this difficult time . Shifting now to Renaissance , third quarter performance , we delivered another strong quarter with operating income of $734 million and an operating return on average , common equity in aggregate .
Speaker #4: Year to date , we have earned almost $1.3 billion in operating income and operating return on average , common equity . Finally , we grew tangible book value per share plus change in accumulated dividends by 10% in the quarter and almost 22% year to date .
Speaker #4: These results are consistent with our track record of strong returns over the last three years . In fact , since Q4 2022 , the quarter after Hurricane Ian in just prior to the step change in property , cat and we have delivered , delivered operating return on equity above 20% in ten of the 12 and ten out of 12 quarters , with an average return of 24% .
Speaker #4: As a consequence , we more than doubled tangible book value per share during this period . As strong as our performance has been over the last three years .
Speaker #4: I believe we can continue growing tangible book value per share in the future at an attractive pace. This is because many of the factors that have contributed to our success since 2020.
Speaker #4: Three should persist into 2026 and beyond . Looking back over our achievements , first , we grew into an attractive property cat market , increasing our property cat portfolio from $2 billion of gross written premium in 2022 to around $3.3 billion today , which creates a strong base of profit in our portfolio going forward .
Speaker #4: Second , we focused on preserving our underwriting margin , our average combined ratio in property Cat since 2023 has been about 50% . David will explain the many tools we have to preserve this margin .
Speaker #4: Going forward . Third , we nearly tripled our capital partner fees from $120 million in 2022 to just over $300 million over the trailing four quarters , as we have discussed , these fees are consistent , low volatility addition to our earnings stream .
Speaker #4: That should continue to grow in 2026 . Fourth , we grew retained net investment income from $392 million in 2022 to almost $1.2 billion over the trailing four quarters , despite declining interest rates .
Speaker #4: We expect investment income to persist and potentially grow over time as our asset base continues to increase . Finally , we returned over $1 billion in capital to shareholders so far this year .
Speaker #4: We continue to have considerable excess capital and believe our shares represent exceptional value, making share repurchases highly critical to our bottom line.
Speaker #4: Looking forward to 2026 . While we are facing decreasing property cat rates and falling short term interest rates , these are challenges we successfully overcame in 2025 .
Speaker #4: We will continue to do so in 2026 by executing on the five factors . I just enumerated and building upon the foundation that we have established , our success starts with strong underwriting .
Speaker #4: In 2026 , we will continue to prioritize margin over growth , strong returns have resulted in reinsurers increasing supply through retained earnings . Demand , however , is expected to grow at a slower rate than what we have seen over the last few years .
Speaker #4: This dynamic will likely likely put pressure on rates , resulting in some reduction in excess margin . That said , given the strong profitability of this business , we are confident our ability to construct and attractive property portfolio .
Speaker #4: To be clear , we will always pursue top line growth when it makes sense . That said , reinsurance is a risk business where adroitly managing the bottom line is more important than consistently growing the top line over emphasizing top line growth is the surest way to fail to grow tangible book value per share over the long term .
Speaker #4: Managing this business is knowing where and when to expand and where and when to hold . In the current environment , the best move is to focus on margin .
Speaker #4: By doing so , I'm confident that our growth in tangible book value per share will will significantly exceed our cost of capital . In our casualty business , you can see our strong underwriting reflected in how we pulled back on several lines this year , such as General casualty and professional liability .
Speaker #4: We did this in a way that was sensitive to the needs of our customers , which will help preserve future options . While we believe rate is outpacing trend in general liability , we will not reflect this in our reserves until we have more confidence in the sustainability of the improved results .
Speaker #4: Having maintained good relationships with our customers opens opportunities for future growth . If conditions improve . Moving now to a few comments on the upcoming January 1st renewal , which David will elaborate on later in the call .
David Marra: SA.
Speaker #4: We begin with a very profitable property cat book . While we expect some market reductions , return levels should remain very attractive . I expect the market to remain disciplined with reinsurers holding on .
Speaker #4: Retentions in terms and conditions . Consequently , in 2026 , property catastrophe rates should remain strong and produce returns significantly in excess of our cost of capital .
Speaker #4: In other property , this book is performing very well . As you saw this quarter , and we believe this momentum will carry into 2026 .
Speaker #4: We are seeing increased competition in the Cat exposed , pro rata delegated book and are keeping a close eye on it . Ultimately , we will manage our exposure based on the expected profitability and the opportunities in the market .
Speaker #4: Moving now to our cash specialty segment , where January 1st is a significant renewal . We expect increased competition in some lines , but are confident that our customer relationships and risk expertise will enable us to select the best risk and construct ending now with some comments on capital management and consistency .
Speaker #4: Consistent execution of the five factors I mentioned earlier has created a cash-generating engine. On a GAAP basis, we have earned $1.9 billion so far this year.
Speaker #4: While generating $3.2 billion in operating cash flow . This facilitated growth growing limit in our property . Cat portfolio by over $1.7 billion during 2025 , adding new business and strong expected returns for all of our capital providers .
Speaker #4: It is also allowed us to share our success with our shareholders through repurchases . Despite significant capital return , we have grown tangible book value by $1 billion year to date .
Operator: To all sites on hold, we appreciate your patience. Please continue to stand by.
Speaker #4: So we have grown assets , grown capital deployed significantly into high margin business and return capital to shareholders . Bob will address our future capital management plans in greater detail shortly .
David Marra: SA.
Speaker #4: But for all the reasons I just gave , we expect to continue generating profits and cash in an attractive rate . And one of the best uses for that cash right now is repurchasing our shares , because we believe they represent exceptional value .
Speaker #4: That concludes my opening comments . As discussed , Bob cover our financial performance for the quarter , followed by David , who will provide an update on our segment performance .
Speaker #5: Thank you , Kevin , and good morning , everyone . We delivered excellent results this quarter with annualized return on equity of 35% and operating return on equity of 28% .
Speaker #5: Year to date . Annualized return on equity is 25% and operating return on equity is 17% . As Kevin mentioned , this is the quarter out of 12 where we have delivered an operating return on equity over 20% operating income per share was $15.62 in the quarter .
Speaker #5: This is our strongest operating EPs to date , driven by continued growth in all three drivers of prophet . Specifically , we reported underwriting income of $770 million , nearly double from Q3 2024 .
Speaker #5: Retained net investment income of $305 million , up 4% , and fee income of $102 million , up 24% . One of the key messages you should take away from this call is that our earnings has improved significantly over the last three years .
Speaker #5: Our underwriting and fee businesses , as well as our investment portfolio , have reached a scale where earnings are consistently higher in large individual loss events , are having a smaller impact on our financial outcomes .
Speaker #5: As a result , we are better able to deliver strong annual returns with less volatility now than we could 10 or 5 or even five years ago .
Speaker #5: Last quarter I shared four numbers that demonstrated this strong earnings profile . I would like to highlight these numbers again on a year to date basis , which means they include the impact of the California wildfires .
Speaker #5: Reviewing our financials through this lens shows the improved returns and lower volatility of our business . The first number is 15 points , which is the aggregate contribution from fee income and net investment income to our overall return .
Operator: To all sides on hold. We appreciate your patience. Please continue to stand by. We appreciate your patience. Please continue to stand by. Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero. Good morning, my name is Stephanie and I'll be your conference operator today. At this time I would like to welcome everybody to RenaissanceRe Holdings Ltd. Third 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. I will now turn the call over to Keith McCue, Senior Vice President of Finance and Investor Relations. Please go ahead.
Speaker #5: On average, common equity. So far this year, this is consistent with last year, and together these two drivers of profit create a stable base of earnings quarter over quarter.
Speaker #5: The second number is $600 million , which is our underwriting profit so far this year , including the impact of California wildfires . This profit complements the stable earnings base we generate from fees and investments each quarter .
Speaker #5: The third number is 22%, which is the amount we have grown tangible book value per share plus the change in accumulated dividends so far this year.
Speaker #5: Ultimately , we measure our ability to deliver enduring value to our shareholders through growth in tangible book value per share , plus a change in accumulated dividends .
Speaker #5: This metric reflects the aggregation of our past successes and is most directly comparable to our peers. The final number is $1 billion, which is the amount of capital.
Speaker #5: This year we have returned to our shareholders through repurchases . As of October 24th . As you can see , we are consistently generating substantial capital .
Speaker #5: Consequently , capital management will continue to play an important role in creating value for shareholders going forward . We pride ourselves in being good stewards of your capital and sharing our successes with you .
Speaker #5: Our shareholders . Since Q2 2024 , we have returned over $1.7 billion of capital through share buybacks . This represents about half of the net income during this period .
Speaker #5: Or alternatively , over 80% of the shares we issued to support the validus acquisition in the third quarter . Specifically , we bought back over 850,000 shares for $205 million .
Speaker #5: We continued repurchasing post quarter end , buying back another 100 million as of October 24th , 2025 , repurchasing over $300 million in the wind season demonstrates confidence in our sustainable earnings .
Speaker #5: Our strong capital position and our conviction in the compelling value of our stock . For all these reasons , we anticipate continuing share buybacks consistent with our long term track record of being good stewards of our shareholders capital .
Speaker #5: Now, I'd like to provide a detailed view of our third-quarter results, starting with our first driver of profit: underwriting in the third quarter.
Speaker #5: Our adjusted combined ratio was 67% . This result reflects disciplined underwriting coupled with a low level of catastrophic losses and favorable prior year development .
Robert Qutub: Thank you, Stephanie.
Speaker #5: Specifically , property catastrophe . We reported a current accident year loss ratio of 10% and an adjusted combined ratio of -8% . This benefited from 44 percentage points of favorable development on prior years , primarily from large catastrophes .
David Marra: Good morning and welcome to RenaissanceRe.
Robert Qutub: Third Quarter Earnings Conference Call.
David Marra: Joining me today to discuss our results are Kevin O'Donnell, President and Chief Executive Officer, and Robert Qutub, Executive Vice President.
Robert Qutub: Chief Financial Officer and David Marra.
Speaker #5: In 2022 and small events across excellent years . Other property results were exceptional . Again this quarter , with a 50% current accident year loss ratio and an adjusted combined ratio of 44% .
David Marra: Executive Vice President and Chief Underwriting Officer. To begin, some housekeeping matters.
Robert Qutub: Our discussion today will include forward-looking statements, including new and updated expectations for RenaissanceRe Holdings Ltd.
Speaker #5: We reported significant prior year favorable development , which was related to large catastrophes as well as attritional losses . Our casualty and specialty adjusted combined ratio was 99% this quarter , consistent with our expectations prior year development and casualty and specialty was slightly favorable , with slightly unfavorable .
David Marra: Our business and results of operations.
Robert Qutub: It's important to note that actual results may differ materially from the expectations shared today. Additional information regarding the factors shaping these.
David Marra: Outcomes can be found in our SEC filings and in our earnings release. During today's call, we will also present.
Robert Qutub: Non-GAAP financial measures.
Speaker #5: However , slightly favorable . Excuse me . However , non-cash purchase accounting adjustments of 50 basis points pushed the segment's prior year to adverse .
David Marra: Reconciliations to GAAP metrics and other information.
Robert Qutub: Concerning non-GAAP measures may be found.
David Marra: In our earnings release and financial supplement, which are available on our website at renre.com, and now I'd like to turn the call over to Kevin. Kevin.
Speaker #5: We remain comfortable with reserve development in this book and have not experienced heightened trend . This quarter across our underwriting portfolio . Gross premiums written were 2.3 billion and premiums written were $2 billion .
Kevin O'Donnell: Thanks, Keith. Good morning, everyone, and thank you for joining today's call. Before we begin, I want to take a moment to acknowledge the devastating impact of Hurricane Melissa. Being in Bermuda, we are familiar with the challenges of hurricanes, but the scale of this storm is unprecedented, and our thoughts are with the people of Jamaica, Haiti, and Cuba at this difficult time. Shifting now to RenaissanceRe Holdings Ltd.'s third quarter performance, we delivered another strong quarter with operating income of $734 million and an operating return on average common equity. In aggregate, year to date, we have earned almost $1.3 billion in operating income and percent operating return on average common equity. Finally, we grew our primary metric, tangible book value per share plus change in accumulated dividends, by 10% in the quarter and almost 22% year to date.
Speaker #5: Both segments were slightly down compared to the comparable quarter. Within both of these segments, we continued to shape the portfolio, specifically in property. We grew property catastrophe at the midyear renewal while keeping other property flat.
Speaker #5: As you can see on page 12 of the financial supplement , underlying growth in property catastrophe was 22% , excluding the $116 million year over year change in reinstatement premiums net .
Speaker #5: These reinstatement premiums were -$50 million this quarter due to reversals of reinstatement premiums from accident years that have developed more favorably than expected .
Speaker #5: Conversely , gross reinstatement premiums were positive 66 million in Q3 2024 related to Hurricane Helene in casualty and specialty gross premiums written were roughly flat to the comparable quarter , but there was movement at a class of business level .
Speaker #5: As we manage the cycle . Specifically in general casualty , we have been reducing our exposure to U.S. general liability as a result , gross premiums written in general casualty were down 7% this quarter , with continuing rate increases helping to offset exposure reductions in credit gross premiums written increased by 19% , largely driven by additional premium on seasoned mortgage deals from older underwriting years .
Kevin O'Donnell: These results are consistent with our track record of strong returns over the last three years. In fact, since Q4 2022, the quarter after Hurricane Ian and just prior to the step change in property catastrophe, we have delivered operating return on equities above 20% in 10 out of 12 quarters, an average return of 24%. As a consequence, we more than doubled tangible book value per share during this period. As strong as our performance has been over the last three years, I believe we can continue growing tangible book value per share in the future at an attractive pace. This is because many of the factors that have contributed to our success since 2023 should persist into 2026 and beyond.
Speaker #5: And finally , we held specialty largely flat as we continued to retain our share in this attractive market . Looking ahead in the fourth quarter , we expect other property net premiums earned of around $360 million and an additional loss ratio in the mid 50s .
Speaker #5: Casualty and specialty net premiums earned of about 1.5 billion and adjusted combined ratio in the high 90s . Moving now to fee income and our capital partners business , where fee income continues to be a strong contributor to our results .
Kevin O'Donnell: Looking back over our achievements, first, we grew into an attractive property catastrophe market, increasing our property catastrophe portfolio from $2 billion of gross written premium in 2022 to around $3.3 billion today, which creates a strong base of profit in our portfolio going forward. Second, we focused on preserving our underwriting margin. Our average combined ratio in property catastrophe since 2023 has been about 50%. David will explain the many tools we have to preserve this margin going forward. Third, we nearly tripled our capital partner fees from $120 million in 2022 to just over $300 million over the trailing four quarters. As we have discussed, these fees are consistent, low volatility addition to our earnings stream that should continue to grow in 2026. Fourth, we grew retained net investment income from $392 million in 2022 to almost $1.2 billion over the trailing four quarters.
Speaker #5: With $102 million in fees in the third quarter , as you can see on page 17 of our financial supplement , only 13 million of these fees are included in underwriting income .
Speaker #5: The remaining $89 million of these fees are incremental to our earnings as they flow through non-controlling interests . This quarter . Management fees were $53 million and performance fees were $49 million .
Speaker #5: Performance fees were particularly strong due to the favorable impact of favorable development on prior years . Looking ahead to the fourth quarter , we expect management fees to be around 50 million and performance fees to be around 30 million .
Speaker #5: Absent the impact of large losses or favorable development , once again , we expect the significant majority of these fees to flow through non-controlling interests , which means they are incremental to our underwriting income .
Speaker #5: Moving to our third driver of profit investments, where retained net investment income was $305 million, up 6.5% from the previous quarter, driven by continued growth in our investment assets.
Speaker #5: In addition , we reported significant retained mark to market gains of $258 million , primarily from equity and gold futures . As I've discussed in the past , we have increased our allocations to derivatives over time , including equity , interest rate , credit and commodity futures .
Kevin O'Donnell: Despite declining interest rates, we expect investment income to persist and potentially grow over time as our asset base continues to increase. Finally, we returned over $1 billion in capital to shareholders so far this year. We continue to have considerable excess capital and believe our shares represent exceptional value, making share repurchases highly accretive to our bottom line. Looking forward to 2026, while we are facing decreasing property catastrophe (cat) and falling short term interest rates, these are challenges we successfully overcame in 2025. We will continue to do so in 2026 by executing on the five factors I just enumerated and building upon the foundation that we have established. Our success starts with strong underwriting in 2026. We will continue to prioritize margin over growth. Strong returns have resulted in reinsurers increasing supply through retained earnings.
Speaker #5: We use these derivative positions to shape our portfolio , and as part of this we carry cash collateral to support the positions . Looking ahead , we anticipate our investment income to persist at similar levels and potentially grow over time as our asset base increases .
Speaker #5: Next , I'd like to provide an additional update on expenses where our operating expense ratio was in line with expectations at 5.1% flat from the comparable quarter in the fourth quarter , we expect our run rate and operating expense ratio to be about flat .
Speaker #5: That said, we typically make accruals for performance-based compensation expenses at the end of the year, which may impact the ratio.
Speaker #5: In conclusion , each of our three drivers of profit outperformed this quarter and contributed meaningfully to our results . We deployed significant capital through share repurchases while also growing into opportunities and property catastrophe business .
Kevin O'Donnell: Demand, however, is expected to grow at a slower rate than what we have seen over the last few years. This dynamic will likely put pressure on rates, resulting in some reduction in excess margin. That said, given the strong profitability of this business, we are confident in our ability to construct an attractive property portfolio. To be clear, we will always pursue top line growth when it makes sense. That said, reinsurance is a risk business where adroitly managing the bottom line is more important than consistently growing the top line. Overemphasizing top line growth is the surest way to fail to grow tangible book value per share over the long term. Managing this business is knowing where and when to expand and where and when to hold. In the current environment, the best move is to focus on margin.
Speaker #5: We believe the strong earnings engine that we have built will continue to generate enduring value for our shareholders in the fourth quarter , and beyond .
Speaker #5: And with that, I'll now turn the call over to David.
Speaker #4: Thanks . Bob , and good .
Speaker #6: Morning , everyone . We're pleased to deliver another excellent quarter financially and strategically financially . We grew underwriting income to 770 million with strong current and prior year loss ratios and low catastrophe activity .
Speaker #6: These results reflect our disciplined underwriting approach. In addition to our market-leading access to business strategically, this preferential access enabled us to continue deploying capacity into an attractive market in 2025.
Speaker #6: We closed out a highly successful mid-year renewal and began planning for January 1st . Looking across the reinsurance market , we believe it remains highly attractive for underwriters with deep expertise and strong access to risk like Renaissance Re .
Kevin O'Donnell: By doing so, I'm confident that our growth and tangible book value per share will significantly exceed our cost of capital. In our casualty business, you can see our strong underwriting reflected in how we pulled back on several lines this year such as general casualty and professional liability. We did this in a way that was sensitive to the needs of our customers, which will help preserve future options. While we believe rate is outpacing trend in general liability, we will not reflect this in our reserves until we have more confidence in the sustainability of the improved results. Having maintained good relationships with our customers opens opportunities for future growth if conditions.
Speaker #6: Our vision is to be the best underwriter. Our integrated systems and our underwriting culture are aligned around this goal. Our 2025 portfolio is largely underwritten, and I'm proud of the book we built.
Speaker #6: This is not a market where all risks are equally attractive. In fact, returns vary significantly between classes of business and between deals within each class, which presents opportunities for us.
Speaker #6: We've been successful in 2025 because we applied our deep underwriting expertise to differentiate the best deals and deployed our strong customer value proposition to secure these lines .
Speaker #6: This combination is a differentiator and enables us to build a portfolio that is accretive to shareholders year after year . You saw this benefit when we were able to bring on the full validus portfolio in 2024 .
Robert Qutub: Improve.
Kevin O'Donnell: Moving now to a few comments on the upcoming January 1st renewal, which David will elaborate on later in the call, we begin with a very profitable property catastrophe book. While we expect some market reductions, return levels should remain very attractive. I expect the market to remain disciplined with reinsurers holding on retentions in terms and conditions. Consequently, in 2026 property catastrophe rates should remain strong and should produce returns significantly in excess of our cost of capital. In other property, this book is performing very well as you saw this quarter and we believe this momentum will carry into 2026. We are seeing increased competition in the catastrophe exposed pro rata delegated book and are keeping a close eye on it. Ultimately, we will manage our exposure based on the expected profitability and the opportunities in the market.
Speaker #6: You saw it again in 2025, when we were able to shape our larger portfolio by growing property cat holding lines and other property and specialty lines, and reducing risk in casualty.
Speaker #6: In 2026 , we will follow the same disciplined playbook , engaging early with customers on how we can solve their risk challenges across lines , leveraging our underwriting excellence to identify the best opportunities and deploying our owned and partner capital balance sheets to construct an attractive portfolio .
Speaker #6: Moving now to a discussion of our segments and outlook for January 1st renewal in more detail . Starting with property , focusing on property catastrophe first .
Speaker #6: Over the last three years , we have grown this business by about 60% in one of the most attractive rate environments in history .
Speaker #6: It has been highly profitable with an average margin of 50% over this period . Even with significant catastrophe activity in 2025 . We grew U.S.
Kevin O'Donnell: Moving now to our casualty specialty segment where January 1st is a significant renewal. We expect increased competition in some lines but are confident that our customer relationships and risk expertise will enable us to select the best risk and constraint. Ending now with some comments on capital management. Consistent execution of the five factors I mentioned earlier has created a cash generating engine on a GAAP basis. We have earned $1.9 billion so far this year while generating $3.2 billion in operating cash flow. This facilitated growing limit in our property catastrophe portfolio by over $1.7 billion during 2025, adding new business and strong expected returns for all of our capital providers. It has also allowed us to share our success with our shareholders through repurchases. Despite significant capital return, we have grown tangible book value by $1 billion year to date.
Speaker #6: property cap margin business by 13% . We did this by selecting the most attractive risks in areas like Florida , California and Los impacted nationwide accounts and securing these lines with our strong access to business .
Speaker #6: As a result , we captured more than our market share of the $15 billion in new demand . This year . Looking ahead to 2026 , we expect continued growth in demand .
Speaker #6: Supply will likely exceed this demand , which will result in some rate pressure at January 1st . The market anticipates rates could be down about 10% , as we have seen in 2025 .
Speaker #6: However , this will not be uniform across all accounts . There are some renewals which are impacted by California wildfires and some of our accounts are already secured on a multiyear basis .
Speaker #6: Our experienced team has a fantastic track record of underwriting and dynamic markets like this . As we demonstrated at the mid-year renewal , where we grew faster and at better rates than the market average .
Speaker #6: Let me provide some more context on our view of the market and our underwriting approach to deliver superior risk adjusted returns . Since the 2023 step change , the market has appropriately balanced risk between reinsurers and insurers , with reinsurers largely providing balance sheet protection .
Kevin O'Donnell: We have grown assets, grown capital, deployed significantly into high margin business and returned capital to shareholders. Bob will address our future capital management plans in greater detail shortly. For all the reasons I just gave, we expect to continue generating profits and cash at an attractive rate. One of the best uses for that cash right now is repurchasing our shares because we believe they represent exceptional value. That concludes my opening comments. As discussed, Bob will cover our financial performance for the quarter, followed by David who will provide an update on our segment performance.
Speaker #6: Interests are appropriately aligned. Insurers have adjusted their business to support current retention levels, and the level of expected attritional losses is well understood in the market.
Speaker #6: We do not expect insurers reinsurers to cost , and we do not expect clients to pay high rates for these layers . Therefore , we expect new demand to be mostly at the top end of programs and most of the competition to be focused on rate rather than terms and conditions and retentions , which will help insulate our bottom line profitability .
Robert Qutub: Thank you, Kevin, and good morning, everyone. We delivered excellent results this quarter with annualized return on equity of 35% and annualized operating return on equity of 28%. Year to date, annualized return on equity is 25% and annualized operating return on equity is 17%. As Kevin mentioned, this is the 10th quarter out of 12 where we have delivered an operating return on equity over 20%. Operating income per share was $15.62 in the quarter. This is our strongest operating EPS to date, driven by continued growth in all three drivers of profit. Specifically, we reported underwriting income of $770 million, nearly double from Q3 2024, retained net investment income of $305 million, up 4%, and fee income of $102 million, up 24%. One of the key messages you should take away from this call is that our earnings profile has improved significantly over the last three years.
Speaker #6: If rates decline . In addition , our gross to net strategy is a key differentiator in supports sustained , attractive returns . We retain approximately 50% of our assumed property catastrophe premiums , making our returns less elastic to rate change .
Speaker #6: To achieve this , we typically share about one third of our property cap business with partners and our joint venture vehicles , which produces fee income that is less sensitive to movements in rate .
Speaker #6: We also protect and shape our portfolio with ceded reinsurance as we look to 2026 . I'm confident in our ability to deliver underwriting results that are substantially accretive to the guidance Bob gave on our other two drivers of profit .
Speaker #6: Following several years of strong growth, our focus is on preserving margin, enabling us to continue delivering market-leading returns on equity.
Speaker #6: Shifting now to other property where we continued our disciplined approach through 2025 , renewals to deliver excellent returns , this book includes a combination of Cat and Non-cat business , and we adjust its composition based on market opportunities following years of rate increases .
Robert Qutub: Our underwriting and fee businesses, as well as our investment portfolio, have reached a scale where earnings are consistently higher and large individual loss events are having a smaller impact on our financial outcomes. As a result, we are better able to deliver strong annual returns with less volatility now than we could 10 or even five years ago. Last quarter, I shared four numbers that demonstrated this strong earnings profile. I would like to highlight these numbers again on a year to date basis, which means they include the impact of the California wildfires. Reviewing our financials through this lens shows the improved returns and lower volatility of our business. The first number is 15 points, which is the aggregate contribution from fee income and net investment income to our overall return on average common equity so far this year.
Speaker #6: We are seeing pressure on rates in the most profitable areas , similar to property cat . Terms and conditions such as deductibles , policy sub limits remain attractive .
Speaker #6: This combination of rate and terms and conditions has led to profitable returns since 2023 . We have seen positive development on our initial loss estimates from prior years , which benefited our results in 2025 .
Speaker #6: This consistent prior year favorable development combined with strong current year underwriting results and solid terms and conditions favorably impacts our view of the sustained profitability of the other property business .
Speaker #6: Despite pressure on rates . Moving now to casualty and specialty . Over the last year , we have seen positive progress in the casualty market as clients have acted with determination to combat social inflation trends in U.S.
Speaker #6: general liability rates have nearly tripled since 2018 and early 2024 . Rates further accelerated and have been covering loss trend . In addition , clients are implementing increasingly sophisticated claims management practices .
Robert Qutub: This is consistent with last year, and together these two drivers of profit create a stable base of earnings quarter over quarter. The second number is $600 million, which is our underwriting profit so far this year, including the impact of California wildfires. This profit complements the stable earnings base we generate from fees and investments each quarter. The third number is 22%, which is the amount we have grown tangible book value per share plus change in accumulated dividends so far this year. Ultimately, we measure our ability to deliver enduring value to our shareholders through growth in tangible book value per share plus a change in accumulated dividends. This metric reflects the aggregation of our past successes and is most directly comparable to our peers.
Speaker #6: As we have discussed with you , we reduced our exposure to general liability business significantly through 2025 . We did this carefully and thoughtfully , taking a data driven approach and working to understand our customer portfolio actions in order to position our portfolio with the best programs for the next cycle .
Speaker #6: At January 1st , we will continue to stay closely connected with our clients to understand the trends they are seeing and how they are managing claims actions of our clients and our portfolio .
Speaker #6: Repositioning will take time to show up in the claims data . Until this happens , we will not reflect the benefit in our reserving .
Speaker #6: As Bob discussed , we expect the casualty and specialty segment to deliver a high 90 combined ratio . This segment remains highly accretive due to the substantial float that it generates in an attractive interest rate environment .
Robert Qutub: The final number is $1 billion, which is the amount of capital this year we have returned to our shareholders through repurchases as of October 24th. As you can see, we are consistently generating substantial capital. Consequently, capital management will continue to play an important role in creating value for shareholders going forward. We pride ourselves in being good stewards of your capital and sharing our successes with you, our shareholders. Since Q2 2024, we have returned over $1.7 billion of capital through share buybacks. This represents about half of the net income during this period or alternatively over 80% of the shares we issued to support the Validus acquisition in the third quarter. Specifically, we bought back over 850,000 shares for $205 million. We continued repurchasing post quarter end, buying back another $100 million as of October 24, 2025.
Speaker #6: In addition , it is strategically important to our goal of being the best underwriter , allowing us to trade with clients across classes and access the most attractive lines across property , casualty and specialty .
Speaker #6: In closing , through 2025 , we built an attractive portfolio by focusing on our clients , identifying accretive growth opportunities in the market , and preserving margin through disciplined execution .
Speaker #6: This market is one where underwriting excellence will produce a more attractive portfolio. We believe that this will continue to be true in 2026.
Speaker #6: Our underwriting expertise and access to risk will enable us to deliver superior underwriting returns in the short term and value creation for our shareholders over the long term .
Speaker #6: And with that, I'll turn it back to Kevin.
Speaker #4: Thanks , David . In closing , we had another strong quarter in which all three drivers of profit performed well . We delivered excellent underwriting income as well as strong fee and investment income , together with robust share repurchases .
Robert Qutub: Repurchasing over $300 million in the win season demonstrates confidence in our sustainable earnings, our strong capital position, and our conviction in the compelling value of our stock. For all these reasons, we anticipate continuing share buybacks consistent with our long term track record of being good stewards of our shareholders' capital. Now I'd like to provide a detailed view of our third quarter results starting with our first driver of profit, underwriting. In the third quarter, our adjusted combined ratio was 67%. This result reflects disciplined underwriting coupled with a low level of catastrophic losses and favorable prior year development, specifically property catastrophe. We reported a current accident year loss ratio of 10% and an adjusted combined ratio of negative 8%. This benefited from 44 percentage points of favorable development on prior years, primarily from large catastrophes in 2022 and small events across accident years.
Speaker #4: We delivered record high operating EPs results . This outcome is especially impressive given our status this year as a Bermuda taxpayer . Looking forward .
Speaker #4: Even with anticipated market dynamics , we are confident that our underwriting excellence , investment management capabilities and gross strategy will continue providing us with significant competitive advantages .
Speaker #4: Consequently, we are very optimistic regarding our potential for future performance and our ability to continue delivering superior shareholder value. Thanks. And with that, I'll turn it over for questions.
Speaker #2: Thank you . At this time , if you'd like to ask a question , please press Star One on your telephone keypad . If you wish to remove yourself from the queue , please press star two .
Speaker #2: We remind you to please unmute your line when introduce and if possible , pick up your handset for optimal sound quality . In the interest of time , we ask that you please limit yourself to one question and one follow up .
Robert Qutub: Other property results were exceptional again this quarter with a 50% current accident year loss ratio and an adjusted combined ratio of 44%. We reported significant prior year favorable development which was related to large catastrophes as well as attritional losses. Our casualty and specialty adjusted combined ratio was 99% this quarter, consistent with our expectations. Prior year development in casualty and specialty was slightly unfavorable, however, slightly favorable. Excuse me. However, noncash purchase accounting adjustments of 50 basis points pushed the segment's prior year to adverse. We remain comfortable with reserve development in this book and have not experienced heightened trend this quarter. Across our underwriting portfolio, gross premiums written were $2.3 billion and net premiums written were $2 billion, both slightly down to the comparable quarter. Within both these segments, we continued to shape the portfolio.
Speaker #2: We will now take our first question from Elyse Greenspan with Wells Fargo .
Speaker #7: Hi . Thanks . Good morning . For my first question , I wanted to start with something . Bob said . Right . We said there was 15 points this year on your return from the aggregate contribution from fee income and net net investment income .
Speaker #7: So obviously this year , right ? Fee income , I think would have been higher than normal . Right . Just because it's been a pretty low cat year .
Speaker #7: So for that 15 point contribution from those two pieces , what is I guess normal expectations , what would you be expecting ? You know , from fee income and net investment income on your return going for 2026 .
Speaker #5: Thanks . Elise . I'll take that . This is Bob . My context was the full year 15 points . So we look at around 11 to 12% from investment income and around three plus percent that comes in from the fees .
Speaker #5: That's our starting point . And when you look back over the last three quarters and even back into last year , that's been what has been the absolute contribution to our our operating return on equity .
Robert Qutub: Specifically in property, we grew property catastrophe fee mid-year renewal while keeping other property flat. As you can see on page 12 of the Financial Supplement, underlying growth in property catastrophe was 22% excluding the $116 million year-over-year change in reinstatement premiums. These reinstatement premiums were negative $50 million this quarter due to reversals of reinstatement premiums from accident years that have developed more favorably than expected. Conversely, gross reinstatement premiums were positive $66 million in Q3 2024 related to Hurricane Helene. In casualty and specialty, gross premiums written were roughly flat to the comparable quarter, but there was movement at a class of business level as we manage the cycle. Specifically in general casualty, we have been reducing our exposure to U.S. general liability. As a result, gross premiums written in general casualty were down 7% this quarter, with continuing rate increases helping to offset exposure reductions.
Speaker #5: And that's how we think about it . We think about that as our starting point . And David goes and said this on the past calls is builds his book of business is and will be accretive to that number which is telling you that we have an outlook of a strong financial performance and given you a foundation from where we start from .
Speaker #7: Okay, thanks. And then my.
Speaker #5: I also want to point out , I did say for the full year , so this isn't a low cat year . Remember we took a $750 million charge on a $50 billion event in the first quarter , and that was the point .
Speaker #5: I was trying to emphasize on that for the full year .
Speaker #7: Okay . Thank you . Appreciate that color . And then for my second question , you know , just thinking about the market dynamics that you laid out on the property cat side , right ?
Speaker #7: It sounds like baseline expectation , 10% decline in price at one one . Obviously it will vary depending upon where you are in programs .
Robert Qutub: In credit, gross premiums written increased by 19%, largely driven by additional premium on seasoned mortgage deals from older underwriting years. Finally, we held specialty largely flat as we continued to retain our share in this attractive market. Looking ahead in the fourth quarter, we expect other property net premiums earned of around $360 million and an attritional loss ratio in the mid-50s. Casualty and specialty net premiums earned of about $1.5 billion, an adjusted combined ratio in the high 90s. Moving now to fee income in our capital partners business, where fee income continues to be a strong contributor to our results, we had $102 million in fees in the third quarter. As you can see on page 17 of our financial supplement, only $13 million of these fees are included in underwriting income.
Speaker #7: And maybe some incremental demand higher up , I think is what you said . But as you guys kind of think about the factors impacting the renewal , if it comes together based on how you expect today , what do you think the expected ROE on cat business written in 2026 , will be ?
Speaker #4: That's a tough question to answer because it's part of our portfolio . So the standalone and , you know , kind of the marginal what I would say is , you know , if you Dave's comments I think are important in twofold .
Speaker #4: One is rate change , which is a benchmark , is , you know , what is 25 and 26 relatively look like together .
Speaker #4: And but more importantly , the bigger comment we're trying to make is rate adequacy . So if we if maybe one way to frame it is if we go back to when things changed and the property cat was rerated at one 123 , if it was rerated 10% less , which is where we ultimately expect 26 to look relative to 25 , we would have done exactly the same thing over the last three years that we have done .
Robert Qutub: The remaining $89 million of these fees are incremental to our earnings as they flow through noncontrolling interest. This quarter, management fees were $53 million and performance fees were $49 million. Performance fees were particularly strong due to the impact of favorable development on prior years. Looking ahead to the fourth quarter, we expect management fees to be around $50 million and performance fees to be around $30 million, absent the impact of large losses or favorable development. Once again, we expect the significant majority of these fees to flow through non-controlling interest, which means they are incremental to our underwriting income.
Speaker #4: So having the rates pull back a little bit is simply pulling some of the excess margin that we've been enjoying in property . Cat .
Speaker #4: Is not bringing property cat anywhere close to , and it still abundantly above rate adequacy . So we still have very strong rate adequacy even with some reduction in rate change .
Kevin O'Donnell: Moving to our third driver of profit.
Robert Qutub: Investments where retained net investment income was $305 million, up 6.5% from the previous quarter, driven by continued growth in our investment assets. In addition, we reported significant retained mark to market gains of $258 million, primarily from equity and gold futures. As I've discussed in the past, we have increased our allocations to derivatives over time, including equity, interest rate, credit, and commodity futures. We use these derivative positions to shape our portfolio, and as part of this we carry cash collateral to support the positions. Looking ahead, we anticipate our investment income to persist at similar levels and potentially grow over time as our asset base increases. Next, I'd like to provide an additional update on expenses where our operating expense ratio was in line with expectations at 5.1% flat from the comparable quarter.
Speaker #4: Anything you'd add , Dave ?
Speaker #6: That's true . We still remain very positive on the business . It's been very profitable over the last few years . We expect the terms and conditions to largely persist and some pressure on rate .
Speaker #6: Our team is well positioned to figure out how to underwrite around that . Not not all risks will be equal . So we'll be able to pick the best risk based on what happens on each individual program .
Speaker #6: And construct an attractive portfolio .
Speaker #7: Thank you .
Speaker #2: Thank you. We'll take our next question from Josh Shanker with Bank of America.
Speaker #8: Thank you for taking my question . You know , typically when people see pricing going down , there's an assumption that too much capital is chasing too little risk or something to that effect .
Speaker #8: I'm curious to the extent that your third party investors or potential new third party investors are showing interest such that 2026 might be a strong or maybe a weak year for capital raising , can you sort of speak to that a little bit ?
Robert Qutub: In the fourth quarter, we expect our run rate and operating expense ratio to be about flat. That said, we typically make accruals for performance-based compensation expenses at the end of the year, which may impact the ratio. In conclusion, each of our three drivers of profit outperformed this quarter and contributed meaningfully to our results. We deployed significant capital through share repurchases while also growing into opportunities in property catastrophe business. We believe the strong earnings engine that we have built will continue to generate enduring value for our shareholders in the fourth quarter and beyond. With that, I'll now turn the call over to David.
Speaker #4: Yeah , I'll start there . You know , that's a it's a broad question . So we because of the structures we have and because of the reputation we have in managing third party capital , very good access to third party capital .
Speaker #4: And that has been true even when it has been more constrained for others . Right now , I don't think third party capital is going to be the driving influence on pricing in 2026 .
David Marra: Thanks, Bob, and good morning, everyone. We're pleased to deliver another excellent underwriting quarter, both financially and strategically. Financially, we grew underwriting income to $770 million with strong current and prior year loss ratios and low catastrophe activity. These results reflect our disciplined underwriting approach, in addition to our market-leading access to business. Strategically, this preferential access enabled us to continue deploying capacity into an attractive market. In 2025, we closed out a highly successful mid-year renewal and began planning for January 1st. Looking across the reinsurance market, we believe it remains highly attractive for underwriters with deep expertise and strong access to risk. Like RenaissanceRe, our vision is to be the best underwriter. Our integrated systems and our underwriting culture are aligned around this goal. Our 2025 portfolio is largely underwritten, and I'm proud of the book we built.
Speaker #4: I think it's more about comfort with levels within property . Cat , and I think , you know , reinsurers having a little bit more confidence and a little bit more capital .
Speaker #4: Good news is we expect that the demand side . So there will be more will grow . So more property cat demand , although that level of increase is smaller than what we saw in 26 .
Speaker #4: So that said , the market will be slightly more favorable for buyers than for sellers , where I would say 25 was a little bit better balanced , you know , and that's the reason we're projecting about a 10% reduction in rate .
Speaker #4: The other thing I want to mention is there is more third party capital that is becoming interested in longer tail liabilities . So basically looking at that to fund their investment strategies , I think that will continue through 2026 .
David Marra: This is not a market where all risks are equally attractive. In fact, returns vary significantly between classes of business and between deals within each class, which presents opportunities for us. We've been successful in 2025 because we applied our deep underwriting expertise to differentiate the best deals and deployed our strong customer value proposition to secure these lines. This combination is a differentiator and enables us to build a portfolio that is accretive to shareholders year after year. You saw this benefit when we were able to bring on the full Validus portfolio in 2024. You saw it again in 2025 when we were able to shape our larger portfolio by growing property catastrophe, holding lines in other property and specialty, and reducing risk in casualty.
Speaker #4: So I think there'll be a little bit more third party capital coming into perhaps longer tail casualty or specialty lines . So all in all , it's going to be driven by traditional reinsurers , third party capital will continue to be available , but not driving the show .
Speaker #4: If anything , you'd add .
Speaker #6: Yeah , we're definitely the competition . We're seeing , especially on the cat side , is from retained earnings on the traditional reinsurers , more so than new capital injections .
Speaker #4: Thanks , Dave .
Speaker #8: And given that situation , there's a lot of expectation that you'll be in the market for your own stock , even where it's trading , how much capital you have .
Speaker #8: But in this third party business , a part of the reason why it's been so successful is because you eat your own cooking and your investors know that whatever risks they're taking , and giving you money , you're also taking yourself .
David Marra: In 2026, we will follow the same discipline playbook, engaging early with customers on how we can solve the risk challenges across lines, leveraging our underwriting excellence to identify the best opportunities, and deploying our own and partner capital balance sheets to construct an attractive portfolio. Moving now to a discussion of our segments and outlook for January 1st renewal in more detail, starting with property. Focusing on property catastrophe first, over the last three years we have grown this business by about 60% in one of the most attractive rate environments in history. It has been highly profitable, with an average margin of 50% over this period, even with significant catastrophe activity. In 2025, we grew U.S. property cat, which is our highest margin business, by 13%.
Speaker #8: When we look at the minority interest on your balance sheet , and we look at your own shareholders equity , you know , there's obviously some off balance sheet , third party capital as well .
Speaker #8: There somewhere close to the same amount . If you're returning capital . Do we ever think there could be a situation where third party capital is a bigger balance sheet for rent ?
Speaker #8: Re than the proprietary capital of the company ?
Speaker #4: It's a good question . And , you know , one of the things we look at each year is what is the right balance between what we're retaining and what we're sharing .
Speaker #4: I think Dave mentioned , you know , we share about 50% of our property cat , and anywhere , depending on the line of business , 15 to 30% on the casualty specialty lines .
David Marra: We did this by selecting the most attractive risks in areas like Florida, California, and loss-impacted nationwide accounts and securing these lines with our strong access to business. As a result, we captured more than our market share of the $15 billion in new demand this year. Looking ahead to 2026, we expect continued growth in demand. Supply will likely exceed this demand, which will result in some rate pressure. At January 1st, the market anticipates rates could be down about 10%, as we have seen in 2025. However, this will not be uniform across all accounts. There are some renewals which are impacted by California wildfires, and some of our accounts are already secured on a multi-year basis.
Speaker #4: There are scenarios where , you know , we can make this narrow enough that within a certain target strategy , we are larger in third party capital than we are with our own deployment of risk into that narrow strategy .
Speaker #4: So there are scenarios where we could have larger third party balance sheets than our own balance sheets . I don't see that occurring in 26 .
Speaker #8: Thank you for all the answers .
Speaker #4: Thank you . Josh .
Speaker #2: Thank you. We'll take our next question from Andrew Kligerman with TD Cowan.
Speaker #9: Hey good morning . So I was a little curious shifting over to the casualty line or the casualty and specialty area . It looked like you talked on the call about pricing being very firm , but you're still pulling back a bit on the US general liability yet when I when I've talked to others in reinsurance , I've been hearing that there's , you know , certainly upward movement in pricing at the primary level .
David Marra: Our experienced team has a fantastic track record of underwriting in dynamic markets like this, as we demonstrated at the midyear renewal where we grew faster and at better rates than the market average. Let me provide some more context on our view of the market and our underwriting approach to deliver superior risk-adjusted returns. Since the 2023 step change, the market has appropriately balanced risk between reinsurers and insurers, with reinsurers largely providing balance sheet protection. Interests are appropriately aligned, insurers have adjusted their business to support current retention levels, and the level of expected attritional losses is well understood in the market. We do not expect insurers, reinsurers to cost, and we do not expect clients to pay high rates for these layers.
Speaker #9: But a lot of reinsurers are kind of softening their pricing a little bit. So I was wondering if you could share some color on what you're seeing in the casualty reinsurance line and how pricing is coming along.
David Marra: Therefore, we expect new demand to be mostly at the top end of programs and most of the competition to be focused on rate rather than terms and conditions and retentions, which will help insulate our bottom line profitability if rates decline. In addition, our gross to net strategy is a key differentiator and supports sustained attractive returns. We retain approximately 50% of our assumed property catastrophe premiums, making our returns less elastic to rate change. To achieve this, we typically share about one-third of our property cat business with partners in our joint venture vehicles, which produces fee income that is less sensitive to movements in rate. We also protect and shape our portfolio with ceded reinsurance. As we look to 2026, I'm confident in our ability to deliver underwriting results that are substantially accretive to the guidance Bob gave on our other two drivers of profit.
Speaker #6: Okay . Yeah . Thanks . Andrew . This is David . So we're seeing a continuation of what we've seen for the last several quarters as overall the market is responding to elevated loss trend .
Speaker #6: And we're seeing the market respond in a couple of different ways . Most of the pricing increase has happened at the insurer level .
Speaker #6: And if you remember , reinsurance is normally quote , a share of an insurer . So we're taking a share of every policy they write , every loss they pay .
Speaker #6: And as they get additional rate that inures to our benefit . So that's what's going on in the market . They've been getting rate , which has been exceeding trend .
Speaker #6: They're also investing in better claims management practices . So the third angle that we have to improve our own portfolio is to take action and reposition our reinsurance lines to those that we think that are doing that the best .
David Marra: Following several years of strong growth, our focus is on preserving margin, enabling us to continue delivering market-leading returns on equity. Shifting now to other property, where we continued our disciplined approach through 2025 renewals to deliver excellent returns. This book includes a combination of CAT and non-CAT business, and we adjust its composition based on market opportunities. Following years of rate increases, we are seeing pressure on rates in the most profitable areas, similar to property CAT. Terms and conditions such as deductibles and policy sub-limits remain attractive. This combination of rate and terms and conditions has led to profitable returns since 2023. We have seen positive development on our initial loss estimates from prior years, which has benefited our results in 2025.
Speaker #6: And that's what we've been doing over the last year . It's just a standard part of how we would always optimize our casualty and specialty segment within a class .
Speaker #6: So the overall balance between classes .
Speaker #9: I , see so rent is not increasing . Their their seating commissions at all . It it's sort of steady as she goes .
Speaker #6: So the seating commissions that we pay to our clients . Have been pretty flat . Most of the improvements in the economics have been insurers getting more rate and improving claims , handling .
Speaker #9: Got it . And then just one last thing on casualty . So you talked about a slight favorable development . And I was wondering if you could provide some color around the vintages , the the product lines that that had played out .
David Marra: This consistent prior year favorable development, combined with strong current year underwriting results and solid terms and conditions, favorably impacts our view of the sustained profitability of the other property business. Despite pressure on rates, moving now to casualty and specialty, over the last year we have seen positive progress in the casualty market as clients have acted with determination to combat social inflation. Trends in U.S. general liability rates have nearly tripled since 2018. In early 2024, rates further accelerated and have been covering loss trend. In addition, clients are implementing increasingly sophisticated claims management practices. As we have discussed with you, we reduced our exposure to general liability business significantly through 2025. We did this carefully and thoughtfully, taking the data-driven approach and working to understand our customer portfolio actions in order to position our portfolio with the best programs for the next cycle at January 1st.
Speaker #9: Were there any big movements in one direction or another with a specific product ?
Speaker #6: Yeah . So the way I think about the overall casualty and specialty development , you know , that our view is that was that was flat , that was stable .
Speaker #6: Reserves . And we think just from the top down , we've shown a lot of favorable development as a group . A lot of those products from our reinsurance book , a lot of those clients by products across property casualty and specialty within casualty and specialty reserves have been stable .
Speaker #6: Combined ratios are in the high 90s, and the main contribution we get is from the float, which is an attractive piece of the ROE contribution with stable reserves and growing float.
Speaker #9: Got it . Thank you .
Speaker #4: Thank you .
Speaker #2: Thank you . We'll take our next question from Bob Hall with Morgan Stanley .
David Marra: We will continue to stay closely connected with our clients to understand the trends they are seeing and how they are managing claims. Actions of our clients and our portfolio repositioning will take time to show up in the claims data. Until this happens, we will not reflect the benefit in our reserving. As Bob discussed, we expect the casualty and specialty segment to deliver a high 90s combined ratio. This segment remains highly accretive due to the substantial float that it generates in an attractive interest rate environment. In addition, it is strategically important to our goal of being the best underwriter, allowing us to trade with clients across classes and access the most attractive line across property, casualty, and specialty. In closing, through 2025, we built an attractive portfolio by focusing on our clients, identifying accretive growth opportunities in the market, and preserving margin through disciplined execution.
Speaker #10: Hi . Good morning . My first question is a little bit of a follow up on what Josh was asking earlier . If we look at .
Speaker #10: So one of the things you've said was that you talk about loss volatility for smaller . Now . And so consequently , earnings are more steady despite catastrophe risk .
Speaker #10: If this trend continues longer term , doesn't that also imply that longer term pricing should be pressured by stable earnings , less volatility to me feels like it should have less pricing volatility as well .
Speaker #10: Like theoretically , how do you think about that ? Like , should we see less pricing increase going forward if we have medium sized hurricanes ?
Speaker #10: Running through Florida here and there ?
Speaker #4: Yeah . So . Thank you for the question . I'm hearing two things in the question . One , what the volatility from is relatively consistent from an exposure perspective and how it represents , you know thinking you mentioned Florida in Florida .
David Marra: This market is one where underwriting excellence will produce a more attractive portfolio. We believe that this will continue to be true in 2026. Our underwriting expertise and access to risk will enable us to deliver superior underwriting returns in the short term and value creation for our shareholders over the long term. With that, I'll turn it back to Kevin.
Kevin O'Donnell: Thanks, David. In closing, we had another strong quarter in which all three drivers of profit performed well. We delivered excellent underwriting income as well as strong fee and investment income. Together with robust share repurchases, we delivered record high operating EPS results. This outcome is especially impressive given our status this year as a Bermuda taxpayer. Looking forward, even with anticipated market dynamics, we are confident that our underwriting excellence, investment management capabilities, and gross dominant strategy will continue providing us with significant competitive advantages. Consequently, we are very optimistic regarding our potential for future performance and ability to continue delivering superior shareholder value.
Speaker #4: Renri is different. We have much greater investment leverage with that. We have more stability coming from the investment earnings in our portfolio.
Speaker #4: We have a much bigger fee platform which provides stability and buffers volatility . And then our property , Cat , has been touched on a few different points .
Speaker #4: Is shared between third party capital and our own capital . Third party capital represents the stability of fees , our own capital represents the return for risk .
Speaker #4: So what we're trying to say is the representation of volatility from catastrophes is buffered because of who we are , who .
Speaker #11: We are .
Speaker #4: Years ago , within the market itself , it is about unchanged .
Speaker #10: Okay . That's very helpful . Thank you for that . My second question is on on gold . Just given the the volatility that we've seen in obviously it was a strong quarter for gold in the third quarter .
Robert Qutub: Thanks.
Kevin O'Donnell: I'll turn it over for questions.
Operator: Thank you. At this time, if you'd like to ask a question, please press star one on your telephone keypad. If you wish to remove yourself from the queue, please press star two. We remind you to please unmute your line when introduced and, if possible, pick up your handset for optimal sound quality. In the interest of time, we ask that you please limit yourself to one question and one follow-up. We will now take our first question from Elyse Beth Greenspan with Wells Fargo Securities LLC. Hi, thanks. Good morning. For my first question, I wanted to start with something Bob said. He said there was 15 points this year on your return from the aggregate contribution from fee income and net investment income. Obviously, this year.
Speaker #10: But just given the volatility in gold in October . Curious if you have any updates on holdings or have you have any strategy or change in strategy or changing view about the investments in gold ?
Speaker #10: And then, what is the impact of gold on the book value for October?
Speaker #5: Thank you for the question . Our view on gold from a strategic standpoint hasn't changed . We've been in gold for all of 25 and a good bit in 24 , and we went into it as more of a hedge against our portfolio with the geopolitical environment and a lot of change going on and the shifting of the central governments and how they approach their base currency , this has proven to be a good strategy .
David Marra: Right.
Operator: Fee income, I think would have been higher than normal, right, just because it's been a pretty low cat year. For that 15% contribution from those two pieces, what is, I guess, normal expectations? What would you be expecting, you know, from fee income and net investment income on your return going for 2026.
Speaker #5: I mentioned in my comments that part of our mark to market gain , the 258 million , a large chunk of that came from the gold position that we have out there .
Speaker #5: There's been some volatility up and down here and there , but we still see that within our strategic remit for the foreseeable future .
Speaker #10: Got it. Thank you.
Robert Qutub: Thanks, Elyse. I'll take that. This is Bob. My context was the full year 15 points. We look at around 11 to 12% from investment income and around 3 plus % that comes in from the fees. That's our starting point. When you look back over the last three quarters and even back into last year, that's been what has been the absolute contribution to our operating return on equity. That's how we think about it. We think about that as our starting point. David goes, and I've said this on the past calls, has built his book of business that is and will be accretive to that number, which is telling you that we have an outlook of a strong financial performance and giving you a foundation from where we start from.
Speaker #2: Thank you . We'll move next to Mike Zarembski with BMO .
Speaker #9: Hey great .
Speaker #12: Good morning . I was curious , you know , on the property segment , if we look at property , Ebner reserves and additional case reserves , those levels are hovering currently .
Speaker #12: And you know , the 70% plus range , you know , we all have the historical levels . They bob around a lot , but still above the long term historical levels .
Speaker #12: I'm just curious , do you is there a way for you guys to frame whether the reserves for those two buckets are kind of higher than historical levels for a certain reason , or is there any color you could add to kind of frame whether there's kind of just maybe some added conservatism here , how you guys think about it ?
Operator: Okay, thanks.
Robert Qutub: Mike, to be honest, I also want to point out I did say for the full year. This isn't a low CAT year. Remember, we took a $750 million charge on a $50 billion event in the first quarter. That was the point I was trying to emphasize on that for the full year.
Speaker #4: Yeah , there's no added conservatism or any shift in the way that we've built our reserves . You know , the property side , it can be difficult because any movement in any single large event can have a meaningful impact on whether we have adverse or favorable development within the property segment .
Operator: Okay, thank you. Appreciate that. And then for my second question, just thinking about the market dynamics that you laid out on the property catastrophe (cat) side, right. It sounds like baseline expectation, 10% decline in price at 1.1. Obviously, it'll vary depending upon where you are in programs and maybe some incremental demand higher up, I think is what you said. As you guys kind of think about the factors impacting the renewal, if it comes together based on how you expect today, what do you think the expected ROE on catastrophe (cat) business written in 2026 will be?
Speaker #4: The I spend less time when I look at our reserves differentiating between ACR and Ebner for the property . Cat portfolio , and I look at it as relative , we the normal process for us is looking at each large event on the anniversary of the event .
Speaker #4: So you saw some third quarter events coming through with some favorable development from older years . I would say there's no story to tell with regard to the numbers or the way that you're looking at the reserves there .
Kevin O'Donnell: That's a tough question to answer because it's part of our portfolio. They're standalone and, you know, kind of the marginal. What I would say is, you know, Dave's comments, I think are important in twofold. One is rate change, which is a benchmark, is, you know, what does 2025 and 2026 relatively look like together? More importantly, the bigger comment we're trying to make is rate adequacy. Maybe one way to frame it is if we go back to when things changed and the property catastrophe portfolio was re-rated at 1.1 2023. If it was re-rated 10% less, which is where we ultimately expect 2026 to look relative to 2025, we would have done exactly the same thing over the last three years that we have done.
Speaker #4: It's pretty much steady as she goes from a reserving perspective .
Speaker #12: Okay , got it . Hi . Well , it's been a good thing you guys have been releasing a lot more than expected , so I'll keep trying to figure out how to how to how to develop that .
Speaker #12: You know , maybe just pivoting , you know , you you've made the point . And I think we get it that this year , you know , because of one Q you know , isn't a benign year for large losses , for example , would you be willing to frame kind of if you look at the year to date , nine months combined ratios , you could either use calendar year or action year or both .
Speaker #12: Would you still describe this year , nine months , year to date as being a below average ? You know better than average year or about normal ?
Kevin O'Donnell: Having the rates pull back a little bit is simply pulling some of the excess margin that we've been enjoying in property catastrophe. It is not bringing property catastrophe anywhere close to, and it's still abundantly above, rate adequacy. We still have very strong rate adequacy, even with some reduction in rate change. Anything you'd add, Dave?
Speaker #12: Any help there ?
Speaker #4: It's a tough question because there's so many moving parts and you know , the we can get to this taking , you know , 20 different journeys .
Speaker #4: This journey began with a large wildfire loss . And then a light wind season and then some favorable development , some strong pricing .
Speaker #4: If I look at the economic balance sheet and our modeled loss ratios , and then I produce , they're not wildly apart . So , you know , it's hard to say because this is an event driven book .
David Marra: That's true. We still remain very positive on the business. It's been very profitable over the last few years. We expect the terms and conditions to largely persist, and some pressure on rate. Our team is well positioned to figure out how to underwrite around that. Not all risks will be equal, so we'll be able to pick the best risks based on what happens on each individual program and construct an attractive portfolio.
Speaker #4: So , you know , one change in the fourth quarter with an earthquake somewhere can change things dramatically . But this year doesn't look wildly dissimilar than our model portfolio .
Speaker #12: Helpful . Thank you .
Operator: Thank you. Thank you. We'll take our next question from Joshua David Shanker with BofA Securities.
Speaker #4: Yeah .
Speaker #2: Thank you. We'll take our next question from Meyer Shields with KB.
Speaker #13: Great . Thanks so much and good morning . I don't know if there's a question for Kevin or for Bob , but when you have the sort of favorable development that we've seen in recent quarters in either the cafe segment or property , how does that flow through to the models that you're using for pricing ?
Robert Qutub: Thank you for taking my question. Typically, when people see pricing going down, there's an assumption that too much capital is chasing too little risk or something to that effect.
Kevin O'Donnell: I'm curious to the extent that your.
Robert Qutub: Third party investors or potential new third party investors are showing interest such that 2026 might be a strong or maybe a weak year for capital raising. Can you sort of speak to that a little bit?
Speaker #5: It's all a part of the information ecosphere that we have out there . We look at our pricing , we look at our reserving .
Speaker #5: We do , you know , actual versus , you know , observed . And what we do in terms of the pricing models as we go into the one one seasons .
Kevin O'Donnell: Yeah, I'll start there. You know, that's a broad question. We, because of the structures we have and because of the reputation we have in managing third party capital, have very good access to third party capital. That has been true even when it's been more constrained for others. Right now I don't think third party capital is going to be the driving influence on pricing in 2026. I think it's more about comfort with return levels within property cat, and I think reinsurers having a little bit more confidence and a little bit more capital. Good news is we expect that the demand side will grow, so more property cat demand, although that level of increase is smaller than what we saw in 2026. That said, the market will be slightly more favorable for buyers than for sellers, where I would say 2025 was a little bit better balanced.
Speaker #5: And David can talk about this as we look at one one's , whether it's casualty or whether it's property , with an emphasis on loss ratios , on property
Speaker #5: is we look at the experience that we've had and over the years we've seen that converge , you know , become closer . But that's in based on the information and the data sets that we have .
Speaker #5: So they are connected and we do observe that . And it does play into roles . But you know , with reserving , its historical with pricing , it's it's forecasting in the future based on that information , I don't know if you want to add anything to that .
Speaker #5: David .
Speaker #6: Yeah, I think from an underwriting perspective, we take into account both qualitative and quantitative factors for the risk. When we think about future underwriting and rate changes, the trend that goes into the quantitative side.
Speaker #6: But some of the things that that have driven favorable development will go into the qualitative side and take other property , for example , a lot of the terms and conditions , like the supplements and deductibles have held up as claims have settled out .
Speaker #6: So, something like that will go into our qualitative view, and that will have a positive impact on our expectations in future years.
Kevin O'Donnell: That's the reason we're projecting about a 10% reduction in rate. The other thing I want to mention is there is more third party capital that is becoming interested in longer tail liabilities, basically looking at that to fund their investment strategies. I think that will continue through 2026. I think there'll be a little bit more third party capital coming into perhaps longer tail casualty or specialty lines. All in all, it's going to be driven by traditional reinsurers. Third party capital will continue to be available but not driving the show. Anything you'd add?
Speaker #13: Okay . That's helpful . The second question , and I'm not really sure how to ask this , but Kevin , you talked about an increase in demand , which makes sense , I guess when that materializes in the marketplace is competition for that increased demand different from the renewing demand ?
Speaker #4: You're right . It is a difficult one to to ask . It's also difficult to answer . So so what's happened last year just to frame it in maybe as a real example , is a lot of the demand came in at the top of programs .
Speaker #4: Not every reinsurer is equally hungry for high layers as they are for low layers , but those that traditionally write high layers will have probably a pretty consistent targeting for the new demand .
David Marra: Yeah, we're definitely the competition. We're seeing, especially on the CAT side, is from retained earnings on traditional reinsurers, more so than new capital projections.
Speaker #4: If it's within their target appetite already . One of the things that David mentioned is , you know , we took a greater market share of the increased demand last year .
Kevin O'Donnell: Thanks, Dave.
Robert Qutub: Given that situation, there's a lot of expectation that you'll be in the market for your own stock given where it's traded, how much capital you have. In this third party business, a part of the reason why it's been so successful is because you eat your own cooking and your investors know that whatever risks they're taking, giving you money, you're also taking yourself.
Speaker #4: That was partially because we have vehicles that complement our own targeted demand . And secondly , we recognize that the rate adequacy is at such attractive levels , we should deploy into that because we'll be able to retain it for several years .
Kevin O'Donnell: We look at the minority interest on.
Speaker #4: And continue to produce attractive returns . So I would say it's . Generally consistent if it's well ready within their appetite . And it doesn't , you know , then it could be that it's between the traditional market and the cat bonds , but it's not as if it's binary between third party capital and reinsurers .
Robert Qutub: Your balance sheet, and we look at.
David Marra: Your own shareholders' equity.
Robert Qutub: You know, there's obviously some off-balance sheet third-party capital as well. They're somewhere close to the same amount.
Kevin O'Donnell: If you're returning capital.
Robert Qutub: Do we ever think there could be a situation where third party capital is a bigger balance sheet for RenaissanceRe than the proprietary capital of the company?
Kevin O'Donnell: It's a good question. You know, one of the things we look at each year is what is the right balance between what we're retaining and what we're sharing. I think Dave mentioned, you know, we share about 50% of our property cat and anywhere, but depending on the line of business, 15% to 30% on the casualty specialty lines. There are scenarios where, even with, you know, we can make this narrow enough that within a certain target strategy, we are larger in third party capital than we are with our own deployment of risk into that narrow strategy. There are scenarios where we could have larger third party balance sheets than our own balance sheets. I don't see that occurring in 2026.
Speaker #4: It's really whether it's consistent with appetite .
Speaker #13: Okay. That's helpful. Thanks so much.
Speaker #2: Thank you . We'll take our next question from Andrew Anderson with Jefferies .
Speaker #14: Hey . Good morning . Just on the casualty and specialty segment , I think you called out some higher attritional losses in the quarter .
Speaker #14: Was that on the on the specialty side and more one off in nature .
Speaker #6: Andrew , this is David . I'll take it from an underwriting perspective . So it's about four quarters now that we've had higher views of casualty trend .
Speaker #6: And so that that has been baked in for the last four quarters . And there's no change there . And if you look at the comparable quarter , if you're comparing now to Q3 2024 , that would be a difference .
David Marra: All right, thanks for all the answers.
Kevin O'Donnell: Thank you, Josh.
Operator: Thank you. We'll take our next question from Andrew Kligerman with TD Cowen.
Speaker #6: But that's been stable in the last four quarters .
Robert Qutub: Hey, good morning. I was a little curious, shifting over to the casualty line or the casualty and specialty area. It looked like you talked on the call about pricing being very firm, but you're still pulling back a bit on the U.S. general liability. Yet when I've talked to others in reinsurance, I've been hearing that there's certainly upward movement in pricing at the primary level, but a lot of reinsurers are kind of softening their pricing a little bit. I was wondering if you could share some color on what you're seeing in the casualty reinsurance line and how pricing is coming along.
Speaker #14: Okay . And then just on the reducing some of the exposures to us , general liability , I think this kind of started the back half of 24 , but maybe where are you in the the reduction cycle here .
Speaker #14: Should we see this continuing throughout 26 . And is it just ceding commissions that we need to see change here to get a bit more positive ?
Speaker #6: I think the thing with general liability is that the momentum in the market is very strong . It just needs to be continued momentum .
Speaker #6: So we'll be watching to make sure that clients are continuing to get rate above trend , continuing to invest in the claims . And with that , our appetite will be largely stable .
Speaker #6: If we see that slip , then we'll still be always optimizing the portfolio based on how we see the risk .
Speaker #4: Yeah , one thing I'd add to Dave's comments is this isn't a re underwriting of the casualty portfolio . This is simply recognizing that certain companies are doing a better job changing claims behavior , underwriting , and rating to address the elevated trend for effectively than others .
David Marra: Thanks, Andrew. This is David. We're seeing a continuation of what we've seen for the last several quarters as overall, the market is responding to elevated loss trends and we're seeing the market respond in a couple of different ways. Most of the pricing increase has happened at the insurer level. If you remember, reinsurance is normally quota share of an insurer. We're taking a share of every policy they write, every loss they pay, and as they get additional rate that inures to our benefit. That's what's going on in the market. They've been getting rate which has been exceeding trend. They're also investing in better claims management practices. The third angle that we have to improve our own portfolio is to take action and reposition our reinsurance lines to those that we think that are doing that the best. That's what we've been doing over the last year.
Speaker #4: So we just are continuing to optimize our portfolio into the best performers .
Speaker #14: Thank you .
Speaker #2: Thank you . We'll take our next question from Alex Scott with Barclays
Speaker #2: . And
Speaker #15: I wanted to ask one on the capital. Maybe if you could frame for us the way you're thinking about the amount of excess capital you have based on the PMNLS and all the things you guys look at internally today, and maybe just help us think as well about if growth ends up being more limited next year or maybe more flattish.
Speaker #15: What would your approach to capital management and capital return be ? How aggressive would you be in terms of taking the operating earnings
David Marra: It's just a standard part of how we would always optimize our casualty and specialty segment within a class. The overall balance between classes.
Speaker #15: funneling it back . ?
Speaker #5: this is Bob . Thanks for the question . There's a lot packed into the question . Let me see if I can open it up a little bit in my prepared comments .
Robert Qutub: I see. RenaissanceRe is not increasing their ceding commissions at all. It's sort of steady as she goes.
Speaker #5: I did talk about a couple of things. Probably more than a couple of things. One is that the earnings capacity in the foreseeable future, we do feel strong.
David Marra: The ceding commissions that we pay to our clients have been pretty flat. Most of the improvements in the economics have been insurers getting more rate and improving claims handling. Got it, got it.
Speaker #5: As we've talked about all three drivers of profit , a couple times on the call , and we pointed it out in our prepared comments .
Speaker #5: So we feel that the earnings , the numerator , if you will , is performing quite well . And we're expecting that to continue .
Robert Qutub: Just one last thing on casualty, you talked about a slight favorable development and I was wondering if you could provide some color around the vintages, the product lines that had played out. Were there any big movements in one direction or another with a specific product?
Speaker #5: We're focused on margins . We're focused on protection . Growth is challenging , but we'll continue to find it and deploy it where we can .
Speaker #5: Like what we did in property Cat in the third quarter , where we grew that a lot of our comments were based on managing the denominator , which would be the capital aspect and $1 billion this year , we expect the earnings trend to continue .
Speaker #5: We expect the capital generation to continue . And rather than accumulate capital , we're looking to , you know , give that return that capital in the form of buybacks .
Kevin O'Donnell: Yeah.
David Marra: The way I think about the overall casualty and specialty development, our view is that was flat, that was stable reserves. We think just from the top down, we've shown a lot of favorable development as a group. A lot of those products for our reinsurance book, a lot of those clients buy products across property, casualty, and specialty. Within casualty and specialty, reserves have been stable. Combined ratios are in the high 90s. The main contribution we get is from the float, which is an attractive piece of the ROE contribution with stable reserves and growing float. Got it.
Speaker #5: As we've done . And we're expecting that return to continue .
Speaker #15: I got it . Thanks . And second one I had is just if you could talk about , you know , the ongoing situation in California and if as we move into 2026 , if there's anything we should be considering , particularly around one on renewals , that would be impacted by , you know , maybe moving out of some of those areas of California that were impacted by .
Robert Qutub: Thank you.
Speaker #4: Yeah , actually , we grew in California after the wildfires . I think the rerating was in excess of what was required from the learnings from the from the wildfires that occurred .
Kevin O'Donnell: Thank you.
Operator: Thank you. We'll take our next question for Bob Huang with Morgan Stanley.
Robert Qutub: Hi, good morning. My first question is a little bit of a follow up on what Josh was asking earlier.
Speaker #4: So from our perspective , we continue to like the California market . A lot of the issues that you're I think , are that are resonant within the market are affecting the primary companies more than they're affecting us as reinsurers because we're setting our own rate and our own terms for taking the wildfire risk out of California .
David Marra: If we look at.
Robert Qutub: One of the things you've said was that you talked about loss volatilities are smaller now, and so consequently earnings are more steady despite catastrophe risk. If this trend continues longer term, doesn't that also imply that longer term pricing should be pressured by stable earnings? Less volatility to me feels like should have less pricing volatility as well, like theoretically. How do you think about that, like should we see less pricing increase going forward if we have medium sized hurricanes running through Florida here and there?
Speaker #4: So , you know , I would say our if everything continues as it is in California , our appetite is to continue to grow .
Speaker #4: There . .
Speaker #15: Got it . Okay . Thank you .
Speaker #2: Thank you . We'll move next to David Motemaden with Evercore .
Speaker #16: Hey , thanks . Good morning . Kevin . You had said , I guess this year , which sounds like not far off from what you had expected from a modeled basis .
Kevin O'Donnell: Thank you for the question. I'm hearing two things in the question, Henry. The volatility is relatively consistent from an exposure perspective and how it represents, you know, thinking. You mentioned Florida. In Florida, RenaissanceRe Holdings Ltd. is different. We have much greater investment leverage with that. We have more stability coming from the investment earnings in our portfolio. We have a much bigger fee platform, which provides stability and buffers volatility. Our property catastrophe (cat) portfolio, as has been touched on at a few different points, is shared between third party capital and our own capital. Third party capital represents the stability of fees. Our own capital represents the return for risk. What we're trying to say is the representation of volatility from catastrophes is buffered because of who we are today compared to who we were five years ago. Within the market itself, it is about unchanged.
Speaker #16: 17% operating ROE year to date , including , you know , that $50 billion event , I guess , just given sort of everything that you're seeing as we get into to one one , do you think that , you know , how should we think about that ?
Speaker #16: ROE profile as we head into 2026, just given everything that you're seeing from a pricing standpoint?
Speaker #4: Yeah . So to be clear , that question was , you know , is this year an outlier from an average year with regard specifically to property cat ?
Speaker #4: So my comment was really on what is the modeled loss ratio for property Cat and to what's our actual , you know , if rates are down 10% , you can assume loss ratios are up .
Speaker #4: You know , so I would say the , you know , the important thing is , you know , within property Cat , it's going to be a well-rated book of business in 26 .
Speaker #4: It is just going to be slightly less well-rated than it was in 2025. You know, so the guidance we're trying to give or the directional information we're trying to give is that fees look strong, investments look strong.
Robert Qutub: Okay, that's very helpful, thank you for that. My second question is on gold. Just given the volatility that we've seen and obviously it was a strong quarter for gold in the third quarter, just given the volatility in gold in October, curious if you have any updates on holdings or if you have any strategy or change in strategy or change in view about the investments in gold, and then what is the impact of gold on the book value for October? Thank you for the question. Our view on gold from a strategic standpoint hasn't changed. We've been in gold for all of 2025 and a good bit in 2024. We went into it as more of a hedge against our portfolio.
Speaker #4: And the underwriting in 2026 is largely going to look like the underwriting in 2025.
Speaker #16: Got it . Thanks for that clarification . There . And then I think , David , you had mentioned party Capital and some of the longer tail liabilities .
Speaker #16: So I'm just wondering how you're thinking about that dynamic strategically , sort of how it can impact your business . The opportunities , the risks .
Speaker #16: I'd be just interested in your thoughts there .
Speaker #4: Yeah. You know, we have a long history of finding efficient capital and matching a desirable risk. This is an opportunity for us.
Speaker #4: So we will look , we know the capital . That's interested in property . Cat . We know the capital is interested in other property .
Robert Qutub: With the geopolitical environment and a lot of change going on and the shifting of the central governments and how they approach their base currency, this has proven to be a good strategy. I mentioned in my comments that part of our mark to market gain, the $258 million, a large chunk of that came from the gold position that we have out there. There's been some volatility up and down here and there, but we still see that within our strategic remit for the foreseeable future.
Speaker #4: And we know the capital that is coming in . A lot of it to the to the longer tail casualty lines . A lot of it is capital that's already been active in Bermuda .
Speaker #4: Many of which have been in the life sector . So , you know , these are it's a different strategy where they're looking at the .
Speaker #4: Reserves as funding their investment strategy, not looking for low beta risk, which has been the traditional third-party capital appetite for property.
Kevin O'Donnell: Got it.
Robert Qutub: Thank you.
Operator: Thank you. We'll move next to Michael David Zaremski with BMO Capital Markets Equity Research.
Speaker #4: Cat risk . We're well positioned to produce that risk . We're well positioned to to structure vehicles that allow them to share that risk that we have the other side of that is it's capital that's coming in that will compete with .
David Marra: Hey, great. Good morning.
Robert Qutub: I was curious on the.
David Marra: Property segment, if we look at property IBNR reserves and additional case reserves, those levels are hovering currently in the 70%+ range. We all have the historical levels, they bob around a lot, but still above the long-term historical levels.
Speaker #4: So we're just trying to figure out how it's going to move the market . If it's going to move the market , and then how it can be a tool for us to service it and to bring fee income to our shareholders .
Speaker #16: Great . Appreciate that perspective . Thanks .
Speaker #17: Yeah .
Speaker #2: Thank you . We'll take our next question from Ryan Tunis with Cantor .
Robert Qutub: I'm just curious, is there a way?
David Marra: For you guys, to frame whether the reserves for those two buckets are higher than historical levels for a certain reason, or is there any color you could add to trying to frame whether there's kind of just maybe some added conservatism here? How you guys think about it?
Speaker #13: Hey , thanks .
Speaker #18: I guess just for Kevin. So we're talking down 10% as sort of a base case, but I'm just curious, in a marketplace like this, as we move toward the renewal, what are the types of scenarios for someone in your seat?
Speaker #18: What are the types of , I don't know , red flags that that you'd be looking you'd be looking for that might suggest that the market's being a little bit less disciplined .
Kevin O'Donnell: Yeah, there's no added conservatism or any shift in the way that we've built our reserves. You know, the property side, it can be difficult because any movement in any single large event can have a meaningful impact on whether we have adverse or favorable development within the property segment. I spend less time when I look at our reserves differentiating between ACR and IBNR for the property catastrophe (cat) portfolio, and I look at it as relative. The normal process for us is looking at each large event on the anniversary of the event. You saw some third quarter events coming through with some favorable development from older years. I would say there's no story to tell with regard to the numbers or the way that you're looking at the reserves there. It's pretty much steady as she goes from a reserving perspective.
Speaker #4: So it can be any number of things I am going into this renewal with optimism . It's going to be a pricing shift , not a terms and conditions shift , which I think is likely to be the case .
Speaker #4: You know , sometimes terms and conditions changing have material impact on economics and is less transparent to , you know , to see in the portfolio .
Speaker #4: I don't think that's what we're going to see this one , one , you know , so so from my perspective , I think it will be a relatively transparent shift in economics .
Speaker #4: And we think it's in the ballpark of a 10% rate reduction . So there are numerous other things we'll monitor . You know , we've got great underwriting capabilities .
Speaker #4: We have great tools to see changes in the portfolio. So, if we do see other shifts in economics that are less transparent than price will be, we will react accordingly.
David Marra: Okay, got it. Hi.
Robert Qutub: It's been a good thing.
David Marra: You guys have been releasing a lot more than expected. I'll keep trying to figure out how to develop that. Maybe just pivoting, you've made the point and I think we got it that this year, because Q1 isn't a benign year for large losses. For example, would you be willing to frame, if you look at the year to date, nine months combined ratios, you could either use calendar year or X year or both. Would you still describe this year, nine months, year to date as being below average, better than average year, or about normal? Any help there?
Speaker #4: But it's not my expectation.
Speaker #18: Got it . And then I'll just end here with a couple separate ones . First one just for Bob . So in the 2024 10-K , the property segment shows about a billion .
Speaker #18: Two of Ebner for 2022 . And prior years . I'm wondering after all the releases this year , if that's still a solidly positive number .
Speaker #18: And then just separately , just curious if there's anything you guys want to say at this juncture . I'm Melissa exposure . Thanks .
Speaker #5: I'll handle the first one . I'll give exposure to Melissa to David . Generally speaking , that's a question . The way I would look at that point in time reserves and property right now are about 6.3 or $6.3 billion .
Kevin O'Donnell: It's a tough question because there's so many moving parts and we can get to this taking 20 different journeys. This journey began with a large wildfire loss, then a light wind season, and then some favorable development and some strong pricing. If I look at the economic balance sheet and our model loss ratios and then I lip reduce, they're not wildly apart. It's hard to say because this is an event-driven book. One change in the fourth quarter with an earthquake somewhere can change things dramatically. This year doesn't look wildly dissimilar.
Speaker #5: Now , and a year ago , there were 6.5 . So we've continued to build reserves . We've had some reserve releases and they're mutually exclusive of one another .
Speaker #5: Reserve releases are based on information that we get over time , and we act accordingly . We've got independent advisors that look at this and test it .
Speaker #5: You know, one of them is PricewaterhouseCoopers. So, as far as absolute levels, they're relatively constant.
Speaker #6: Yeah . And then this is David I'll take the Melissa question . And first of all it's a cat five a very powerful Cat five direct hit on Jamaica .
Robert Qutub: Than our modeled portfolio.
Speaker #6: So, our sympathies are with the people of Jamaica as they work through this. It's too soon to put any number on it.
David Marra: Helpful.
Robert Qutub: Thank you.
Speaker #6: We have a couple of locations and not a lot of exposure in the cat book , but a couple of locations in the other property book , so we don't think it will be that anything of an outlier financial event .
Operator: Thank you. We'll take our next question from Meyer Shields with Keefe Bruyette & Woods Inc.
Robert Qutub: Great.
David Marra: Thanks so much, and good morning.
Robert Qutub: I don't know if there's a question for Kevin or for Bob, but when.
Speaker #6: But too early to put a number on it . And it is still a live event that's going to the Bahamas next . So we'll be continuing to that .
David Marra: You have the sort of favorable development that we've seen in recent quarters.
Speaker #6: We also , in the book , particularly , we don't write any of the local Jamaica companies . So we've already looked into that part of it .
Robert Qutub: Either the casualty segment or in property, how does that flow through to the.
David Marra: Models that you're using for pricing?
Speaker #17: Thank you .
Speaker #2: Thank you . We'll take our final question from Tracy Benguigui with Wolfe Research .
Robert Qutub: It's all part of the information ecosystem that we have out there. We look at our pricing, we look at our reserving, we do actual versus observed and what we do in terms of the pricing models as we go into the 1/1 seasons. David can talk about this as we look at 1/1s, whether it's casualty or whether it's property, with an emphasis on loss ratios on property. As we look at the experience that we've had and over the years we've seen that converge, become closer. That's based on the information and the data sets that we have. They are connected and we do observe that. It does play into roles. With reserving, it's historical. With pricing, it's forecasting in the future based on that information. I don't know if you want to add anything to that, David.
Speaker #7: Thank you . Good morning .
Speaker #19: Interesting comments on demand . But you also mentioned that supply outweighs demand . Looking ahead into 2026 . So this is more of a macro question rather than a run rate question .
Speaker #19: Specifically . But if you had to take an educated guess , how much of the 800 billion ish reinsurance dedicated capital needs to leave the industry , whether it be from cat losses or returns to get to a state of equilibrium ?
Speaker #4: I don't know how to answer your question. I would say what we look at.
Speaker #11: Is .
Speaker #4: What is the over placement programs ? And , you know , maybe that is a barometer as to , you know , kind of what level of capitalization brings us back to a balanced market .
David Marra: Yes, I think from an underwriting perspective, we take into account both qualitative and quantitative for the risk. When we think about future underwriting and rate change trend, that goes into the quantitative side. Some of the things that have driven favorable development will go into the qualitative side. Take other property, for example. A lot of the terms and conditions like the supplements and deductibles have held up as claims have settled out. Something like that will go into our qualitative view and that will have a positive impact on our expectations in future years. Okay, that's helpful. The second question, and I'm not really sure how to ask this, but Kevin.
Speaker #4: I don't anticipate substantial over placement . So that would indicate that we're relatively close to balance . The fact that rates are forecast or expectation is down 10% would suggest we're relatively close to balance .
Speaker #4: So I think there's a bit of can sometimes . Bringing together the amount of capital . And then the appetite for risk . I think the appetite of risk is unlikely to be wildly disconnected from the increase in demand , which will be less than what it was last year .
Robert Qutub: You talked about an increase in demand, which makes sense, I guess, when that materializes in the marketplace. Is competition for that increased demand different?
David Marra: From the renewing demand?
Speaker #4: But still , there . So I don't think we're far out of balance from a willingness to deploy into the market . So I don't think it's a matter of , you know , X billion dollars leaving the market .
Kevin O'Donnell: You're right. It is a difficult one to ask. It's also difficult to answer. What's happened last year, just to frame maybe as a real example, is a lot of the demand came in at the top of programs. Not every reinsurer is equally hungry for high layers as they are for low layers. Those that traditionally write high layers will have probably a pretty consistent targeting for the new demand if it's within their target appetite already. One of the things that David Marra mentioned is, you know, we took a greater market share of the increased demand last year. That was partially because we have vehicles that complement our own targeted demand. Secondly, we recognize that the rate adequacy is at such attractive levels, we should deploy into that because we'll be able to retain it for several years and continue to produce attractive returns.
Speaker #4: And then we're back in . It's really about the perception of risk . And what is the comfort level for deployment into peak zone , particularly property cat .
Speaker #4: .
Speaker #19: Okay . That was interesting . I understand that a lot of property business that used to be underwritten by an insurer as a whole account backed by facultative reinsurance , is now that risk is being unwritten as shared and layered .
Speaker #19: So, as a reinsurer, how is this trend impacting your opportunity set and relative pricing? Like I heard that some of the layers have different terms and conditions.
Speaker #6: Yeah . Hey , this is David . I think what you're referring to is business . That would go into our other property segment or subsegment .
Speaker #6: And where we right .
Speaker #17: A .
Speaker #6: Cat exposed ins business . A lot of that shared , shared and layered that's coming under competition is performed very well . But that competition for the larger account ins , fortune 1000 is where some of that is going on .
Kevin O'Donnell: I would say it's generally consistent if it's well ready within their appetite. It could be that it's between the traditional market and the cat bonds, but it's not as if it's binary between third party capital and reinsurers. It's really whether it's consistent with appetite.
Speaker #6: That's a minority portion of our book . We also have positions in middle market , small commercial and homeowners . Overall , the book has performed really well and like I think I said earlier , the favorable development we're seeing is a good example of how the terms and conditions that are on our portfolio are holding up really well .
David Marra: Okay, that's helpful.
Robert Qutub: Thanks so much.
Operator: Thank you. We'll take our next question from Andrew E. Andersen with Jefferies LLC.
Speaker #6: So there'll be some additional competition , but still optimistic with how that book's performing .
Kevin O'Donnell: Hey, good morning. Just on the casualty and specialty segment.
Robert Qutub: I think you called out some higher attritional losses in the quarter. Was that on the specialty side and more one off in nature?
Speaker #19: Thank you .
Speaker #4: Thank you .
Speaker #2: Thank you . And this does conclude the time we have for questions today . I would like to now turn the call back to Kevin O'Donnell for any additional or closing remarks .
David Marra: Hey, Andrew, this is David. I'll take it from an underwriting perspective. It's been about four quarters now that we've had higher views of casualty trend, and that has been baked in for the last four quarters and there's no change there. I think if you look at the comparable quarter, if you're comparing now to Q3 2024, that would be a difference, but that's been stable in the last four quarters.
Speaker #4: Thank you for joining today's call . We hope the comments were helpful . We look forward to the renewal and talking to you after year end .
Speaker #4: Thanks again for joining .
Speaker #2: Thank you . This concludes today's Renaissance Free third quarter 2020 earnings Call and webcast . Please disconnect your line at this time and have a wonderful day .
Robert Qutub: Okay.
Kevin O'Donnell: On the reducing some.
David Marra: Of the exposures to U.S. general liability.
Kevin O'Donnell: I think this kind of started the back half of 2024, but maybe where are you in the reduction cycle here? Should we see this continuing throughout 2026.
Robert Qutub: Is it just ceding commissions that.
Kevin O'Donnell: We need to see change here, too.
Robert Qutub: Get a bit more positive?
David Marra: I think the thing with general liability is that the momentum in the market is very strong. It just needs to be continued momentum. We'll be watching to make sure that clients are continuing to get rate above trend, continuing to invest in the claims, and with that, our appetite will be largely stable. If we see that slip, we'll still be always optimizing the portfolio based on how we see the risk.
Kevin O'Donnell: Yeah. One thing I'd add to Dave's comments, this isn't a re-underwriting of the casualty portfolio. This is simply recognizing that certain companies are doing a better job changing claims behavior, underwriting, and rating to address the elevated trend more effectively than others. We just are continuing to optimize our portfolio into the best performers.
Robert Qutub: Thank you.
Operator: Thank you. We'll take our next question from Alex Scott with Barclays Bank PLC.
Robert Qutub: I wanted to ask one on the capital. Maybe if you could frame for us the way you're thinking about the amount of excess capital you have.
David Marra: The PMLs and all the things you guys look at internally today.
Robert Qutub: Help us think as well about.
David Marra: If growth ends up being more limited next year or maybe more flattish, what would your approach to capital management and capital return be?
Robert Qutub: How aggressive would you be in terms?
David Marra: Of taking the operating earnings and funneling it back?
Robert Qutub: This is Bob, thanks for the question. There's a lot packed into the question. Let me see if I can open it up a little bit. In my prepared comments, I did talk about a couple things, probably more than a couple things. One is that the earnings capacity in the foreseeable future. We do feel strong as we've talked about all three drivers of profit a couple times on the call and we pointed it out in our prepared comments. We feel that the earnings, the numerator, if you will, is performing quite well and we're expecting that to continue. We're focused on margins, we're focused on protection. Growth is challenging, but we'll continue to find it and deploy it where we can, like what we did in property catastrophe in the third quarter, where we grew that.
Robert Qutub: A lot of our comments were based on managing the denominator, which would be the capital aspect, $1 billion this year. We expect the earnings trend to continue. We expect the capital generation to continue. Rather than accumulate capital, we're looking to give back, return that capital in the form of buybacks, as we've done, and we're expecting that return to continue. Got it.
David Marra: Thanks.
Kevin O'Donnell: The second one I had is just.
Robert Qutub: If you could talk about the ongoing situation in California and as we move into 2026, if there's anything we should.
David Marra: Be considering, particularly around 1:1 renewals that would be impacted by maybe moving out of some of those areas of California.
Robert Qutub: That you were impacted by.
Kevin O'Donnell: Yeah, actually we grew in California after the wildfires. I think the re-rating was in excess of what was required from the learnings from the wildfires that occurred. From our perspective, we continue to like the California market. A lot of the issues that are resonant within the market are affecting the primary companies more than they're affecting us as reinsurers because we're setting our own rate and our own terms for taking the wildfire risk out of California. I would say if everything continues as it is in California, our appetite is to continue to grow there.
David Marra: Got it.
Kevin O'Donnell: Okay.
Robert Qutub: Thank you.
Operator: Thank you. We'll move next. David Kenneth Motemaden with Evercore ISI Institutional Equities.
Robert Qutub: Hey, thanks. Good morning, Kevin.
David Marra: You had said I guess this year.
Robert Qutub: Which sounds like not far off from.
David Marra: What you had expected from a model basis. 17% operating ROE year to date, including that $50 billion event.
Robert Qutub: I guess just given everything.
David Marra: That you're seeing as we get into Q1, do you think that, you know, how should we think about that ROE profile as we head into 2026, just given everything that you're seeing from a pricing standpoint?
Kevin O'Donnell: To be clear, that question was, is this year an outlier from an average year with regard specifically to property catastrophe? My comment was really on what is the modeled loss ratio for property catastrophe into what's our actual. If rates are down 10%, you can assume loss ratios are up. The important thing is, within property catastrophe, it's going to be a well-rated book of business in 2026. It is just going to be slightly less well-rated than it was in 2025. The guidance we're trying to give or the directional information we're trying to give is fees look strong, investments look strong, and the underwriting in 2026 is largely going to look like the underwriting in 2025.
David Marra: Got it.
Robert Qutub: Thanks for that clarification.
David Marra: I think, David, you had mentioned party capital in some of the longer tail liabilities. I'm just wondering how you're thinking about that dynamic strategically, sort of how.
Robert Qutub: It can impact your business, the opportunities, the risks.
David Marra: I'd be just interested in your thoughts there.
Kevin O'Donnell: Yeah, we have a long history of finding efficient capital and matching a desirable risk. This is an opportunity for us. We will look. We know the capital that's interested in property cat. We know the capital is interested in other property and we know the capital that is coming in, a lot of it to the longer tail casualty lines. A lot of it is capital that's already been active in Bermuda, many of which have been in the life sector. These are a different strategy where they're looking at the reserves as funding their investment strategy, not looking for low beta risk, which has been the traditional third party capital appetite for property cat risk. We're well positioned to produce that risk. We're well positioned to structure vehicles that allow them to share that risk that we have.
Kevin O'Donnell: The other side of that is it's capital that's coming in that we'll compete with. We're just trying to figure out how it's going to move the market, if it's going to move the market and then how it can be a tool for us to service it and to bring fee income to our shareholders.
David Marra: Great.
Robert Qutub: Appreciate that perspective. Thanks.
David Marra: Yep.
Operator: Thank you. We'll take our next question from Ryan Tunis with BMO Capital Markets Equity Research.
Robert Qutub: Hey, thanks, I guess, just for Kevin. We're talking down 10% as sort of a base case. I'm just curious, in a marketplace like this, as we move toward the renewal, what are the types for someone in your seat, what are the types of, I don't know, red flags that.
Kevin O'Donnell: You'd be looking that you'd be looking.
Robert Qutub: For that, might suggest that the market's being a little bit less disciplined? Chair Powell.
Kevin O'Donnell: It can be any number of things. I am going into this renewal with optimism. It's going to be a pricing shift, not a terms and conditions shift, which I think is likely to be the case. Sometimes terms and conditions changing have material impact on economics and are less transparent to see in the portfolio. I don't think that's what we're going to see this 1/1.
Robert Qutub: You know.
Kevin O'Donnell: From my perspective, I think it'll be a relatively transparent shift in economics, and we think it's in the ballpark of a 10% rate reduction. There are numerous other things we'll monitor. We've got great underwriting capabilities. We have great tools to see changes in the portfolio. We do see other shifts in economics that are less transparent than price, and we'll react accordingly, but it's not my expectation.
David Marra: Got it.
Robert Qutub: I'll just end here with a couple of separate ones. First, one just for Bob. In the 2024 10K, the property segment shows about $1.2 billion of IVNR for 2022 and prior years. I'm wondering after all the releases this year if that's still a solidly positive number. Just separately, curious if there's anything you guys want to say at this juncture on Melissa exposure. Thanks, I'll handle it first. I'll give exposure to Melissa to David. Generally speaking, that's a question the way I would look at that and approach it, our point in time reserves in property right now are about $6.3 billion. A year ago they were $6.5 billion. We've continued to build reserves. We've had some reserve releases and they're mutually exclusive of one another. Reserve releases are based on information that we get over time and we act accordingly.
Robert Qutub: We've got independent advisors that look at this and test it. One of them is PricewaterhouseCoopers. As far as absolute levels, they're relatively constant. Yep.
David Marra: This is David. I'll take the Melissa question. First of all, it's a Cat 5, a very powerful Cat 5 direct hit on Jamaica. Our sympathies with the people of Jamaica as they work through this. It's too soon to put any number on it. We have a couple of locations and not a lot of exposure in the CAT book, but a couple of locations in the other property book. We don't think it'll be anything of an outlier financial event, but it's too early to put a number on it. It is still a live event that's going to the Bahamas next. We'll be continuing that. In the CAT book particularly, we don't write any of the local Jamaica companies. We've already looked into that part of it.
Robert Qutub: Thank you.
Operator: Thank you. We'll take our final question from Tracy Pingweiwe with Wolfe Research. Thank you. Good morning. Interesting comment on demand, but you also mentioned that supply outweighs demand looking ahead into 2026. This is more of a macro question rather than a run rate question specifically. If you had to take an educated guess, how much of the $800 billion-ish reinsurance dedicated capital needs to leave the industry, whether it be from CAT losses or capital returns, to get to a state of equilibrium.
Kevin O'Donnell: I don't know how to answer your question. I would say that what we look at is what is the overplacement programs, and maybe that is a barometer as to what level of capitalization brings us back to a balanced market. I don't anticipate substantial overplacement, so that would indicate that we're relatively close to balance. The fact that rates are forecast or our expectation is down 10%, which suggests we're relatively close to balance. I think there's a bit of sometimes bringing together the amount of capital and then the appetite for risk. I think the appetite of risk is unlikely to be wildly disconnected from the increase in demand, which will be less than what it was last year, but still there. I don't think we're far out of balance from a willingness to deploy into the market.
Kevin O'Donnell: I don't think it's a matter of X billion dollars leaving the market and then we're back in. It's really about the perception of risk and what is the comfort level for deployment into peak zone, particularly property cat.
Operator: Okay, that was interesting. I understand that a lot of property business that used to be underwritten by an insurer as a whole account backed by facultative reinsurance is now that risk is being unwritten as shared and layered. As a reinsurer, how is this trend impacting your opportunity set and relative pricing? I heard that some of the layers had different terms and conditions.
David Marra: Yeah. Hey, this is David. I think what you're referring to is business that would go into our other property segment or sub segment. Yes, you're right. Cat exposed E&S business. A lot of that shared and layered. That's coming under competition. It's performed very well. That competition for the large account E&S Fortune 1000 is where some of that is going on. That's a minority portion of our book. We also have positions in middle market, small commercial, and homeowners. Overall, the book has performed really well. I think I said earlier the favorable development we're seeing is a good example of how the terms and conditions that are on our portfolio are holding up really well. There will be some additional competition but still optimistic with how that book's performing.
Operator: Thank you.
Robert Qutub: Thank you.
Operator: Thank you. This does conclude the time we have for questions today. I would like to now turn the call back to Kevin O'Donnell for any additional or closing remarks.
Kevin O'Donnell: Thank you for joining today's call. We hope the comments were helpful. We look forward to the renewal and talking to you after year end. Thanks again for joining.
Operator: Thank you. This concludes today's RenaissanceRe Holdings Ltd. third quarter 2025 earnings call and webcast. Please disconnect your line at this time and have a wonderful day.
David Marra: SA.