Q1 2026 Onex Corp Earnings Call

May 15, 2026

Speaker #1: Welcome to ONEX Q1 2026 conference call and webcast. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session with pre-qualified analysts.

Operator: Welcome to Onex Q1 2026 Conference Call and Webcast. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session with pre-qualified analysts. At that time, if you have a question, please press star 1 1 on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the conference over to Jill Homenuk, Managing Director, Shareholder Relations and Communications at Onex. Please go ahead.

Speaker #1: At that time, if you have a question, please press star 11 on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the conference over to Jill Homenuk, Managing Director.

Speaker #1: Shareholder Relations and Communications at ONEX. Please go ahead.

Speaker #2: Thank you. Good morning, everyone, and thanks for joining us. We're broadcasting this call on our website. Hosting the call today are Bobby LeBlanc, ONEX's Chief Executive Officer, and Meg McLellan, our Chief Financial Officer.

Jill Homenuk: Thank you. Good morning, everyone, and thanks for joining us. We're broadcasting this call on our website. Hosting the call today are Bobby LeBlanc, Onex's Chief Executive Officer, and Megan McClellan, our Chief Financial Officer. Also joining us today for our Q&A session is Paul Brand, Chief Executive Officer of Convex. Earlier this morning, we issued our Q1 2026 press release, MD&A, and consolidated financial statements, which are available on the shareholder section of our website and have also been filed on SEDAR. Our supplemental information package is also available on our website. As a reminder, all references to dollar amounts on this call are in US, unless otherwise stated. I must also point everyone to our webcast presentation for our usual disclaimer and cautionary factors relating to any forward-looking statements contained in today's presentation and remarks. With that, I'll now turn the call over to Bobby.

Jill Homenuk: Thank you. Good morning, everyone, and thanks for joining us. We're broadcasting this call on our website. Hosting the call today are Bobby Le Blanc, Onex's Chief Executive Officer, and Megan McClellan, our Chief Financial Officer. Also joining us today for our Q&A session is Paul Brand, Chief Executive Officer of Convex. Earlier this morning, we issued our Q1 2026 press release, MD&A, and consolidated financial statements, which are available on the shareholder section of our website and have also been filed on SEDAR. Our supplemental information package is also available on our website. As a reminder, all references to dollar amounts on this call are in US, unless otherwise stated. I must also point everyone to our webcast presentation for our usual disclaimer and cautionary factors relating to any forward-looking statements contained in today's presentation and remarks. With that, I'll now turn the call over to Bobby.

Speaker #2: Also joining us today for our Q&A session is Paul Brand, Chief Executive Officer of Convex. Earlier this morning, we issued our first quarter 2026 press release, MDNA, and consolidated financial statements which are available on the shareholder section of our website, and have also been filed on CDAR.

Speaker #2: Our supplemental information package is also available on our website. As a reminder, all references to dollar amounts on this call are in U.S. dollars unless otherwise stated.

Speaker #2: I must also point everyone to our webcast presentation for our usual disclaimer and cautionary factors relating to any forward-looking statements contained in today's presentation and remarks.

Speaker #2: With that, I'll now turn the call over to Bobby.

Speaker #3: Happy Friday, everyone. First, I'd like to welcome Meg, ONEX's new CFO, and Paul Brand, the CEO of Convex, to their first ONEX earnings call.

Bobby LeBlanc: Happy Friday, everyone. First, I'd like to welcome Meg, Onex's new CFO, and Paul Brand, the CEO of Convex, to their first Onex earnings call. Thank you both for being here today. Onex delivered a solid Q1 despite a challenging market backdrop. We remain focused on executing our strategy to drive long-term value creation and earnings growth. Our Convex private equity and credit platforms are performing well, and we are experiencing positive momentum across our investing and asset management activities. As I've indicated before, Convex will be the largest contributor to increasing shareholder value in the near term. The value of our strategic partnership with AIG should not be overlooked. As a reminder, AIG purchased 7.5 million shares of Onex for a 9.9% ownership stake and has committed to invest $2 billion in our asset management strategies.

Bobby Le Blanc: Happy Friday, everyone. First, I'd like to welcome Meg, Onex's new CFO, and Paul Brand, the CEO of Convex, to their first Onex earnings call. Thank you both for being here today. Onex delivered a solid Q1 despite a challenging market backdrop. We remain focused on executing our strategy to drive long-term value creation and earnings growth. Our Convex private equity and credit platforms are performing well, and we are experiencing positive momentum across our investing and asset management activities. As I've indicated before, Convex will be the largest contributor to increasing shareholder value in the near term. The value of our strategic partnership with AIG should not be overlooked. As a reminder, AIG purchased 7.5 million shares of Onex for a 9.9% ownership stake and has committed to invest $2 billion in our asset management strategies.

Speaker #3: Thank you both for being here today. ONEX delivered a solid first quarter, despite a challenging market backdrop. We remain focused on executing our strategy to drive long-term value creation and earnings growth.

Speaker #3: Our Convex private equity and credit platforms are performing well, and we are experiencing positive momentum across our investing and asset management activities. As I've indicated before, Convex will be the largest contributor to increasing shareholder value in the near term.

Speaker #3: In addition, the value of our strategic partnership with AIG should not be overlooked. As a reminder, AIG purchased $7.5 million shares of ONEX for a $9.9% ownership stake and has committed to invest $2 billion in our asset management strategies.

Speaker #3: We expect AIG's capital commitment to be accretive to FRE and to shareholder value. We are actively working with AIG to determine how capital will be allocated across Onex's private equity and credit products, including Onex Partners VI and OSCO II.

Bobby LeBlanc: We expect AIG's capital commitment to be accretive to FRE and to shareholder value. We are actively working with AIG to determine how capital will be allocated across Onex's private equity and credit products, including Onex Partners VI and OSCO II. We also believe there could be additional opportunities that arise to collaborate with AIG as we continue to build our relationship. At yesterday's annual general meeting, we were pleased to welcome AIG's representative, Jay Cullen, to our board of directors. Jay has more than 30 years of experience across the insurance industry ecosystem, most recently leading the insurance equity research team as Managing Director at Bank of America. We look forward to working with Jay and to the expertise and contributions he will bring to our board discussions. Now let's turn to Convex's performance.

Bobby Le Blanc: We expect AIG's capital commitment to be accretive to FRE and to shareholder value. We are actively working with AIG to determine how capital will be allocated across Onex's private equity and credit products, including Onex Partners VI and OSCO II. We also believe there could be additional opportunities that arise to collaborate with AIG as we continue to build our relationship. At yesterday's annual general meeting, we were pleased to welcome AIG's representative, Jay Cullen, to our board of directors. Jay has more than 30 years of experience across the insurance industry ecosystem, most recently leading the insurance equity research team as Managing Director at Bank of America. We look forward to working with Jay and to the expertise and contributions he will bring to our board discussions. Now let's turn to Convex's performance.

Speaker #3: We also believe there could be additional opportunities that arise to collaborate with AIG as we continue to build our relationship. At yesterday's Annual General Meeting, we were pleased to welcome AIG's representative, Jay Cohen, to our Board of Directors.

Speaker #3: Jay has more than 30 years of experience across the insurance industry ecosystem, most recently leading the insurance equity research team as Managing Director at Bank of America.

Speaker #3: We look forward to working with Jay and to the expertise and contributions he will bring to our board discussions. Now, let's turn to Convex's performance.

Speaker #3: Convex delivered a strong quarter, with underwriting performance, profitability, and return on equity all improving versus the prior year period. Gross premiums written increased 5% year over year.

Bobby LeBlanc: Convex delivered a strong quarter with underwriting performance, profitability, and return on equity all improving versus the prior year period. Gross premiums written increased 5% year over year. This headline growth rate understates the underlying performance because Q1 of 2025 was an elevated comparison period, which included unusually high reinstatement premiums that Convex received following the California wildfires. Excluding these one-time premiums, which are paid by clients to restore coverage for a subsequent event following a major loss, gross premiums written grew 8%. As we forecasted prior to our acquisition, insurance pricing has softened with year-to-date rates down 4%. The softness is concentrated in short-tail classes of risk, such as property. In contrast, there has been rate increases in areas affected by the Middle East conflict and in casualty classes.

Bobby Le Blanc: Convex delivered a strong quarter with underwriting performance, profitability, and return on equity all improving versus the prior year period. Gross premiums written increased 5% year over year. This headline growth rate understates the underlying performance because Q1 of 2025 was an elevated comparison period, which included unusually high reinstatement premiums that Convex received following the California wildfires. Excluding these one-time premiums, which are paid by clients to restore coverage for a subsequent event following a major loss, gross premiums written grew 8%. As we forecasted prior to our acquisition, insurance pricing has softened with year-to-date rates down 4%. The softness is concentrated in short-tail classes of risk, such as property. In contrast, there has been rate increases in areas affected by the Middle East conflict and in casualty classes.

Speaker #3: However, this headline growth rate understates the underlying performance because Q1 of 2025 was an elevated comparison period, which included unusually high reinstatement premiums that Convex received following the California wildfires.

Speaker #3: Excluding these one-time premiums, which are paid by clients to restore coverage for a subsequent event following a major loss, gross premiums written grew 8%.

Speaker #3: As we forecasted prior to our acquisition, insurance pricing has softened, with year-to-date rates down 4%. The softest is concentrated in short-tail classes of risk, such as property.

Speaker #3: In contrast, there has been rate increases in areas affected by the Middle East conflict, and in casualty classes. Convex generated adjusted net income of $106 million in the quarter.

Bobby LeBlanc: Convex generated adjusted net income of $106 million in Q1, which included a $50 million unrealized mark-to-market loss on Convex's fixed income portfolio amid rising interest rates due to broader macroeconomic volatility. Excluding this non-operational accounting loss, Convex generated adjusted net income of $156 million. Q1 earnings should also not be viewed as representative of a full year run rate, as historically, net income in Q1 of the year is less than we see in other quarters. Convex currently recognizes unrealized changes in the value of its fixed income portfolio through earnings, but plans to transition to an available-for-sale classification during Q2. This revised treatment is in line with peers and will reduce income statement volatility in subsequent periods.

Bobby Le Blanc: Convex generated adjusted net income of $106 million in Q1, which included a $50 million unrealized mark-to-market loss on Convex's fixed income portfolio amid rising interest rates due to broader macroeconomic volatility. Excluding this non-operational accounting loss, Convex generated adjusted net income of $156 million. Q1 earnings should also not be viewed as representative of a full year run rate, as historically, net income in Q1 of the year is less than we see in other quarters. Convex currently recognizes unrealized changes in the value of its fixed income portfolio through earnings, but plans to transition to an available-for-sale classification during Q2. This revised treatment is in line with peers and will reduce income statement volatility in subsequent periods.

Speaker #3: Which included a $50 million unrealized mark-to-market loss on Convex's fixed income portfolio amid rising interest rates due to broader macroeconomic volatility. Excluding this non-operational accounting loss, Convex generated adjusted net income of $156 million.

Speaker #3: First-quarter earnings should also not be viewed as representative of a full-year run rate, as historically, net income in the first quarter of the year is less than we see in other quarters.

Speaker #3: Convex currently recognizes unrealized changes in the value of its fixed income portfolio through earnings, but plans to transition to an available-for-sale classification during the second quarter.

Speaker #3: This revised treatment is in line with peers and will reduce income statement volatility in subsequent periods. Convex delivered a combined ratio of 87% in the quarter, and underwriting earnings growth was largely driven by significant reduction in the loss ratio.

Bobby LeBlanc: Convex delivered a combined ratio of 87% in the quarter, and underwriting earnings growth was largely driven by a significant reduction in the loss ratio as Q1 earnings last year were negatively impacted by incurred losses due to the California wildfires. The Middle East conflict has resulted in estimated net losses of $23 million in Q1, which is relatively small compared to our overall earnings. Convex management is actively monitoring the evolving situation and expects rate increases on new policies written in the region to provide some offset against incurred losses. On a last twelve-month basis, adjusted net income was $827 million, an increase from $401 million in the comparable prior year period and from $711 million for the full year 2025. The last twelve-month combined ratio improved to 83% and ROE increased to 24%.

Bobby Le Blanc: Convex delivered a combined ratio of 87% in the quarter, and underwriting earnings growth was largely driven by a significant reduction in the loss ratio as Q1 earnings last year were negatively impacted by incurred losses due to the California wildfires. The Middle East conflict has resulted in estimated net losses of $23 million in Q1, which is relatively small compared to our overall earnings. Convex management is actively monitoring the evolving situation and expects rate increases on new policies written in the region to provide some offset against incurred losses. On a last twelve-month basis, adjusted net income was $827 million, an increase from $401 million in the comparable prior year period and from $711 million for the full year 2025. The last twelve-month combined ratio improved to 83% and ROE increased to 24%.

Speaker #3: As first quarter earnings last year were negatively impacted by incurred losses due to the California wildfires, the Middle East conflict has resulted in estimated net losses of $23 million in Q1, which is relatively small compared to our overall earnings.

Speaker #3: Convex management is actively monitoring the evolving situation and expects rate increases on new policies written in the region to provide some offset against incurred losses.

Speaker #3: On a last 12-month basis, adjusted net income was $827 million, an increase from $401 million in the comparable prior-year period, and from $711 million for the full year 2025.

Speaker #3: The last 12-month combined ratio improved to 83%, and ROE increased to 24%. Convex's ROE has steadily increased since ONEX's acquisition, reflecting both stronger earnings and a lower tangible book value denominator following the repurchase of shares completed as part of the Convex transactions.

Bobby LeBlanc: Convex's ROE has steadily increased since Onex's acquisition, reflecting both stronger earnings and a lower tangible book value denominator following the repurchase of shares completed as part of the Convex transactions. It should be noted that Convex recorded modest major event losses over the last twelve-month period, which has also helped improve Convex's overall loss ratio. The value of Onex's investment in Convex increased to CAD 4 billion at the end of the quarter, representing an increase of 4% since the acquisition was closed earlier this year. This valuation is based upon a 2.0 times price to tangible book value, supported by Convex's high return on equity, earnings growth, and continued market share gains. At this valuation, the implied price to earnings multiples are 8.1 times on a last twelve months adjusted net income basis and 10 times on a full year 2025 actual net income basis.

Bobby Le Blanc: Convex's ROE has steadily increased since Onex's acquisition, reflecting both stronger earnings and a lower tangible book value denominator following the repurchase of shares completed as part of the Convex transactions. It should be noted that Convex recorded modest major event losses over the last twelve-month period, which has also helped improve Convex's overall loss ratio. The value of Onex's investment in Convex increased to CAD 4 billion at the end of the quarter, representing an increase of 4% since the acquisition was closed earlier this year. This valuation is based upon a 2.0 times price to tangible book value, supported by Convex's high return on equity, earnings growth, and continued market share gains. At this valuation, the implied price to earnings multiples are 8.1 times on a last twelve months adjusted net income basis and 10 times on a full year 2025 actual net income basis.

Speaker #3: It should be noted that Convex recorded modest major event losses over the last 12-month period, which has also helped improve Convex's overall loss ratio.

Speaker #3: The value of ONEX's investment in Convex increased to $4 billion at the end of the quarter, representing an increase of 4% since the acquisition was closed earlier this year.

Speaker #3: This valuation is based upon a 2.0 times price-to-tangible book value, supported by Convex's high return on equity, earnings growth, and continued market share gains.

Speaker #3: At this valuation, the implied price-to-earnings multiples are 8.1 times on a last 12-month adjusted net income basis, and 10 times on a full year 2025 actual net income basis.

Speaker #3: Looking ahead, we expect Convex's earnings to benefit from several structural levers, including continued market share gains, prudent growth in asset leverage, improvement in investment portfolio yields, and operating leverage as the business continues to scale.

Bobby LeBlanc: Looking ahead, we expect Convex's earnings to benefit from several structural levers, including continued market share gains, prudent growth in asset leverage, improvement in investment portfolio yields, and operating leverage as the business continues to scale. We are pleased with Convex's early results and continue to value our strong working partnership with Paul Brand and the entire Convex team. Now turning to asset management. Within private equity, our teams made significant progress returning capital to our limited partners last year. We returned more than CAD 8 billion, and this momentum has continued into 2026. Onex Partners recently closed its CAD 1.6 billion multi-asset continuation fund. Raising capital from some of the world's leading institutional and sovereign investors, including several that are new to Onex. Just this past Monday, OP announced a full realization of Emerald, with expecting net proceeds to Onex of $230 million.

Bobby Le Blanc: Looking ahead, we expect Convex's earnings to benefit from several structural levers, including continued market share gains, prudent growth in asset leverage, improvement in investment portfolio yields, and operating leverage as the business continues to scale. We are pleased with Convex's early results and continue to value our strong working partnership with Paul Brand and the entire Convex team. Now turning to asset management. Within private equity, our teams made significant progress returning capital to our limited partners last year. We returned more than CAD 8 billion, and this momentum has continued into 2026. Onex Partners recently closed its CAD 1.6 billion multi-asset continuation fund. Raising capital from some of the world's leading institutional and sovereign investors, including several that are new to Onex. Just this past Monday, OP announced a full realization of Emerald, with expecting net proceeds to Onex of $230 million.

Speaker #3: We are pleased with Convex's early results and continue to value our strong working partnership with Paul Brand and the entire Convex team. Now, turning to asset management.

Speaker #3: Within private equity, our teams made significant progress returning capital to our limited partners last year. We returned more than $8 billion, and this momentum has continued into 2026.

Speaker #3: ONEX Partners recently closed its $1.6 billion multi-asset continuation fund, raising capital from some of the world's leading institutional and sovereign investors, including several that are new to ONEX.

Speaker #3: And just this past Monday, OP announced a full realization of Emerald with expected net proceeds to ONEX of $230 million. Importantly, these efforts will bring DPI for ONEX Partners 5 to $1.0, making it a positive outlier on this metric relative to other funds of its vintage.

Bobby LeBlanc: Importantly, these efforts will bring DPI for Onex Partners V to 1.0, making it a positive outlier on this metric relative to other funds of its vintage. Moreover, OP has good visibility into additional realizations and expects DPI to increase by the time Onex Partners VI has its first close, which is expected later this year. The Onex Partners Opportunities Fund has now invested about 70% of its CAD 1 billion in commitments, with 1 investment in each of the 4 verticals, and has attracted an additional CAD 1 billion in co-investment. The fund has performed very well to date, particularly on the strength of its first 2 investments that we've held for over 12 months, Fischbach and Farsound. Our credit platform continues to distinguish itself as a market leader and a relative safe haven amidst considerable industry noise.

Bobby Le Blanc: Importantly, these efforts will bring DPI for Onex Partners V to 1.0, making it a positive outlier on this metric relative to other funds of its vintage. Moreover, OP has good visibility into additional realizations and expects DPI to increase by the time Onex Partners VI has its first close, which is expected later this year. The Onex Partners Opportunities Fund has now invested about 70% of its CAD 1 billion in commitments, with 1 investment in each of the 4 verticals, and has attracted an additional CAD 1 billion in co-investment. The fund has performed very well to date, particularly on the strength of its first 2 investments that we've held for over 12 months, Fischbach and Farsound. Our credit platform continues to distinguish itself as a market leader and a relative safe haven amidst considerable industry noise.

Speaker #3: Moreover, OP has good visibility into additional realizations and expects DPI to increase by the time ONEX Partners 6 has its first close, which is expected later this year.

Speaker #3: The OP Opportunities Fund has now invested about 70% of its $1 billion in commitments, with one investment in each of the four verticals, and has attracted an additional $1 billion in co-investment.

Speaker #3: The fund has performed very well to date particularly on the strength of its first two investments that we've held for over 12 months. Fishbach and Farsound.

Speaker #3: Our credit platform continues to distinguish itself as a market leader and a relative safe haven amidst considerable industry noise. Across the platform, we have been underweight software and AI-exposed credits, avoided exposure to aggressive PIC loans that have come to market in the past two years, and, importantly, have almost no direct lending retail exposure.

Bobby LeBlanc: Across the platform, we have been underweight software and AI-exposed credits, avoided exposure to aggressive PIK loans that have come to market in the past 2 years, and importantly, have almost no direct lending retail exposure, which has gotten a lot of attention of late. While the market for new CLO issuances in Q1 was more subdued given recent market volatility, the credit team has been actively resetting existing CLOs and opportunistically placing new offerings. Over the first 4 months of the year, the team raised or extended 8 CLOs, including 3 new issuances. Notably, the team recently priced their 50th US CLO. It was just a little bit over 3 years ago that they issued their 25th US CLO. Proof of the team's ability to steadily scale the platform while maintaining their commitment to investment discipline and performance.

Bobby Le Blanc: Across the platform, we have been underweight software and AI-exposed credits, avoided exposure to aggressive PIK loans that have come to market in the past 2 years, and importantly, have almost no direct lending retail exposure, which has gotten a lot of attention of late. While the market for new CLO issuances in Q1 was more subdued given recent market volatility, the credit team has been actively resetting existing CLOs and opportunistically placing new offerings. Over the first 4 months of the year, the team raised or extended 8 CLOs, including 3 new issuances. Notably, the team recently priced their 50th US CLO. It was just a little bit over 3 years ago that they issued their 25th US CLO. Proof of the team's ability to steadily scale the platform while maintaining their commitment to investment discipline and performance.

Speaker #3: Which has gotten a lot of attention lately. While the market for new CLO issuances in Q1 was more subdued, given recent market volatility, the credit team has been actively resetting existing CLOs and opportunistically placing new offerings.

Speaker #3: Over the first four months of the year, the team raised or extended eight CLOs, including three new issuances. Notably, the team recently priced their 50th US CLO.

Speaker #3: It was just a little bit over three years ago that they issued their 25th US CLO. Proof of the team's ability to steadily scale the platform while maintaining their commitment to investment discipline and performance.

Speaker #3: And they've done so with far greater balance sheet efficiency, with ONEX's 35% share of CLO equity today being half of what it was three years ago.

Bobby LeBlanc: They've done so with far greater balance sheet efficiency, with Onex's 35% share of CLO equity today being half of what it was three years ago. Structured credit, which includes CLOs, OSCO II, and ONCAP, delivered $15 million in fee-related earnings in Q1 and remains positively positioned to grow earnings for the remainder of the year. As I mentioned, with direct lending being a source of concern in the market, it is worth noting that direct lending represents only 1% of Onex's credit AUM. Moreover, our offerings are focused on liquid, structured, and multi-asset credit strategies which benefit from a sophisticated institutional client base and a proven track record of performance across economic cycles. Consequently, we continue to benefit from the quality and strength of our credit platform, which is showing up in the form of both new and repeat investors.

Bobby Le Blanc: They've done so with far greater balance sheet efficiency, with Onex's 35% share of CLO equity today being half of what it was three years ago. Structured credit, which includes CLOs, OSCO II, and ONCAP, delivered $15 million in fee-related earnings in Q1 and remains positively positioned to grow earnings for the remainder of the year. As I mentioned, with direct lending being a source of concern in the market, it is worth noting that direct lending represents only 1% of Onex's credit AUM. Moreover, our offerings are focused on liquid, structured, and multi-asset credit strategies which benefit from a sophisticated institutional client base and a proven track record of performance across economic cycles. Consequently, we continue to benefit from the quality and strength of our credit platform, which is showing up in the form of both new and repeat investors.

Speaker #3: Structured credit, which includes CLOs, OSCO, and ONTAP, delivered $15 million in fee-related earnings in Q1 and remains positively positioned to grow earnings for the remainder of the year.

Speaker #3: As I mentioned, when direct lending is a source of concern in the market, it is worth noting that direct lending represents only 1% of Onex's credit AUM.

Speaker #3: Moreover, our offerings are focused on liquid, structured, and multi-asset credit strategies, which benefit from a sophisticated institutional client base and a proven track record of performance across economic cycles.

Speaker #3: Consequently, we continue to benefit from the quality and strength of our credit platform, which is showing up in the form of both new and repeat investors.

Speaker #3: Finally, let me turn to our liquidity and capital allocation priorities. As I outlined in our last call, we intend to reorient realized proceeds from our legacy investments into one or two direct balance sheet investments that ideally have a good strategic fit with Convex and/or our asset management business.

Bobby LeBlanc: Finally, let me turn to our liquidity and capital allocation priorities. As I outlined in our last call, we intend to reorient realized proceeds from our legacy investments into one or two direct balance sheet investments that ideally have a good strategic fit with Convex and/or our asset management business. These investments will use lower leverage and have attractive risk-adjusted return profiles to drive earnings growth and enterprise value for Onex shareholders. Of course, as we get closer to fully paying down the NAV loan, share buybacks will once again be considered as part of our future capital allocation decisions. I am confident that the combination of earnings growth from Convex, future realizations from our PE portfolio, and the reorientation of that capital, and the growing profitability of our asset management business will drive substantial long-term value creation. I'll now turn the call over to Meg.

Bobby Le Blanc: Finally, let me turn to our liquidity and capital allocation priorities. As I outlined in our last call, we intend to reorient realized proceeds from our legacy investments into one or two direct balance sheet investments that ideally have a good strategic fit with Convex and/or our asset management business. These investments will use lower leverage and have attractive risk-adjusted return profiles to drive earnings growth and enterprise value for Onex shareholders. Of course, as we get closer to fully paying down the NAV loan, share buybacks will once again be considered as part of our future capital allocation decisions. I am confident that the combination of earnings growth from Convex, future realizations from our PE portfolio, and the reorientation of that capital, and the growing profitability of our asset management business will drive substantial long-term value creation. I'll now turn the call over to Megan.

Speaker #3: These investments will use lower leverage and have attractive risk-adjusted return profiles to drive earnings growth and enterprise value for ONEX shareholders. And, of course, as we get closer to fully paying down the NAV loan, share buybacks will once again be considered as part of our future capital allocation decisions.

Speaker #3: I am confident that the combination of earnings growth from Convex future realizations from our PE portfolio and the reorientation of that capital and the growing profitability of our asset management business will drive substantial long-term value creation.

Speaker #3: I'll now turn the call over to Meg.

Speaker #1: Thank you, Bobby. And good morning, everyone. Before I begin my prepared remarks, I'd like to thank my predecessor, Christopher Govan, for his help during my transition to this role.

Megan McClellan: Thank you, Bobby. Good morning, everyone. Before I begin my prepared remarks, I'd like to thank my predecessor, Chris Govan, for his help during my transition to this role. I am grateful for his support and partnership. I'm thrilled to join Onex at such a pivotal time in the company's evolution. Convex is now a meaningful driver of shareholder value. Our private equity team continues to compound shareholder capital and generate realizations. Our credit platform continues to scale while maintaining discipline in challenging markets. I'll focus my remarks today on how these themes show up in our Q1 financials. First, I would like to provide an update on our investing capital.

Speaker #1: I am grateful for his support and partnership. I'm thrilled to join ONEX at such a pivotal time in the company's evolution. Convex is now a meaningful driver of shareholder value, our private equity team continues to compound shareholder capital and generate realizations, and our credit platform continues to scale while maintaining discipline in challenging markets.

Speaker #1: I'll focus my remarks today on how these themes show up in our first quarter financials. First, I would like to provide an update on our investing capital.

Speaker #1: Investing capital, which includes Convex and other balance sheet activity at ONEX, ended the quarter at $9.4 billion. That equates to $122.45 per share, or about $170 Canadian.

Megan McClellan: Investing capital, which includes Convex and other balance sheet activity at Onex, ended the quarter at $9.4 billion, which equates to $122.45 per share, or about CAD 170. The 2% decline in the quarter relative to the 2025 year end was primarily driven by the dilutive impact of issuing shares to AIG in connection with the Convex acquisition. Excluding this, investing capital per share would have increased 1% during the quarter and 8% over the last 12 months. We believe this dilutive impact will be more than offset by the incremental FRE and shareholder value generated through the $2 billion of AIG commitments in our asset management products. We will also manage a portion of Convex investment portfolio, supporting long-term FRE growth.

Speaker #1: The 2% decline in the quarter relative to the 2025 year-end was primarily driven by the diluted impact of issuing shares to AIG in connection with the Convex acquisition.

Speaker #1: Excluding this, investing capital per share would have increased 1% during the quarter and 8% over the last 12 months. We believe this diluted impact will be more than offset by the incremental FRE and shareholder value generated through the $2 billion of AIG commitments in our asset management products.

Speaker #1: And we will also manage a portion of the Convex investment portfolio, supporting long-term FRE growth. Convex accounts for 42% of Onex investing capital and, as Bobby emphasized, a key driver of our investment in Convex was $4 billion at the end of the quarter, or $51.87 per share, equal to C$72.18 per share.

Megan McClellan: Convex accounts for 42% of Onex investing capital and, as Bobby emphasized, was a key driver of our results. The fair value of our investment in Convex was $4 billion at the end of the quarter, or $51.87 per share, equal to CAD 72.18 per share. This value is increased by 4% since our acquisition and is based on a 2x tangible book value multiple. We believe this multiple is well supported by the factors Bobby mentioned, especially Convex's strong return on equity and levers it can utilize to grow earnings. These levers are outlined in our supplemental information package. Our valuation is anchored on price to tangible book value. This avoids overweighting any single period of earnings, which can be affected by timing and severity of loss events.

Speaker #1: This value was increased by 4% since our acquisition and is based on a two-time tangible book value multiple. We believe this multiple is well supported by the factors Bobby mentioned, especially Convex's strong return on equity and levers it can utilize to grow earnings.

Speaker #1: These levers are outlined in our supplemental information package. Our valuation is anchored on price-to-tangible book value. This avoids overweighting any single period of earnings, which can be affected by timing and severity of loss events.

Speaker #1: Instead, it reflects accumulated growth in tangible book value and equity value creation over time. This is consistent with how Onex partners historically value Convex.

Megan McClellan: Instead, it reflects accumulated growth in tangible book value and equity value creation over time. This is consistent with how Onex Partners historically valued Convex. We also reviewed Convex's relative positioning versus property and casualty peers. We believe Convex's return on equity and key financial performance metrics support a modest premium to peer tangible book value multiples. Additionally, we referenced the valuation against Convex earnings. The valuation equates to 8.1x last twelve months adjusted net income and 10x 2025 net income, which are well below Convex peer average. Finally, we compared our Convex valuation to input from an independent third-party valuation source, which provided additional support on the reasonableness of our estimate and our approach. Moving on to investments in treasury.

Speaker #1: We also reviewed Convex's relative positioning versus property and casualty peers. We believe Convex's return on equity and key financial performance metrics support a modest premium to peer tangible book value multiples.

Speaker #1: Additionally, we referenced the valuation against Convex earnings. The valuation equates to 8.1 times last 12 months adjusted net income and 10 times 2025 net income, which are well below Convex's peer average.

Speaker #1: Finally, we compared our Convex valuation to input from an independent third-party valuation source, which provided additional support on the reasonableness of our estimate and our approach.

Speaker #1: Moving on to investments in treasury. This section consists of the non-Convex remainder of our investment holdings and activity, including our private equity and credit investing capital, cash and near cash, and debt.

Megan McClellan: This section consists of the non-Convex remainder of our investment holdings and activity, including our private equity and credit investing capital, cash and near cash, and debt. Investments in treasury ended the quarter with 5.4 billion of investing capital or $70.58 per share equal to CAD 98.22 per share. Private equity generated an 8% return on Onex investing capital over the last 12 months and a 1% return in the quarter. Importantly, the private equity team continues to deliver strong realizations with 317 million of proceeds to Onex from the multi-asset continuation vehicle Bobby mentioned. Approximately half of that was received in the quarter and the balance is expected in Q1 2027.

Speaker #1: Investments in treasury ended the quarter with $5.4 billion of investing capital or $70.58 per share equal to Canadian $98.22 per share. Private equity generated an 8% return on ONEX investing capital over the last 12 months and a 1% return in the quarter.

Speaker #1: Importantly, the private equity team continues to deliver strong realizations. With $317 million of proceeds to Onex from the multi-asset continuation vehicle Bobby mentioned, approximately half of that was received in the quarter and the balance is expected in Q1 2027.

Speaker #1: Subsequent to quarter ends, we announced the sale of Emerald and expect to receive $230 million of proceeds to ONEX in the second half of 2026.

Megan McClellan: Subsequent to quarter end, we announced the sale of Emerald and expect to receive $230 million of proceeds to Onex in H2 2026. Credit generated a 2.1% return on Onex investing capital over the last twelve months, however, declined 3% in the quarter, primarily due to mark-to-market non-realized losses in structured credit, particularly CLO equity. I would like to reinforce here Bobby's point that our direct lending exposure is minimal with Onex investing capital in this strategy only $16 million at quarter end, representing well under 1% of our total investing capital. Turning now to our asset management business. The asset management story this quarter is straightforward. The longer-term fee base continues to grow, particularly for Credit, while reported FRE continues to reflect private equity fees step-downs and market volatility.

Speaker #1: Credit generated a $2.1% return on ONEX investing capital over the last 12 months. However, declined 3% in the quarter primarily due to mark-to-market non-realized losses in structured credit, particularly CLO equity.

Speaker #1: I would like to reinforce here Bobby's point that our direct lending exposure is minimal. With ONEX investing capital in this strategy, only $16 million at quarter end, representing well under 1% of our total investing capital.

Speaker #1: Turning now to our asset management business. The asset management story this quarter is straightforward. The longer-term fee base continues to grow, particularly for credit, while reported FRE continues to reflect private equity fee step-downs and market volatility.

Speaker #1: Fee-generating AUM was $42.8 billion at quarter ends. Credit fee-generating AUM was $30.2 billion, up 1% from the end of last year. This was driven by net new CLO fee-generating AUM raised despite credit market headwinds.

Megan McClellan: Fee-generating AUM was $42.8 billion at quarter end. Credit fee-generating AUM was $30.2 billion, up 1% from the end of last year. This was driven by net new CLO fee-generating AUM raised despite credit market headwinds. Private equity fee-generating AUM was $12.6 billion, down 10% due to OP Five's realization of Convex. Excluding the impact of the Convex realization, private equity fee-generating AUM would have increased 3%, driven largely by the Onex Partners multi-asset continuation fund. Run rate management fees for asset management were $210 million. FRE for our asset management business was $5 million in the quarter, and overall FRE was a loss of $3 million. The balance of higher fee-related earnings will not be linear.

Speaker #1: Private equity fee-generating AUM was $12.6 billion, down 10% due to OP5's realization of Convex. Excluding the impact of the Convex realization, private equity fee-generating AUM would have increased 3%, driven largely by the ONEX Partners' multi-asset continuation fund.

Speaker #1: Run-rate management fees for asset management were $210 million. FRE for our asset management business was $5 million in the quarter, and overall FRE was a loss of $3 million.

Speaker #1: The path to higher fee-related earnings will not be linear. Several revenue drivers, including an active fundraising pipeline, are expected to have a greater impact in the second half of this year.

Megan McClellan: Several revenue drivers, including an active fundraising pipeline, are expected to have a greater impact in H2 of this year. Due to this, FRE will be backloaded and annualizing Q1 is not representative. Onex continues to prioritize building a more durable recurring management fee base, maintaining expense discipline, and improving the earnings profile of our asset management business over time to generate value for our shareholders. Finally, on liquidity, we ended the quarter with $398 million of cash and near cash. We drew $700 million on the NAV loan to support the Convex acquisition. In April, we repaid $200 million, reducing that balance to $500 million. Following this repayment, we retained strong liquidity with approximately $200 million of cash and near cash and $600 million available to be drawn on our revolving credit facility.

Speaker #1: Due to this, FRE will be backloaded, and annualized in Q1 is not representative. Onex continues to prioritize building a more durable, recurring management fee base, maintaining expense discipline, and improving the earnings profile of our asset management business over time to generate value for our shareholders.

Speaker #1: Finally, on liquidity, we ended the quarter with $398 million of cash and near cash. We drew $700 million on the NAV loan to support the Convex acquisition.

Speaker #1: In April, we repaid $200 million, reducing that balance to $500 million. Following this repayment, we retained strong liquidity with approximately $200 million of cash and near cash and $600 million available to be drawn on our revolving credit facility.

Speaker #1: Continued private equity realizations, including the sale of Emerald, will support further repayment, reduce interest expense, and provide additional capital allocation flexibility. We also have significant flexibility with our private equity investing capital, which totaled $4.6 billion at quarter end.

Megan McClellan: Continued private equity realizations, including the sale of Emerald, will support further repayment, reduce interest expense, and provide additional capital allocation flexibility. We also have significant flexibility with our private equity investing capital, which totaled $4.6 billion at quarter-end. We only have $255 million of unfunded commitments to funds still in their active commitment period. Overall, we are comfortable that our liquidity position provides ample capacity to fund our capital commitment needs. In closing, Q1 was a positive quarter that reflects our strategy to reorient our balance sheet. Convex is now reported separately, reflecting its significance as a core investment for Onex shareholders. Investing in treasury continues to show the value and flexibility for the rest of our balance sheet. Asset management should deliver growing run rate management fees as our investment teams execute against their fundraising targets. Our liquidity position remains solid and flexible.

Speaker #1: We only have $255 million of unfunded commitments to funds still in their active commitment period. Overall, we're comfortable that our liquidity position provides ample capacity to fund our capital commitment needs.

Speaker #1: In closing, Q1 was a positive quarter that reflects our strategy to reorient our balance sheet. Convex is now reported separately, reflecting its significance as a core investment for Onex shareholders.

Speaker #1: Investing in treasury continues to show the value and flexibility for the rest of our balance sheet. Asset management should deliver growing run rate management fees as our investment teams execute against their fundraising targets.

Speaker #1: And our liquidity position remains solid and flexible. I'm excited to be part of Team ONEX, and I'm committed to providing clear, disciplined financial communication as we execute ONEX priorities and create value for our shareholders.

Megan McClellan: I'm excited to be part of team Onex. I'm committed to providing clear, disciplined financial communication as we execute Onex priorities and create value for our shareholders. Thank you. I look forward to spending time with each of you in the future. We will now open the line for questions.

Speaker #1: Thank you, and I look forward to spending time with each of you in the future. We will now open the line for questions.

Speaker #2: Certainly. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. And our first question comes to the line of Scott Fletcher from CIBC.

Operator: Certainly. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. Our first question comes from the line of Scott Fletcher from CIBC. Your question please.

Speaker #2: Your question, please.

Speaker #3: Hi. Good morning, everyone. I wanted to ask a couple of questions on Convex, maybe for Paul in particular. First, just looking at the current accident year loss ratio, it did tick up quarter over quarter and year on year.

Scott Fletcher: Hi, good morning, everyone. wanted to ask a couple questions on Convex, maybe for Paul in particular. just first, I want to just looking at the current accident year loss ratio, it did tick up quarter-over-quarter and year-on-year. Sounds like the Middle East conflict might have had some element at play there. wonder if you could just dig into that and how we should be thinking of that for the rest of the year.

Speaker #3: Sounds like the Middle East conflict might have had some element at play there. So, I wonder if you could just dig into that and how we should be thinking of that for the rest of the year.

Bobby LeBlanc: Paul, go ahead.

Bobby Le Blanc: Paul, go ahead.

Paul Brand: Yeah, no, absolutely. Yeah, you're quite right. As we sort of noted in the materials, there's about a $23 million add on for the Iran war. That just, yeah, that moved the, you know, ex major event loss ratio up a little bit.

Speaker #3: Yeah, no, absolutely. Yeah, so yeah, you're quite right. As we sort of noted in the materials, there's about a $23 million add-on for the ramble.

Speaker #3: And that just—yeah—and that moved the ex-major event loss ratio up a little bit.

Speaker #2: Okay. Thanks. Nothing sounds like there's not much else to call out there. And then on the net premiums retention, that number sort of came down, again, quarter over quarter, year on year.

Scott Fletcher: Okay, thanks. Nothing. Sounds like there's not much else to call out there. Then on the net premiums retention, that number sort of came down quarter-over-quarter, year-on-year, drove net premiums into sort of a, I think it was 9% down year-on-year. Just wondering what you're seeing in the market that's sort of shifting the posture on premium retention and how we, again, we should think about the approach there for the rest of 2026.

Speaker #2: Drove net premiums into sort of a—I think it was 9% down year on year. Just wondering what you're seeing in the market that's sort of shifting the posture on premium retention, and how we, again, should think about the approach there for the rest of 2026.

Speaker #3: Yeah. So I mean, Convex buys a reasonable amount of reinsurance and as we and we buy that sort of through the market. As we see prices soften we might expect to see sort of reinsurance purchasing going up a little bit.

Paul Brand: Yeah. I mean, Convex buys a reasonable amount of reinsurance, and we buy that sort of through the market. As we see prices soften, we might expect to see sort of reinsurance purchasing going up a little bit. And we also have sort of account credit share, which was slightly underplaced in Q1 of 2025. That would be, you know, affecting that comparative state.

Speaker #3: And we also have whole account credit share, which was slightly underplaced in Q1 of 2025. And so that would be affecting that comparative state.

Speaker #2: Okay, thanks for that. And then I'll just finish on one more on the expense side. It looks like—I'm just trying to get a sense of what the commission costs or the policy acquisition costs should look like. I think the numbers have moved around.

Scott Fletcher: Okay, thanks for that. Then I'll just finish on one more on the expense side. It looks like I'm just trying to get a sense of what the commission costs or the policy acquisition costs should look like. I think, you know, there's been the numbers have moved around. It's not a huge data set. Just wondering, you know, 25% in the quarter or 24.7%. Is that, you know, a good number to look at going forward? I'll pass the line after that. Thanks.

Speaker #2: It's not a huge data set. But just wondering, 25% in the quarter or 24.7, is that a good number to look at going forward?

Speaker #2: And I'll pass the line after that. Thanks.

Speaker #3: Yeah, no, I will come back down much closer to what you're seeing in the LTM—sort of $22-ish would be my prediction on that.

Paul Brand: We'll come back down much closer to what you're seeing in the LTM, sort of 22-ish would be my prediction on that. Just some noise in Q1 in terms of how different parts of the basis of the outwards premium and the inwards premium are driving that effect.

Speaker #3: There's just some noise in Q1 in terms of how different parts of both the sort of the outward premium and the inwards premium are driving that effect.

Speaker #2: Thank you. And our next question comes from the line of Graham Riding from TD Securities. Your question, please.

Operator: Thank you. Our next question comes from the line of Graham Ryding from TD Securities. Your question please.

Speaker #3: Hi, good morning. Paul, maybe I'll stick with you. Welcome to the call. Just maybe the outlook for gross written premium in 2026—just given your focus on specialty, and there is some pricing pressure in the markets overall. Maybe your outlook on what your expectations are for the year?

Graham Ryding: Hi, good morning. Paul, maybe I'll stick with you. Welcome to the call. Just maybe the outlook for gross written premium in 2026, just given your focus on specialty and, you know, there is some pricing pressure in the markets overall. Maybe your outlook on what your expectations are for the year.

Speaker #4: Yeah, no, absolutely. Yeah. So, as we think about roads, we're down about 4% year on year, and we still believe that that leaves actually some reasonable margin in the business, particularly as we can alter the portfolio around between the lines of business that are showing against the lines of business that are showing greatest rate cuts.

Paul Brand: No, absolutely. Yes. As we think about rates, we're down about 4% year-on-year. We still believe that that leaves actually some reasonable margin in the business, particularly as we can alter the portfolio around between the lines of business that are showing, you know, against the lines of business that are showing greatest rate cuts and towards the lines of business that are showing, yeah, the best sort of rating environments. As I sort of think about, you know, an outlook for the year, as we mentioned in comments, I think that 5% is a bit understated because of the reinstatement premiums that we received in Q1 2025. Normalizing for that, yeah, we're about 8%.

Speaker #4: And towards the lines of business that are showing the best sort of rating environments. And I sort of think about an outlook for the year.

Speaker #4: As we mentioned, I think the 5% is a bit understated because of the reinstatement premiums that we received in Q1 2025. Normalizing to that, we're about 8%.

Paul Brand: I would expect us to get maybe a bit higher than that as we get towards the end of the year and more of the insurance versus reinsurance business, it starts to balance in. With reinsurance being, having a very big Q1, and growing and predicted to grow at a slightly lower rate than we're seeing the insurance business in 2026. Again, still, you know, a few quarters to go before we'll be able to prove that.

Speaker #4: I would expect us to get maybe a bit higher than that as we get towards the end of the year. And more of the insurance versus reinsurance business starts to balance in, with reinsurance having a very big Q1 and growing, and predicted to grow at a slightly lower rate than we're seeing the insurance business in '26.

Speaker #4: But still a few quarters to go before we'll be able to print that.

Speaker #2: Okay, understood. And the business delivered at 20% ROE last year—I think slightly higher than that on an LTM basis. Do you feel like this is a business that should be able to sustain that 20% plus ROE?

Graham Ryding: Okay. Understood. The business delivered a 20% ROE last year. I think slightly higher than that on an LTM basis. Do you feel like this is a business that should be able to sustain that 20% plus ROE? Is that a reasonable target?

Speaker #2: Is that a reasonable target?

Speaker #4: Yeah. I mean, I think you kind of have to see what happens to losses. You have to see what's obviously going to go on in the investment environment in an uncertain world.

Paul Brand: Yeah. I mean, I think you kind of have to see what happens to losses. You have to see what's obviously going to go on in the investment environment in an uncertain world. Yeah, I still, as I said, I still think there's plenty of margin in the business. Yeah, and absolutely, you know, we hope to post another, you know, decent ROE in the entirety of 2026. I think as Bobby's comments mentioned, yeah, if you just look at the LTM and just sort of getting up to 24, that is slightly flattered by having probably slightly fewer major events during that particular period in Q1 2025 to Q1 2026 than we might expect in a normal period.

Speaker #4: But yeah, I still, as I said, I still think there's plenty of margin in the business. And yeah, absolutely, we'd hope to post another decent ROE in the entirety of 2026.

Speaker #4: I mean, I think, as Bobby's comments mentioned, if you just look at the LTM and you're sort of getting up to 24, that is slightly flattered by having probably slightly fewer major events during that particular period.

Speaker #4: Q1 2025 to Q1 2026, then we might expect a normal period. So, the underlying sort of drivers in the business are looking good.

Paul Brand: The underlying, sort of, drivers in the business are looking good. As I said, you know, we're seeing good gross premium growth. Our expenses are pretty much in line. Yeah. So yeah. I don't have to get too optimistic to hope to see something like those types of ROEs that you're mentioning.

Speaker #4: As I said, we're seeing good gross premium growth. Our expenses are pretty much in line, yeah. So, yeah. So I don't have to get too optimistic to hope to see something like those types of ROEs that you're mentioning.

Speaker #2: And it's important to remember where Convex is positioned in its evolution. We can pretty much double the size of the current Convex business without adding much to our expense line.

Bobby LeBlanc: It's important to remember, like, where Convex is positioned in its evolution. If we can pretty much double the size of the current Convex business without adding much to our expense line. There'll be inflation and other things, but nothing meaningful. We have a chassis that could grow a lot without incremental cost. Second, our asset leverage is well below industry norms, so we'll be able to grow into that, and that incremental float over time will create more investment income. You know, as we've talked about, we'll. It won't be a lot, right? We'll manage some of our investment portfolio at Convex in alternative assets, which should give a bit of a pickup in yield then.

Bobby Le Blanc: It's important to remember, like, where Convex is positioned in its evolution. If we can pretty much double the size of the current Convex business without adding much to our expense line. There'll be inflation and other things, but nothing meaningful. We have a chassis that could grow a lot without incremental cost. Second, our asset leverage is well below industry norms, so we'll be able to grow into that, and that incremental float over time will create more investment income. You know, as we've talked about, we'll. It won't be a lot, right? We'll manage some of our investment portfolio at Convex in alternative assets, which should give a bit of a pickup in yield then.

Speaker #2: There'll be inflation and other things, but nothing meaningful. So we have a chassis that could grow a lot without incremental cost. Second, our asset leverage is well below industry norms.

Speaker #2: So we'll be able to grow into that. And that incremental float over time will create more investment income. As we've talked about, it won't be a lot, right?

Speaker #2: But we'll manage some of our investment portfolio at Convex and alternative assets. We should give a bit of a pickup and yield then. And importantly, just given the reaction to Convex over last year in the marketplace, we're continuing to gain share given the customer service and data analytics that we're providing to our clients.

Bobby LeBlanc: Importantly, just given the reaction to Convex over the last year in the marketplace, you know, we're continuing to gain share, given the customer service and data analytics that we're providing to our clients.

Bobby Le Blanc: Importantly, just given the reaction to Convex over the last year in the marketplace, you know, we're continuing to gain share, given the customer service and data analytics that we're providing to our clients.

Speaker #3: Okay, helpful. Megan, maybe I could jump to you just on the asset management FRE. You put a $35 million target for the end of 2026.

Graham Ryding: Okay. Helpful. Megan, maybe I could jump to you just on the asset management FRE. You put a $35 million target for the end of 2026, so maybe I should interpret that as a run rate in Q1 2027. Previously, you know, you guys have talked about hitting a $17 million run rate by Q2 of this year. Does that still hold? Just bigger picture, what are the key pieces here to sort of get FRE moving into that positive territory that you're targeting?

Speaker #3: So maybe I should interpret that as sort of a run rate in Q1 '27. And then previously you guys have talked about hitting a $17 million run rate by Q2 of this year.

Speaker #3: Does that still hold? And then, just bigger picture, what are the key pieces here to sort of get FRE moving into that positive territory that you're targeting?

Speaker #5: Yeah, so it's a very similar story, and thanks for the question. As to what Chris talked about in the fourth quarter earnings call, we do expect to hit the year-end run rate.

Megan McClellan: It's a, it's a very similar story, and thanks for the question. As to what Chris talked about in the Q4 earnings call. We do expect to hit the year-end run rate. Again, it's back half loaded. We've got a lot of fundraising coming. You'll hear us talk about OP Six quite a bit. That is a very big component of hitting that run rate, that along with some credit products and some additional CLO issuance. You're going to have a bumpy path getting there. Certainly Q1 with the credit markets was somewhat bumpy. Not gonna be a linear path. It's a little too early to confirm run rate for the full 2026 year.

Speaker #5: But again, it's back half-loaded. We've got a lot of fundraising coming. You'll hear us talk about OP6 quite a bit. That is a very big component of hitting that run rate.

Speaker #5: That, along with some credit products and some additional CLO issuance, so you're going to have a bumpy path getting there. Certainly, Q1 with the credit markets was somewhat bumpy.

Speaker #5: Not going to be a linear path. And so it's a little too early to confirm run rate for the full 2026 year.

Speaker #3: Okay. And on the PE side, expenses continue to sort of be elevated relative to management fees. Are you looking at the expense and the efficiency side, or is this more about fundraising and driving the top line higher?

Graham Ryding: Okay. On the PE side, you know, expenses seem to continue to sort of be elevated relative to management fees. Are you looking at the expense and the efficiency side, or is this more about fundraising and driving the top line higher?

Speaker #2: No, it's definitely the latter. As we continue to sell assets out of OP5—which, of course, generates DPI, which is very important to our LPs—the revenue goes away on those assets when you sell them.

Bobby LeBlanc: No. It's definitely the latter. As we continue to sell assets out of OP Five, which of course generates DPI, which is very important to our LPs. The revenue goes away on those assets when you sell them. That the expense line ought to be right-sized, if you will. And that team's done a very good job of right-sizing its expense structure relative to our fundraising expectations. When we begin to have closes at OP Six, that'll rectify itself.

Bobby Le Blanc: No. It's definitely the latter. As we continue to sell assets out of OP Five, which of course generates DPI, which is very important to our LPs. The revenue goes away on those assets when you sell them. That the expense line ought to be right-sized, if you will. And that team's done a very good job of right-sizing its expense structure relative to our fundraising expectations. When we begin to have closes at OP Six, that'll rectify itself.

Speaker #2: So the expense line ought to be right-sized, if you will. And that seems to do a very good job of right-sizing its expense structure relative to our fundraising expectations.

Speaker #2: But when we begin to have closes at OP6, that'll rectify itself.

Speaker #3: Okay, understood. And then, sorry, I missed that part. Where are you with the fundraising, and what's the expected sort of—or what's the initial feedback and uptake, then?

Graham Ryding: Okay. Understood. Then, sir, I missed that part. Where are you with the fundraising and what's the expected or what's the initial feedback and uptake then for OP Six?

Speaker #3: For OP6?

Speaker #2: Yeah, yeah. So we said we expect to have our first close later this year. Momentum seems good. But the DPI stat that we've delivered for OP5 shouldn't be overlooked.

Bobby LeBlanc: We said we expect to have our first close later this year. Momentum seems good. The DPI stat that we've delivered for OP Five shouldn't be overlooked. We're at a 1.0 pro forma for an Emerald. We think we'll be higher than that when we get to our first close. The smaller the gap you have between realized MOIC versus unrealized MOIC is the more confident LPs are in your ability to deliver the results that you promised. The vintage we're put up against for that 1.0 MOIC, we're probably top decile relative to the similar vintages, and that's only gonna get better given what we have in the pipeline.

Bobby Le Blanc: We said we expect to have our first close later this year. Momentum seems good. The DPI stat that we've delivered for OP Five shouldn't be overlooked. We're at a 1.0 pro forma for an Emerald. We think we'll be higher than that when we get to our first close. The smaller the gap you have between realized MOIC versus unrealized MOIC is the more confident LPs are in your ability to deliver the results that you promised. The vintage we're put up against for that 1.0 MOIC, we're probably top decile relative to the similar vintages, and that's only gonna get better given what we have in the pipeline.

Speaker #2: We're at a 1.0 pro forma for an Emerald. We think we'll be higher than that when we get to our first close. And the smaller the gap you have between realized MOIC versus unrealized MOIC, the more confident LPs are in your ability to deliver the results that you promised.

Speaker #2: The vintage we're put up against for that 1.0 MOIC—we're probably top decile relative to the similar vintages. And that's only going to get better given what we have in the pipeline.

Speaker #2: So, that should give us pretty good momentum coming into the first close on an absolute and relative basis.

Bobby LeBlanc: Pretty good momentum, coming into the first close on an absolute and relative basis.

Bobby Le Blanc: Pretty good momentum, coming into the first close on an absolute and relative basis.

Speaker #3: Okay. Understood. That's it for me. Thank you.

Graham Ryding: Okay. Understood. That's it for me. Thank you.

Speaker #2: Thank you.

Bobby LeBlanc: Thank you.

Bobby Le Blanc: Thank you.

Speaker #1: Thank you, and our next question comes from the line of Bart Jarski from RBC Capital Markets. Your question, please.

Operator: Thank you. Our next question comes from the line of Geoff BMO from RBC Capital Markets. Your question, please.

Speaker #4: Great, thanks, and good morning, everyone. Maybe sticking with the asset management business, I saw the net IRR disclosure was dropped. Maybe give us a rationale why and an update on net IRR performance on the flagship PE funds would be great.

Geoff BMO: Great. Thanks, and good morning, everyone. Maybe sticking with the asset management business. I saw the net IRR disclosure was dropped. Maybe give us a rationale why and an update on net IRR performance on the flagship PE funds would be great. Thanks.

Geoff Barsky: Great. Thanks, and good morning, everyone. Maybe sticking with the asset management business. I saw the net IRR disclosure was dropped. Maybe give us a rationale why and an update on net IRR performance on the flagship PE funds would be great. Thanks.

Speaker #4: Thanks.

Speaker #2: Yep. Yeah. So, we’ve had a couple of instances where the press has gone in and used that stat that doesn’t have the benefit or similarity to the way the rest of the industry calculates net IRR.

Bobby LeBlanc: Yep. Yeah. We've had a couple of instances where the press has gone in and used that stat that doesn't have the benefit or similarity to the way the rest of the industry calculates net IRR. We have incremental disclosure, so you'll be able to see, you know, where we sit relative to carry and give you good comfort that the accrued carry is good. People were scraping data off that, off that exhibit and just implying quartiles and other things that simply weren't accurate given the way we communicate with our LPs. We decided to begin disclose in a different way.

Bobby Le Blanc: Yep. Yeah. We've had a couple of instances where the press has gone in and used that stat that doesn't have the benefit or similarity to the way the rest of the industry calculates net IRR. We have incremental disclosure, so you'll be able to see, you know, where we sit relative to carry and give you good comfort that the accrued carry is good. People were scraping data off that, off that exhibit and just implying quartiles and other things that simply weren't accurate given the way we communicate with our LPs. We decided to begin disclose in a different way.

Speaker #2: So we have incremental disclosures, so you'll be able to see where we sit relative to carry and give you good comfort that the accrued carry is good.

Speaker #2: But people were scraping data off that exhibit, and just implying quartiles and other things that simply weren't accurate, given the way we communicate with our LPs.

Speaker #2: So it was actually putting the OP team at a bit of an unfair competitive disadvantage. So we decided to begin disclosure in a different way.

Speaker #2: But we're not—you'll be able to get to the same place of what you're looking for, which is most likely, are we going to collect that carry that we've accrued?

Bobby LeBlanc: We're not. You know, you'll be able to get to the same place of what you're looking for, which is most likely, are we gonna collect that, the carry that we've accrued? You'll see in the disclosure, we feel very good about that. We wanted to stop these articles from coming out without the proper explanation that we normally give the LPs.

Bobby Le Blanc: We're not. You know, you'll be able to get to the same place of what you're looking for, which is most likely, are we gonna collect that, the carry that we've accrued? You'll see in the disclosure, we feel very good about that. We wanted to stop these articles from coming out without the proper explanation that we normally give the LPs.

Speaker #2: And you'll see in the disclosure, we feel very good about that. But we didn't—we wanted to stop these articles from coming out without the proper explanation that we normally give to LPs.

Speaker #4: Okay, got it. Thanks, Bobby. And maybe, Megan, welcome to the call. Just wanted to ask around how we should think about when the buyback could resume.

Geoff BMO: Okay. Got it. Thanks, Bobby. Maybe Megan, welcome to the call. Just wanted to ask around how we should think about when the buyback could resume. I think you had mentioned you wanna pay down the NAV loan. What should we be expecting on that front?

Geoff Barsky: Okay. Got it. Thanks, Bobby. Maybe Megan, welcome to the call. Just wanted to ask around how we should think about when the buyback could resume. I think you had mentioned you wanna pay down the NAV loan. What should we be expecting on that front?

Speaker #4: I think you had mentioned you wanted paid out in the NAV loan. So, what should we be expecting on that front?

Speaker #2: Yeah, I’ll take that one, thanks. So I’m trying to actually make sure that Megan and I and the rest of the team do what we promised to do.

Bobby LeBlanc: Yeah. I'll take that one. Thanks. I'm trying to actually make sure that Meg and I and the rest of the team do what we promised to do. You know, we promised to get that NAV loan paid down as quickly as possible. I think we're doing quite a good job. If you pro forma for Emerald, you know, you'll have a bunch more of it paid down. I said it in my remarks, where happily at these prices, those share buybacks are gonna become part of the capital allocation decision again. That's obviously coupled with how to reorient the rest of the balance sheet.

Bobby Le Blanc: Yeah. I'll take that one. Thanks. I'm trying to actually make sure that Meg and I and the rest of the team do what we promised to do. You know, we promised to get that NAV loan paid down as quickly as possible. I think we're doing quite a good job. If you pro forma for Emerald, you know, you'll have a bunch more of it paid down. I said it in my remarks, where happily at these prices, those share buybacks are gonna become part of the capital allocation decision again. That's obviously coupled with how to reorient the rest of the balance sheet.

Speaker #2: And we promised to get that NAV loan paid down as quickly as possible. I think we're doing quite a good job. A few pro forma for Emerald.

Speaker #2: We'll have a bunch more of it paid down. And I'm already getting very close to the point where, and I said it in my remarks, where happily, at these prices, those share buybacks are going to become part of the capital allocation decision again.

Speaker #2: And that obviously, coupled with how to reorient the rest of the balance sheet. But we're getting much closer, much quicker, about having that back in the conversation than I would have guessed even three months ago.

Bobby LeBlanc: We're getting much closer, much quicker about having that back in the conversation than I would have guessed even 3 months ago.

Bobby Le Blanc: We're getting much closer, much quicker about having that back in the conversation than I would have guessed even 3 months ago.

Speaker #4: Okay, got it. Thanks for that. And then, maybe last one just on Convex. So Paul, thanks for joining the call as well. The GWP has been decelerating from a growth perspective.

Geoff BMO: Okay, got it. Thanks for that. Then maybe last one, just on Convex. Paul, thanks for joining the call as well. Like the GWP has been decelerating from a growth perspective since 2022. I recognize those are hard markets, and we're kind of running at, call it, high single digits now, it sounds like from your commentary. Maybe what comfort can you give investors that, you know, in a decelerating market where you're growing premiums looks like well above industry, that you're maintaining your discipline on the underwriting and pricing side to generate that growth?

Geoff Barsky: Okay, got it. Thanks for that. Then maybe last one, just on Convex. Paul, thanks for joining the call as well. Like the GWP has been decelerating from a growth perspective since 2022. I recognize those are hard markets, and we're kind of running at, call it, high single digits now, it sounds like from your commentary. Maybe what comfort can you give investors that, you know, in a decelerating market where you're growing premiums looks like well above industry, that you're maintaining your discipline on the underwriting and pricing side to generate that growth?

Speaker #4: Since '22, I recognize those are hard markets. And we're kind of running at, call it, high single digits now. It sounds like from your commentary.

Speaker #4: So maybe, what comfort can you give investors that, in a decelerating market where you're growing premiums—looks like well above industry—that you're maintaining your discipline on the underwriting and pricing side to generate that growth?

Speaker #5: Yeah, no, sure. I think it's an entirely fair question. Yeah, I mean, I've probably spent more of my life in soft markets than hard markets.

Paul Brand: Sure. I think this is an entirely fair question. I mean, I've probably spent more of my life in soft markets than hard markets. We've absolutely focused on a really strong analytical backbone that gives us good insight as to where both gross margin is in the business and also margin that we see after purchasing outwards through insurances. As I said, we're seeing a 4% rate reduction so far this year. As you think about how rates went up in the period of time from really from Convex getting going in 2019 all the way through to sort of midway through 2025, you know, that's not a particularly rapid decline.

Speaker #5: And we've absolutely focused on a really strong analytical backbone that gives us good insight as to where both gross margin is in the business, and also the margin that we see after purchasing outflows through insurances.

Speaker #5: And as I said, we're seeing a 4% rate reduction so far this year. And as you think about how rates went up in the period of time from, really, from Convex getting going in 2019 all the way through to sort of midway through 2025, that's not a particularly rapid decline.

Speaker #5: And then, against the backdrop of that, as I said, we also buy reinsurance. The sort of improvement in terms that we're seeing there is, in lots of ways, mitigating and offsetting the marginal reductions in prices that we're seeing on the ins business.

Paul Brand: Against the backdrop of that, as I said, we also buy reinsurance. The sort of improvement in terms that we're seeing there is in lots of ways mitigating and offsetting the marginal reductions in prices that we're seeing sort of on the ins business. I mean, I'm pleased that we're able to grow to, you know, high single-digit rate even in this, you know, slightly more competitive marketplace. I think that's a signal to the work that Convex has done on its relationships with its brokers and its clients since it's come to existence. No underwriter in Convex, though, has a top-line goal or target.

Speaker #5: Yeah. We don't—I mean, I'm pleased that we're able to grow at a high single-digit rate even in this slightly more competitive marketplace.

Speaker #5: And I think that's a signal to the work that Convex has done on its relationships with its brokers and its clients since it's come into existence.

Speaker #5: No underwriter in Convex, though, has a top-line goal or target—unless, if you don't see margin in the business, then it's absolutely fine to step backwards from it.

Paul Brand: You know, unless if you don't see margin in the business, then it's absolutely fine to step backwards from it. You look, you know, as you said, you know, we were growing at faster rates in the, you know, super hard phases of the marketplace. That's partly driven by, you know, market share and our ability to open new lines of business up. I'm not surprised to see us more normalizing in the market that we're seeing today. I still sense there's, you know, sort of plenty of room for Convex to grow. We will always, you know, put margin and bottom line ahead of DOP.

Speaker #5: And, as you said, we were growing at faster rates in the super-hard phases of the marketplace. And that's partly driven by market share and our ability to open new lines of business up.

Speaker #5: I'm not surprised to see us more normalizing in the market that we're seeing today. But there's—yeah. But I still sense that there's sort of plenty of room for Convex to grow.

Speaker #5: But we will always put margin and bottom line ahead of top. And that's just been a mantra that I've had throughout my career.

Paul Brand: That's just been, you know, a mantra that I've had, you know, pretty much all the way through my career.

Speaker #2: Great. Very helpful. Thanks for the call, Paul. Thanks for taking my questions.

Geoff BMO: Great. Very helpful. Thanks for the call, Paul. Thanks for taking my questions.

Geoff Barsky: Great. Very helpful. Thanks for the call, Paul. Thanks for taking my questions.

Speaker #1: Thank you.

Operator: Thank you.

Speaker #5: My pleasure.

Speaker #1: This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Bobby LeBlanc for any further remarks.

Geoff BMO: My pleasure.

Geoff Barsky: My pleasure.

Operator: This does conclude the question and answer session of today's program. I'd like to hand the program back to Bobby LeBlanc for any further remarks.

Operator: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Bobby LeBlanc for any further remarks.

Speaker #2: Thanks, everyone, for being here with us today. And again, thanks, Paul and Meg, for joining your first earnings call. Great to have you both here.

Bobby LeBlanc: Thanks everyone for being here with us today. Again, thanks Paul and Meg for joining your first earnings call. Great to have you both here. I hope everybody has a great weekend. Again, if you have any questions at all, feel free to call Jill, Zev, or Meg or I, and we'll try to get back to you quickly. Have a great weekend. Bye-bye.

Bobby Le Blanc: Thanks everyone for being here with us today. Again, thanks Paul and Meg for joining your first earnings call. Great to have you both here. I hope everybody has a great weekend. Again, if you have any questions at all, feel free to call Jill, Zev, or Meg or I, and we'll try to get back to you quickly. Have a great weekend. Bye-bye.

Speaker #2: I hope everybody has a great weekend. And again, if you have any questions at all, feel free to call Jill, Jever, Meg, or me.

Speaker #2: And we'll try to get back to you quickly. Have a great weekend. Bye-bye.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.