RenaissanceRe - Earnings Call - Q3 2025

Executive Summary

• RNR delivered a strong Q3 with operating EPS of $15.62 and combined ratio of 68.4%, driven by light catastrophe activity, significant prior-year reserve releases in Property, and solid investment income; book value per share rose 9% q/q and tangible BVPS+dividends rose 10.3% q/q.
• Results materially beat Street: operating EPS $15.62 vs $9.50 consensus and total revenues $3.20B vs $1.93B consensus, as underwriting and investment performance exceeded expectations (see Estimates Context).
• Property segment posted a 15.5% combined ratio (adjusted 14.2%) on low current-year losses and $383.7M of favorable prior-year development; Casualty & Specialty ran at 101.4% (adjusted 99.3%) on higher attritional loss trends.
• Capital return remains a catalyst: $205M of buybacks in Q3 plus $100M post-quarter; Board renewed the repurchase authorization to $750M and declared a $0.40 dividend on Nov 5, 2025.
• Management expects 1/1/26 property-cat rates to decline ~10% but remain above rate adequacy; Q4 guide points to ~$360M other property NPE, ~$1.5B casualty & specialty NPE, adjusted CR in high-90s, and ~$50M mgmt fees/$30M performance fees.

What Went Well and What Went Wrong

What Went Well

• Property outperformance: 15.5% combined ratio (adjusted 14.2%) as current-year cat losses were light and prior-year development was strongly favorable ($236.8M in catastrophe, $146.8M in other property).
• Fee and investment engines: Fee income rose 24% to $101.8M; total investment result was $750.2M with $438.4M net investment income and $311.9M MTM gains, aided by equity/gold futures and falling yields on fixed income.
• Strategic execution and confidence: “We delivered exceptional results… benefited from low catastrophe activity and continued outperformance in our three drivers of profit,” CEO Kevin O’Donnell noted, emphasizing sustainable earnings power and long-term value creation.

What Went Wrong

• Casualty & Specialty pressure: Combined ratio of 101.4% (adjusted 99.3%) on higher attritional losses; purchase accounting added ~50 bps of adverse prior-year impact.
• YoY revenue headwind from lower MTM gains: Total revenues fell to $3.20B from $3.97B in Q3’24 largely as last year included $943.7M investment gains vs $311.9M this quarter.
• Expense ratio optics in Property: Underwriting expense ratio rose 2.6 pts (acquisition +1.2 pts; operating +1.4 pts), reflecting lower net premiums earned from lower reinstatement premiums.

Transcript

Speaker 3

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 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 1

Thank you, Stephanie. Good morning and welcome to RenaissanceRe Holdings Ltd.'s third quarter earnings conference call. Joining me today to discuss our results are Kevin O’Donnell, President and Chief Executive Officer, Bob Qutub, Executive Vice President and Chief Financial Officer, and David Marra, Executive Vice President and Chief Underwriting Officer. To begin, some housekeeping matters. Our discussion today will include forward-looking statements, including new and updated expectations for our business and results of operations. It's important to note that actual results may differ materially from the expectations shared today.

Speaker 0

Additional information regarding the factors shaping these.

Speaker 1

Outcomes can be found in our SEC filings and in our earnings release. During today's call, we will also present non-GAAP financial measures. Reconciliations to GAAP metrics and other information concerning non-GAAP measures may be found in our earnings release and financial supplement, which are available on our website at renre.com. Now I'd like to turn the call over to Kevin. Kevin.

Speaker 2

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 of 28%. In aggregate, year to date, we have earned almost $1.3 billion in operating income and delivered about a 17% 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.

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, with 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.

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 a 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.

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 rates 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.

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 hold. In the current environment, the best move is to focus on margin.

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 improve. 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. 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 construct an attractive portfolio. 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. We have grown assets, grown capital, deployed significantly into a 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, and 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 0

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%. Year to date, annualized return on equity is 25% and 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 earning profile has improved significantly over the last three years.

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.

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.

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 24. 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.

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.

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, non-cash 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. Specifically in property, we grew property catastrophe at the 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 Melissa. 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.

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, and 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, 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.

The remaining $89 million of these fees are incremental to our earnings as they flow through non-controlling 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. 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. 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. 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. With that, I'll now turn the call over to David.

Speaker 1

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.

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.

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%.

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 1, 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.

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 or reinsurers to sell new bottom layers below expected 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 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 casualty 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.

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.

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, 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. 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. I'll turn it back to Kevin.

Speaker 2

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 net 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. Thanks. With that, I'll turn it over for questions.

Speaker 3

Thank you. At this time, if you'd like to ask a question, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, please press star 2. 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, right? 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, fee income, I think, would have been higher than normal, just because it's been a pretty low CAT year.

For that 15 point contribution from those two pieces, what is, I guess, normal expectations, like what would you be expecting, you know, from fee income and net investment income on your return going for 2026?

Speaker 0

Thanks, Lisa. 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+% that comes in from the fees. That's our starting. 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 past calls, as he builds 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 3

Okay, thanks.

Speaker 0

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 million event in the first quarter. That was the point I was trying to emphasize on that for the full year.

Speaker 3

Okay, thank you. Appreciate that. Color. For my second question, just thinking about the market dynamics that you laid out on the property catastrophe side. Right. You know, 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 cat business written in 2026 will be?

Speaker 2

That's a tough question to answer because it's part of our portfolio. The standalone and, you know, kind of the marginal. What I would say is 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. If maybe one way to frame it is if we go back to when things changed and the property catastrophe was re-rated at 1,123, 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've half done. 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. 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 1

That's true. We still remain very positive on the business. It's been very profitable over the last few years.

Speaker 3

We've.

Speaker 1

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, as not all risks will be equal. We will be able to pick the best risks based on what happens on each individual program and construct an attractive portfolio.

Speaker 3

Thank you. Thank you. We'll take our next question from Joshua David Shanker with BofA Securities.

Speaker 0

Thank you for taking my question.

Speaker 2

Typically, when people see pricing.

Speaker 0

Going down, there's an assumption that too.

Speaker 2

Much capital is chasing too little risk or something to that effect. I'm curious to the extent that your

Speaker 0

Third-party investors or potential new third-party investors are showing interest such that.

Speaker 2

2026 might be a strong or maybe a weak year for capital raising. Can you sort of speak to that a little bit? 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 are having a little bit more confidence and a little bit more capital. The 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, and 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 will 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 1

Yeah, the competition we're seeing, especially on the cat side, is from retained earnings on traditional reinsurers more so than new capital projections.

Speaker 2

Thanks, Dave. Given that situation, there's a lot of expectation that you'll be in the.

Speaker 0

Market for your own stock, given where.

Speaker 2

It's traded, how much capital you have. In the third-party business, a.

Speaker 0

Part of the reason why it's been.

Speaker 2

You are successful because you eat your own cooking, and your investors know that whatever risks they're taking giving you money.

Speaker 1

You're also taking yourself.

Speaker 2

We look at the minority interest on your balance sheet and we look at it.

Speaker 1

Your own shareholders' equity.

Speaker 2

You know, there's obviously some off-balance.

Speaker 0

Sheet third-party capital as well. They're somewhere close to the same amount.

Speaker 2

If you're returning capital, do we ever think there could be a situation where third-party capital is?

Speaker 0

A bigger balance sheet for RenaissanceRe than.

Speaker 2

The proprietary capital of the company? It's a good question. 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 we share about 50% of our property cat and, depending on the line of business, 15% to 30% on the casualty specialty lines. There are scenarios where 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 1

Hansen, thank you for all the answers.

Speaker 2

Thank you, Josh.

Speaker 3

Thank you. We'll take our next question from Andrew Kligerman with UBS Investment Bank.

Speaker 0

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.

Speaker 1

Call about pricing being very firm.

Speaker 0

You're still pulling back a bit on the U.S. general liability.

Speaker 1

Yet.

Speaker 0

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 1

Okay, 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 trend. 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.

It's just a standard part of how we would always optimize our casualty and specialty segment within a class like we're doing in general liability and then also the overall balance between classes.

Speaker 0

I see. RenaissanceRe is not increasing their ceding commissions at all. It's sort of steady as she goes.

Speaker 1

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 0

Just one last thing on casualty, you talked about a slight favorable reserve development, and I was wondering if you could provide some color around that.

Speaker 1

Vintages.

Speaker 0

The product lines that had played out. Were there any big movements in one direction or another with a specific product or vintage?

Speaker 1

Yeah. The way I think about the overall casualty and specialty segment, like Bob Qutub described, there was slight favorable reserve 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 reserve 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 0

Thank you.

Speaker 2

Thank you.

Speaker 3

Thank you. We'll take our next question for Bob Qutub with Morgan Stanley.

Speaker 2

Hi, good morning. My first question is a little bit.

Speaker 0

A follow up on what Josh was asking earlier.

Speaker 1

If we look at it.

Speaker 2

One of the things you've said was that you talk about loss volatilities.

Speaker 0

Are smaller now, and so consequently, earnings.

Speaker 2

Are more steady despite catastrophe risk.

Speaker 0

If this trend continues longer term, doesn't that also imply that longer term pricing?

Speaker 2

Should be pressured by stable earnings? Less volatility to me feels like it should have less pricing volatility as well. Theoretically, how do you think about that? Should we see less pricing increase?

Speaker 0

Going forward, if we have medium sized.

Speaker 2

Hurricanes running through Florida here and there. Thank you for the question, I'm hearing two things in the question. What's going on in the market and what's going on at RenaissanceRe?

Speaker 1

Re.

Speaker 2

Volatility from catastrophes is relatively consistent from an exposure perspective and how it represents, you know, thinking. You mentioned Florida. In Florida, RenaissanceRe 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 has been touched on 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. Okay, that's very helpful.

Speaker 0

Thank you for that.

Speaker 2

My second question is on gold.

Speaker 0

Given the volatility that we've seen.

Speaker 2

Obviously, it was a strong quarter.

Speaker 0

Gold in the third quarter, just given the volatility in gold in October. Curious if you have any updates on.

Speaker 2

Holdings or have you any strategy.

Speaker 0

Change in strategy or change in view about the investments in gold and 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. 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 has been some volatility up and down here and there, but we still see that within our strategic remit for the foreseeable future.

Speaker 1

Got it. Thank you.

Speaker 3

Thank you. We'll move next to Mike Zurimski with BMO.

Speaker 0

Hey, great.

Speaker 1

Good morning. I was curious on the property segment. If we look at property IVNR 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. I'm just curious, is there a way for you guys to frame whether the reserves from those two buckets are kind of higher than historical levels for a certain reason? Is there any color you could add to try to frame whether there's maybe some added conservatism here, how you guys think about it?

Speaker 2

Yeah, there's no added conservatism or any shift in the way that we 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 portfolio. 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 1

Okay, got it. A good thing. 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 know, you've made the point and I think we got it that this year, because 1Q 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 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 2

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 look at the actual loss ratios that produce, 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 than our modeled portfolio.

Speaker 1

Helpful. Thank you.

Speaker 3

Thank you. We'll take our next question from Meyer Shields with Keefe Bruyette & Woods Inc. Great.

Speaker 1

Thanks so much, and good morning. I don't know if there's a question.

Speaker 2

For Kevin or for Bob.

Speaker 1

When you have the sort of favorable reserve development that we've seen in recent quarters in either the casualty reinsurance segment or in property reinsurance, how does that flow through to the models that you're using for pricing?

Speaker 0

It's all part of the information ecosystem theory 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 reinsurance or whether it's property reinsurance, with an emphasis on loss ratios on property. As we look at the experience that we've had, 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, and it does play into roles. With reserving, it's historical. With pricing, it's forecasting the future based on that information. I don't know if you want to add anything to that, David.

Speaker 1

Yeah, I think from an underwriting perspective, we take into account both qualitative and quantitative for the risk. When we think about future underwriting and your 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, 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 2

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.

I would say it's generally consistent. If it's already 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. It's really whether it's consistent with appetite.

Speaker 1

Okay, that's helpful.

Speaker 0

Thanks so much.

Speaker 3

Thank you. We'll take our next question from Andrew E. Andersen with Jefferies LLC.

Speaker 2

Hey, good morning. Just on the casualty and specialty segment, I think you called out some higher.

Speaker 1

Attritional losses in the quarter.

Speaker 2

Was that on the specialty side and more one off in nature?

Speaker 1

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 2

Okay. Just on the reducing some of the exposures to U.S. general liability, I think this kind of started the back half of 2024, but maybe where are you in the reduction cycle here? Should we see continuing throughout 2026, and is it just ceding commissions that we need to see change here to get.

Speaker 0

A bit more positive?

Speaker 1

The thing with general liability is that the momentum in the market is very strong. It just needs to be continued momentum. We will 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 will always be optimizing the portfolio based on how we see the risk.

Speaker 2

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 more effectively than others. We are just continuing to optimize our portfolio into the best performers. Thank you.

Speaker 3

Thank you. We'll take our next question from Alex Scott with Barclays.

Speaker 1

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 PMLs 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. What would your approach to capital management and capital return be? How aggressive would you be in terms of taking the operating earnings and funneling it back?

Speaker 0

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.

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.

Speaker 1

you. The second one I had is just if you could talk about the ongoing situation in California, and as we move into 2026, if there's anything we should be considering, particularly around 1/1 renewals that would be impacted by maybe moving out of some of those areas of California that you were impacted by.

Speaker 2

Yeah, we grew in California after the wildfires. I think the rerating 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 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. If everything continues as it is in California, our appetite is to continue to grow.

Speaker 1

Got it. Okay, thank you.

Speaker 3

Thank you. We'll move next. David Kenneth Motemaden with Evercore ISI Institutional Equities.

Speaker 0

Hey, thanks.

Speaker 1

Good morning. Kevin, you had said I guess this.

Speaker 0

Year, which sounds like not far off.

Speaker 1

From what you had expected from a model basis. 17% operating ROE year to date, including that $50 billion event. I guess just given sort of everything that you're seeing as we get into 1/1, do you think that how should we think about that ROE profile as we head into 2026, just given everything that you're seeing from a pricing standpoint?

Speaker 2

Yeah. To be clear, that question was, you know, 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 and to what's our actual, you know, if rates are down 10%, you can assume loss ratios are up. I would say the important thing is, you know, 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.

Speaker 0

Got it. Thanks for that clarification.

Speaker 1

David, you had mentioned just more interest from third-party capital in some of the longer tail liabilities. I'm just wondering how you're thinking about that dynamic strategically, sort of how it can impact your business, the opportunities, the risks. I'd be interested in your thoughts.

Speaker 2

Yeah, you know, 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 that's 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, it's 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.

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.

Speaker 1

Great. Appreciate that perspective.

Speaker 0

Thanks.

Speaker 1

Yep.

Speaker 3

Thank you. We'll take our next question from Ryan Tunis with Keefe Bruyette & Woods Inc.

Speaker 0

Thanks, I guess just for Kevin. We're talking down 10% as sort.

Speaker 2

Of a base case.

Speaker 0

I'm just curious, in a marketplace like this, as we move toward the renewal, what are the types of, I don't know, red flags that you'd be looking for that might suggest that the market's being a little bit less disciplined?

Speaker 2

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 is less transparent to see in the portfolio. I don't think that's what we're going to see this 1/1, you know. 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. If we do see other shifts in economics that are less transparent than price, we'll react accordingly, but it's not my expectation.

Speaker 1

Got it.

Speaker 0

I'll just end here with a couple of separate ones. First, one just for Bob. In the 2024 10-K, the property segment shows about $1.2 billion of.

Speaker 2

IBNR for 2022 and prior years.

Speaker 0

I'm wondering after all the releases this year if that's still a solidly positive number. Just curious if there's anything you guys want to say.

Speaker 2

At this juncture on Hurricane Melissa exposure. Thanks.

Speaker 0

I'll handle the first and I'll give exposure to Melissa to David. Generally speaking, that's a question the way I would look at that and approach it point in time. Reserves in property right now are about $6.3 billion and 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. We've got independent advisors that look at this and test it. One of them is PricewaterhouseCooper. As far as absolute levels, they're relatively constant.

Speaker 1

Yep. Hey Ryan, this is David. I'll take the Melissa question for powerful Cat 5 direct hit on Jamaica. Our sympathies are 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 to watch 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. Thank you.

Speaker 3

Thank you. We'll take our final question from Tracy Benguiat with Wolfe Research. Thank you. Good morning. Interesting comments on demand, but you also mentioned that supply outweighs demand looking ahead into 2026. This is more of a macro rather than a RenaissanceRe 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 catastrophe losses or capital returns, to get to a state of equilibrium.

Speaker 2

I would say that what we look at is what is the overplacement in 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. That would indicate that we're relatively close to balance. The fact that rates are forecast or our expectation is down 10% would suggest 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. 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.

Speaker 3

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, 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.

Speaker 1

Yeah, 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 ENS business, a lot of that shared and layered, that's coming under competition. It's performed very well. That competition for the large account ENS 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. 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. There'll be some additional competition, but still optimistic with how that book's performing.

Speaker 3

Thank you.

Speaker 2

Thank you.

Speaker 3

Thank you. This does conclude the time we have for questions today. I'd like to now turn the call back to Kevin O’Donnell for any additional or closing remarks.

Speaker 2

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.

Speaker 3

Thank you. This concludes today's RenaissanceRe third quarter 2025 earnings call and webcast. Please disconnect your line at this time and have a wonderful day.