RenRe forecasts third-party capital fees to resume typical run-rate, AUM stable-to-up
RenaissanceRe, the Bermuda based reinsurance firm and third-party capital specialist, is anticipating that its assets under management (AUM) across its joint-ventures and ILS funds will be “stable to up” over the rest of 2025, while fee income should resume its typical run-rate over the coming quarters.
RenaissanceRe (RenRe) had reported that the California wildfire losses earlier this year had dented its fee income during the first-quarter.
But executives from the company predicted these will resume a typical run-rate in a quarter or two, major catastrophe loss activity allowing.
Chief Financial Officer Bob Qutub explained on the Capital Partners business unit during the RenRe earnings call last week, “Fees were also impacted by the events of the quarter, and we reported $30 million of fee income down 64% from the first-quarter last year.
“Management fees were $46 million, down 18% as a result of the reduced management fees in DaVinci, which we anticipate recovering over time.
“Performance fees were negative $16 million driven by the reversal of previously recognised commissions in DaVinci and our structured reinsurance products.”
While dented, it’s worth remembering that with a significant amount of third-party investor capital under management, the RenaissanceRe Capital Partners business still made a very welcome contribution in a quarter where the reinsurance firm saw its earnings dented by catastrophe activity.
Looking ahead, Qutub further explained that, “Absent large losses, we expect management fees to be around $45 million in the second-quarter, before returning to a more typical run-rate of $50 million in the third-quarter.”
Adding that, “Similarly, we anticipate beginning to recognise performance fees toward the end of the second-quarter.”
During the same earnings call, RenRe CEO Kevin O’Donnell commented on the insurance-linked securities (ILS) market, in response to a question from an analyst asking if the non-cat bond segment of that market could influence the renewal season at the mid-year juncture.
O’Donnell responded that, “It’s not going to materially impact us from a competitive standpoint, obviously we have a large Capital Partners business.
“One of the headwinds in that business that I know others are facing is, the allocation to alternatives is under stress, so the ability to bring new capital to the market may be a little bit more challenged.
“We’re in the fortunate position where we generally are not in the same stresses that the market experiences, because our offering is different.”
O’Donnell summed up, “So you know, from our standpoint, our third-party capital footprint will be stable-to-up for the rest of the year, and I’m not particularly concerned about ILS impacting our ability to price or compete in the market for the rest of the year.”
While redeemable noncontrolling interest, which is one measure of third-party capital utilised at RenRe, was reported to have fallen from $6.98 billion at Dec 31st 2024 to $6.69 billion as of Mar 31st 2025 by the reinsurer, it’s important to remember that this is not the third-party capital under management figure, which had stood at $7.81 billion at January 1st 2025.
When a fresh third-party capital AUM figure is disclosed, there is a good chance it falls through Q1 given the effects of the wildfire losses on certain joint-venture vehicles. But we suspect that RenaissanceRe will have an opportunity to replenish that over the rest of the year.
