S&P turns positive on RenRe, cites third-party capital as competitive edge
RenaissanceRe’s key position in third-party capital management and property-catastrophe reinsurance has cemented its competitive edge, according to S&P Global Ratings, which has revised the outlook on the Bermuda-based reinsurer and its subsidiaries to positive from stable.
S&P also affirmed its ‘A-‘ issuer credit ratings on RenRe and its intermediate holding company, DaVinciRe Holdings Ltd., as well as its ‘A+’ issuer credit and financial strength ratings on all core operating subsidiaries.
In a new report published by S&P, the agency explains that RenRe’s competitive edge remains anchored in its leading position in the property-catastrophe reinsurance market, its status as one of the top third-party capital managers, and its growing footprint in casualty and specialty lines.
Analysts also explained that following RenRe’s successful integration of Validus and its sustained strong performance across underwriting and risk management, the company’s third-party capital platform and robust presence in the property catastrophe space position it well for future upgrades.
If current performance trends hold, S&P noted that RenRe could receive a one-notch ratings upgrade within the next 12 to 24 months.
S&P credited RenRe’s effective use of third-party capital as a core part of its success, highlighting the company’s “leading position in third-party capital management” as a key differentiator.
As we previously reported, over the twelve months to January 1st 2025, RenaissanceRe added $860 million in third-party assets to its range of joint-venture vehicles and insurance-linked securities (ILS) funds, taking overall third-party capital to $7.81 billion.
The firm’s capital-efficient model, which matches risk with capital across multiple vehicles, was further strengthened by its $2.9 billion acquisition of Validus, finalised in late 2023.
“This strategic acquisition fueled gross premiums written (GPW) growth by over 32%, or $2.9 billion, compared with 2023, reaching $11.7 billion in 2024. The transaction further bolstered RenRe’s already very strong competitive position and advanced its pure-play strategy as a global property/casualty (P/C) reinsurer,” S&P explained.
Adding: “RenRe’s competitive edge remains anchored in its leading position in the property-catastrophe reinsurance market, status as one of the top third-party capital managers, and a growing footprint in casualty and specialty lines. The sizable transaction of Validus increased RenRe’s scale, enhanced its significance to clients and brokers, and broadened its reach.”
As mentioned, S&P outlined that RenRe’s ratings could be raised by one notch within the next 12-24 months if: “The company sustains its enhanced earnings diversity, supported by underwriting profits from property, and casualty and specialty segments, capitalising on still-favourable reinsurance
pricing.”
“RenRe delivers strong consolidated operating performance in line with ‘AA-‘ peers, alongside maintaining excellent capitalisation, with redundancy at the 99.99% confidence level.”
It’s important to add that S&P also explained that RenRe’s outlook could also be revised to stable or its ratings lowered within the next 12-24 months if: “RenRe’s underwriting performance fails to demonstrate earnings diversity, or the company’s combined ratio underperforms compared with ‘AA-‘ peers or exceeds 100% for two consecutive years.
“The company’s capital adequacy falls below 99.99% confidence level due to significant underwriting or investment losses and we believe RenRe would be unable to restore capitalisation to 99.99% within 12-24 months.”
Furthermore, S&P underscored RenRe’s presence within property catastrophe reinsurance, highlighting how over one-third of the company’s premiums are tied to that specific line of business.
Analysts added that since early 2023, RenRe has benefited from structural changes within the reinsurance sector, including higher attachment points, improved terms and conditions, and a hard market in property catastrophe reinsurance.
“As a leading property-catastrophe reinsurer, with over one-third of its premiums attributable to this line of business, RenRe faces heightened exposure to the growing frequency and severity of weather events, which poses risks of earnings and capital volatility. However, these risks are partially mitigated by RenRe’s sophisticated ERM, advanced modeling, and research capabilities.”
“The company has a deep understanding of catastrophe modeling and its limitations. Moreover, the annual repricing of most contracts enables RenRe to adjust pricing in line with changing risk perceptions,” S&P concluded.
