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RenRe purchased extra retrocession at 1/1. To safe further at June as effectively: CEO

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RenaissanceRe secured further retrocessional protections on the 1/1 renewals this yr, ceding extra in the way in which of its property disaster premiums than it had a yr earlier.

kevin-odonnell-ceo-renaissance-reFinal week, in the course of the RenaissanceRe first-quarter 2024 earnings name, the agency’s CEO and CFO mentioned the protections the corporate has purchased and mentioned it expects to resume extra retrocession on the June renewal as effectively.

Curiously, this got here after a dialogue of the forecasts for a really energetic Atlantic hurricane season in 2024, which could possibly be a driver of the elevated retro shopping for, though causes for extra retro being bought weren’t given in the course of the name.

CFO of RenaissanceRe Bob Qutub commented, “We had a phenomenally profitable 1/1 renewal and retained the mixed RenaissanceRe and Validus portfolio based on plan. Consequently, gross premium written have been up 43% with strong progress throughout each segments.”

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However Qutub went on so as to add that, “Internet premiums written have been up barely much less at 41%,” saying that “This displays our resolution to buy some further ceded safety in our property disaster guide as a part of our gross to internet technique, in addition to some timing variations.”

Qutub went into extra element particularly on the property disaster reinsurance guide at RenRe.

He defined that, “Gross premiums written have been up by 44% and internet premiums written have been up by 30%. We ceded about $277 million, or 21% of property disaster enterprise, in comparison with 12% in Q1 final yr.”

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In order that appears a bigger quantity of retrocession getting used to handle the disaster publicity at RenaissanceRe this yr, which it’s affordable to assume may at the least partially be a response to the forecasts for a really energetic Atlantic wind season.

Later within the name, RenaissanceRe’s CEO Kevin O’Donnell additionally mentioned retrocession purchases.

O’Donnell mentioned that, “At 1/1 we noticed continued self-discipline round retro constructions and pricing was comparatively flat. We primarily traded with our long-term companions and have been in a position to safe further capability.”

The CEO went on to elucidate that, “As we renew the Validus portfolio onto RenaissanceRe steadiness sheets it’s included into our numerous retro programmes.”

He then added that, “The subsequent main renewal for our retro programme is in June and we count on that we can buy the restrict that we need.

“That mentioned our sturdy capital and liquidity place offers us vital flexibility, and we’ll solely buy further limits if it improves our general portfolio.”

We’ve heard of quite a lot of firms positioning for the possibilities of a extra energetic hurricane season this yr, with retrocession purchases and devices similar to industry-loss warranties (ILW’s) being procured.

Whereas we will’t say for sure that this can be a driver for RenRe’s elevated use of retrocession in 2024, the corporate has a naturally bigger disaster guide due to the acquisition of Validus, it’s doubtless one of many components which can be weighed when the corporate considers how finest to guard itself, its shareholders and different investor stakeholders.

In fact, the rising third-party capital sources of the Capital Companions unit at RenRe are additionally a consider how the corporate manages its disaster dangers.

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