RenaissanceRe, the Bermuda-based third-party reinsurance and capital management specialist, is working to attract investors from the AlphaCat Managers offering into its Capital Partners products, following the completion of the acquisition by the Validus’ business with AIG.
With the acquisition finalized on November 1Artemis spoke to Chris Parry, Global Head of Capital Partners at RenaissanceRe, to better understand the integration process and what it means for RenRe’s insurance-linked investment offering going forward.
Parry explained that a lot of planning has gone into the integration, which is well underway.
“Our priority is always to provide the highest quality capital management to all investors. Throughout integration planning, we focused on creating a smooth transition for new investors while maintaining excellent service for our existing partners. I’m very happy that we were able to accomplish this,” Parry said.
He added: “As part of the Validus Re transaction, the Capital Partners team took over the management of the AlphaCat platform and we had the pleasure of welcoming these investors to RenaissanceRe on November 1st.
“While we no longer offer the AlphaCat product, for investors who wish to trade with us, we will work to integrate them with our existing full suite of Capital Partners products. This could be done through our rated balance sheets, our guaranteed products or cat bonds.
Overall, the scope of RenaissanceRe Capital Partners’ offering, in terms of joint venture reinsurance structures and insurance-linked securities (ILS) funds, does not change.
RenRe already had a range of investor access points, from collateralized reinsurance to catastrophe bonds and equity investment-style quota share reinsurance vehicles, focused on catastrophe and specialist risks, and Parry believes that the company is well placed to develop these structures next year. .
“Our product offering remains unchanged,” he explained. “We will continue to offer investors the opportunity to invest in our rated balance sheets (DaVinci and Fontana), Upsilon (Collateralized Re), Medici (cat bonds).
“We expect further growth of the platform in 2024 and we will continue to differentiate ourselves through our access to risk, our expert underwriting and our strong alignment of interests with our investors. »
Going on to say: “We expect our structure to remain the same, with our investors benefiting from the growth in the overall size of the business and our vehicles taking a proportionate share of the newly acquired Validus business which renews from of 2024. This not only offers them greater scale, but also greater diversification.
“This is particularly relevant given that we will be able to grow in attractive business sectors at a favorable time in the cycle.”
There are further benefits, for RenRe and its third-party ILS investors, now that the Validus acquisition has been completed, as it helps provide a platform for continued expansion.
“The Validus transaction advances our strategy as a leading global reinsurer, giving us additional scale and positioning us to become the premier brokerage market for property and casualty reinsurance,” explained Parry. “As a result, our investors will benefit from greater access to risk through new business sectors, new platforms and a broader geographic footprint. Additionally, we will have access to valuable new tools and a deeper talent pool.
Talent is a key consideration and RenaissanceRe Capital Partners has welcomed some of AlphaCat Managers’ former employees to its team, both to help manage the AlphaCat funds, as well as to work on integration and future growth opportunities .
Parry said: “I am particularly pleased that we have been able to recruit several talented members of the AlphaCat team. Our new team members will help maintain continuity for AlphaCat’s legacy investors as we wind down activity, while also bringing additional expertise to Capital Partners.
Among those we have learned who have tapped RenRe Capital Partners to manage the liquidation are senior AlphaCat executives: Kevin Ronaldson (former AlphaCat CFO) who becomes senior vice president and chief operating officer; Christian Husby, as executive vice president, to continue to manage AlphaCat’s investor relations during the second round; and Chiara Soria, as vice-president and legal advisor.
We understand that as AlphaCat’s assets under management go into liquidation, the resources that were transferred to RenRe will likely be reallocated to help Capital Partners manage the growth it has experienced.
In total, RenRe Capital Partners has twelve new employees following the integration of AlphaCat, bringing the business unit to thirty-six people.
“We were fortunate to be able to bring on a significant number of AlphaCat team members to support both the winddown of existing operations and our existing portfolio management and investor relations teams. It has been fantastic to welcome the new team after the transaction closed. We now have over 30 professionals working directly in the Capital Partner sector,” explained Parry.
With the integration of AlphaCat Managers and the onboarding of its investors during the fourth quarter, we do not yet have visibility on how this will impact RenaissanceRe Capital Partners’ assets under management at this time.
The business unit ended September 2023 with approximately $6.8 billion in third-party assets across its reinsurance businesses and ILS funds, which “represents further year-over-year growth, driven primarily by increases in both DaVinci (rated balance sheet) and Medici (cat bond) strategies,” Parry said.
He added: “We continue to see a flight to efficiency (i.e. investing in the most operationally efficient vehicles) and a flight to simplicity (i.e. (say tradable catastrophe bond strategies). »
It will be interesting to see how the integration of AlphaCat increases this figure, as well as the imminent investment that AIG is about to make in some of the RenRe Capital Partners vehicles.
Regarding these investments, Parry told us: “AIG remains on track to invest up to $500 million in total in DaVinci and Fontana. The investment is expected to be facilitated by a combination of partial sale of our shares and injection of new capital to support the growth of the respective vehicles.
The acquisition of Validus propelled RenaissanceRe up the rankings to become the fifth P&C reinsurer in the world.
We now look forward to seeing how the AlphaCat integration will help the Capital Partners team take their ambitions to the next level, with additional scale and opportunities that will benefit the long-time investors behind the platform, as well as ‘to all new investors. upgrade to RenRe Capital Partners strategies from legacy AlphaCat ILS funds.