RenaissanceRe suffers continued ILS outflows Q1, despite strong 1.1
Global reinsurer RenaissanceRe suffered its third consecutive quarter of net outflows of third party capital from its stable of ILS vehicles despite what had been hailed as a strong fund-raising effort at the 1.1 reinsurance renewals.
In the first quarter, RenaissanceRe suffered a net outflow of $135.5 million from its facilities, despite a 23% year on year increase in 1.1 renewals fundraising. Compare Q1 2023's net inflows of nearly $414 million.
Fundraising may have looked good for the 1.1 renewals, but languished for the rest of the first quarter.
Q1 gross inflows of $565.7 million may have been within 9% of the prior year tally, but after the previously announced $494.8 million from 1.1, pointed to a mere $70 million gathered during the rest of the quarter.
For Q1, management attributed $300 million of the gross inflows to its original core property cat vehicle DaVinci, $145.7 million to open-ended cat bond funds Medici and $100 million to the infant casualty & specialty vehicle Fontana.
Rapidly accelerating outflows, at $701.2 million in Q1, are the bigger issue, with hint between the lines that property cat collateralised reinsurance unit Upsilon remains troubled.
Management didn't directly name the culprit or the cause, but did attribute $390.7 million in outflows to distributions to units DaVinci, Vermeer, Medici and Top Layer “following strong earnings across these vehicles in 2023.”
That comment leaves Upsilon funds, an open-ended fund group packed with collateralised reinsurance and retrocession structures on property cat exposures, as a likely source of the other 45% of Q1 outflows, potentially some $311 million. Upsilon has taken the blame more openly to date, including for outflows in Q4 2023 at $300 million.
Total fee income for RenaissanceRe from ILS management and performance nearly doubled year on year. Management fee income rose 37% year on year on growth in select units plus the addition of AlphaCat Managers, acquired in 2023 with Validus Re from AIG. Performance fees are up 7x from the prior year period.
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