When Bermuda based reinsurance and third-party capital management expert RenaissanceRe closes on its acquisition of the Validus reinsurance business from AIG, its CEO thinks it will deliver danger from the obtained business to financiers in its ILS and joint-venture automobiles at a comparable rate to how it runs today.
Speaking throughout the RenRe incomes call, when inquired about how the reinsurance company will share Validus-obtained threats with financiers, RenRe’s O’Donnell said, “So I believe it’s going to be a mainly comparable split to what we have now.
“I think what we’ve talked about is, we share roughly 50% of our property cat premium.”
But, with Validus having a varied book of specialized reinsurance lines too, it is not simply the property disaster danger that financiers stand to share in.
O’Donnell said, “The new portfolio will also go into Fontana. The Fontana percentage is just under 20%, at this point.”
Adding that, “We still have some modelling to do, but I think that’s a likely reasonable target as to how much will go in from the casualty-specialty perspective as well.”
Interestingly, we’re being informed by sources that when it pertains to the AlphaCat Managers ILS portfolios, there is a lot cross-over with RenRe’s existing portfolio for the ILS funds it handles, that not all threats will make it throughout.
In truth, our sources inform us that there has actually been a great deal of selling of disaster bonds coming out of AlphaCat, as positions that won’t be needed for the relocation throughout and combining into RenRe’s ILS funds are shed.
It’s going to be fascinating to track the modifications in size to RenRe’s ILS funds and particular joint-venture automobiles, after the acquisition of Validus and AlphaCat finishes, as it ought to provide us a sensible concept where danger has actually been shed, instead of brought across.
