AM Best has updated its rating outlooks for RenaissanceRe and its subsidiaries, now seeing the reinsurance firm’s prospects as positive, rather than stable, citing improved performance, a more balanced business due to diversification, and of course the firm’s ability to attract third-party capital through joint-ventures and ILS partnerships.
AM Best updates its credit rating outlooks to positive from stable for the Long-Term Issuer Credit Ratings (Long-Term ICRs) of all the main RenaissanceRe underwriting entities, while also affirming their Financial Strength Rating (FSR) of A+ (Superior) and Long-Term ICRs of “aa-” (Superior). In addition, the holding company outlook has also been turned positive as well.
At the same time, the rating agency has also affirmed the ratings for two of RenaissanceRe’s most important third-party capital joint-venture vehicles, the equity backed reinsurance sidecar-like DaVinci Reinsurance Ltd. and the Vermeer Reinsurance Ltd. rated reinsurer joint-venture backed by capital from giant insurance-linked securities (ILS) investor PGGM.
For both of those joint-ventures, AM Best sees their balance sheet strength as very strong, with an adequate operating performance and strong enterprise risk management.
Overall, AM Best notes that RenaissanceRe (RenRe) has reported “substantially” improved operating performance in recent years, “in terms of dampened volatility as its specialty and casualty lines have earned into the portfolio and partially offset the volatility produced by the property catastrophe core of RenaissanceRe’s writings.”
Despite global catastrophe loss activity remaining high in recent years, the reinsurance company has delivered strong operating performance from its underwriting, as well as from its third-party capital fee income, AM Best explained.
“Looking forward, RenaissanceRe appears well-positioned to benefit from continued, largely favorable overall market conditions in the global reinsurance space,” the rating agency added.
The diversifying business lines RenRe now underwrites are helping to mitigate the impact of catastrophe losses, AM Best said.
RenRe has “consistently demonstrated its ability to raise capital” through equity and debt markets, both public and private, the rating agency further stated.
But, perhaps more important to the business model at this stage, is RenRe’s ability to raise third-party capital to support its range of ILS funds and reinsurance joint-venture vehicles, which has provided a continuous and growing source of complementary underwriting firepower for the company in recent years.
As we reported back in August, RenaissanceRe Capital Partners, the specialist unit that manages ILS and third-party capital relatioships, grew third-party reinsurance capital under management to surpass the $8 billion milestone for the first time ever by the middle of 2025.
That represented an increase of $940 million or 13% over the prior twelve months, as RenRe continued to benefit from strong investor interest in its joint-ventures and ILS strategies.
Given the growth in ILS-style assets under management, across the funds and JV’s, RenaissanceRe Capital Partners more than doubled its fee income run-rate since the start of 2023, with $700 million in fee income generated since the beginning of that year.
By June 30th 2025, RenRe had $13.68 billion of additional underwriting power from its third-party capital, across the range of JV’s, ILS funds, the State Farm partnership reinsurer Top Layer Re and its own investment commitments to those structures, which is a meaningful and growing addition to its own $10.8 billion of shareholders’ equity (at June 30th 2025).
In upgrading the reinsurers outlook to positive, AM Best said, “RenaissanceRe’s business profile assessment also recognizes the company’s leadership in ERM, modeling capabilities and third-party capital management, where it maintains a strong reputation in evaluating risk and effectively deploying capital.
“As a result, it has attracted capital from outside investors to form several successful joint ventures, including DaVinci, Top Layer Reinsurance Ltd., Vermeer, and most recently, Fontana Holdings L.P., its first third-party reinsurance capital-backed joint venture focused on casualty and specialty risks.”
Third-party capital is core to the RenaissanceRe business model and as a result it remains the traditional reinsurer with the largest ILS-style capital pool available to it at this time, which is clearly helping it manage risk, be an even more important partner to the insurance market and generating significant additional income that meaningfully benefits its shareholders as well.
Of course, the third-party capital activities will also serve RenaissanceRe well through a softening market environment, bolstering earnings and protecting its own balance-sheet capital, while providing real optionality in how and where to deploy capacity through all phases of the market cycle.
In short, the third-party capital business levers RenaissanceRe’s business model and competitiveness in the market, as well as its efficiency, something AM Best clearly recognises and values in its assessment of the company.
