RenaissanceRe Holdings Ltd.

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Good morning. My name is Madison, and I will be your conference operator today. At this time, I would like to welcome everyone to the Renaissance Free First Quarter 2026 Earnings Conference Call and Webcast. After the prepared remarks, we will open the call for your questions. Instructions will be given at that time. Lastly, if you should need operator assistance, please press star zero. Thank you. I will now turn the call over to Keith McHugh, Senior Vice President of Finance and Investor Relations. Please go ahead.

Thank you, Madison. Good morning, and welcome to Renaissance Re's first quarter earnings conference call. Joining me today to discuss our results are Kevin O'Donnell, President and Chief Executive Officer, Bob Qutub, Executive Vice President and Chief Financial Officer, and David Marra, Executive Vice President and Group Chief Underwriting Officer. To begin, some housekeeping matters. Our discussion today will include forward-looking statements, including new and updated expectations for our business and results of operations. It is important to note that actual results may differ materially from the expectations shared today. Additional information regarding the factors shaping these outcomes can be found in our SEC filings and in our earnings release. During today's call, we will also present non-GAAP financial measures. Reconciliations to GAAP metrics and other information concerning non-GAAP measures may be found in our earnings release and financial supplement, which are available on our website at renry.com. And now, I'd like to turn the call over to Kevin. Kevin?

Thanks, Keith. Good morning, everyone. We are proud of the quarter's results, which reflect the strength of Renaissance Re's business model and the value of our three drivers of profit. Once again, this quarter, underwriting, fee, and investment income all contributed meaningfully to strong operating income. This is gratifying as the balanced contribution is central to the resilience we have been building. and advances our strategy of reducing earnings dependency on any single market condition or source of volatility. Before discussing the quarter in more detail, let me start with the broader backdrop. Geopolitical risk is elevated. Markets continue to adjust to higher for longer rate environment, and the macro environment remains increasingly fragmented, highly volatile, and less predictable. Last year, I said that our business is anti-correlated to this kind of environment, and our results demonstrate that this remains true today. As the world becomes more uncertain and risk-averse, the value of the protection we provide increases. Our business is to underwrite the volatility others seek to avoid. We manage it to reduce our customers' risk in exchange for strong returns to our shareholders. Ultimately, our strategy is to absorb volatility, manage it efficiently in the ordinary course, and produce results over time, recognizing occasional losses will occur. For the first quarter of 2026, we reported operating income of $591 million, a 22% annualized operating return on equity, and operating earnings per share of $13.75. Tangible book value per share increased by 1.5% to $233.49. This reflects two influences. Retained mark-to-mark losses of $357 million and share repurchases of $353 million at a premium to book value. I will address the mark-to-market losses and share repurchases in a few minutes, but we view these as temporary drags on book value per share and believe they help create the conditions for continuing strong overall performance. Turning to our three drivers of profit, I will start with underwriting. We reported strong underwriting income of $589 million, driven by excellent current accident year performance and favorable prior year development. We benefited from approximately $160 million of favorable reserve development with proportionally larger contribution from other property. This reflects our proactive portfolio positioning and superior underwriting over the last several years. I want to highlight one accomplishment from the January 1st renewals that we alluded to last quarter. While rates were down low teen percentages, our team did an excellent job positioning into a more competitive environment. As a result, top line in PropertyCat, this quarter stayed relatively flat, excluding reinstatement premiums. Rates remain adequate, and we took an above market share of new business, which demonstrates the strength of our franchise. As I wrote in our most recent shareholder letter, when rates are adequate, underwriters should be taking more risk. and we are. Meanwhile, our casualty specialty adjusted combined ratio was 99.4%. This was consistent with our guidance of high 90s and supports our view that the portfolio performed as expected. David will provide more detail on our exposure to the war in the Middle East. In summary, we have limited exposure through lines narrowly designed to cover these risks, including war on land and marine war. I would not characterize our share in either of these markets as being outsized. Moving now to fee income, which performed equally well this quarter. We reported total fee income of approximately $94 million. Performance fees were the main driver of the upside, reflecting strong current year underwriting results and favorable prior year development. Capital Partners continues to be an important source of persistent and diversified earnings. It allows us to leverage our industry-leading underwriting franchise to generate capital like these. This complements the income we earn on our balance sheets, creating an additional value from our underwriting business. That is another important source of resilience and remains a clear differentiator for Renaissance RE, especially in markets where clients value scale, reliability, and flexibility. Moving to retained net investment income, which was $304 million for the quarter, we have executed well into difficult investment markets, and as a result, net investment income remains robust. This reflects the scale of our invested assets, the quality of the portfolio, and a rate environment that remains favorable. Fixed maturity, short-term, and private credit rates remained steady to higher during the quarter, which supported net investment income. Recent market moves allow us to extend duration and lock in at higher yields, which should continue to support earnings power over time. We reduced our gold position during the quarter by about half. We originally put that hedge in place to protect the portfolio against inflation and geopolitical risk. and it served that purpose well. As markets evolved, we chose to reduce the position, lock in gains, and lower potential future volatility in the portfolio. Importantly, the position remained profitable both in the quarter and since inception. Let me spend a moment on the mark-to-market losses. The same market movements that pressure current period valuations also improve reinvestment yields and support future earnings power. So while book value takes a modest mark today, prospective earnings improve tomorrow. We view that trade-off as economically constructive. In addition, these losses largely unrealized, so this is more of an issue of timing reflecting the quarter shift in the yield curve. The investment portfolio remains high quality and its underlying earnings capacity remains strong. Consequently, we remain comfortable with the overall credit quality of the underwriting securities. That is also true of our private credit portfolio. About 5% of our investment portfolio is in private credit. Our exceptional capital strength and high liquidity are the foundation for this measured allocation to private credit, which enhances our book yield due to the associated illiquidity premium. Bob will provide more color on our credit book in his comments. Shifting now to capital management, where our approach remains unchanged. We have a consistent track record of strong earnings performance, excess capital, and ample liquidity. That positions us to continue returning substantial capital to shareholders, and this quarter we repurchased $353 million of our shares. We did so in a disciplined manner, allocating capital where we see favorable risk-adjusted returns. This includes allocating to our own shares when they trade at levels we consider compelling, relative to intrinsic value and future earnings power. Since 2024, we have repurchased over 20% of our outstanding shares. This total is almost 11 million shares, or $2.7 billion, up until April 24th. We did this at very attractive valuations, very close to current book value, which should boost returns to shareholders with minimal dilutions. At the same time, we remain well capitalized to support our underwriting portfolio, our partners, and future growth opportunities. Ultimately, capital management should support long-term growth in tangible book value per share and long-term value creation for shareholders. That remains the standard we apply. Looking ahead, the message is continuity, not change. The underwriting environment remains competitive, but rates remain adequate. Ultimately, our objective is to maximize long-term growth and tangible book value per share and operating earnings by preserving margin, constructing a right portfolio, and allocating capital with discipline. That has been our approach through the cycle, and it remains our approach today. When we think about the balance of 2026, our outlook remains constructive. The underwriting portfolio is performing well, and our earnings model continues to benefit from multiple diversified sources of income. With that, I'll turn it over to Bob to discuss the financials in more detail, and then to David to provide additional color on underwriting and renewals.

Thanks, Kevin, and good morning to everyone. We delivered a strong start to 2026 in a quarter with both geopolitical and economic volatility. Our diversified earnings model continued to produce superior returns for shareholders. We generated operating earnings per share of $13.75 and annualized operating return on equity of 22%. Annualized return on equity was 10.5%, which included $357 million of retained mark-to-market losses. Importantly, each of our drivers of profit contributed meaningfully in the quarter. providing a diversified and resilient earnings profile. There are a few numbers that will help demonstrate this. First, 15 points, which is the contribution from fee income and retained net investment income to our overall return on average common equity in the quarter. This provides a solid foundation of earnings each quarter, which we then build upon with income from our underwriting business. Second, $589 million, which is the underwriting income we generated this quarter. This reflects discipline, risk selection, and cycle management. And third, $353 million, which is the capital we return to shareholders through share repurchases during the quarter. We continue to view our shares as attractive at current valuations and share repurchases remain an important part of our capital management strategy. Taking a step back, this performance is a continuation of the strong results we have been delivering over the last three years. In the last four quarters alone, we've delivered $2.5 billion of operating income with an operating return on average common equity of 24%. With such a strong base of earnings, we are better able to absorb volatility from a large event in any one quarter while continuing to grow shareholder value over time. Now I'd like to turn to a more detailed view of our three drivers of profit, starting with underwriting. Let me begin with the key points. Even as rates decline in some parts of the reinsurance market, our underwriting book remains highly profitable. In the first quarter, we delivered an adjusted combined ratio of 72%, reflecting discipline underwriting and portfolio construction. We reported favorable development across both segments, with most of it coming from other property, where we fully retained in our bottom-line results. Property catastrophe, we reported a current accident-year loss ratio of 10.2%, and an adjusted combined ratio of 19.2%. This reflected 11 percentage points of favorable development across a range of accident years. In other property, we had another excellent quarter, with a current accident year loss ratio of 55.5% and an adjusted combined ratio of 56.1%. This included 29 percentage points of favorable development, primarily from our non-CAT nutritional book. Casualty and specialty remained in line with our expectations, with an adjusted combined ratio of 99.4%. Shifting to overall gross premiums written, which were $3.4 billion, down 16% from the comparable quarter, or 9% without reinstatement premiums. It is important to remember that our results last year included the California wildfires, which increased loss activity and drove most of the $340 million of reinstatement premiums in Q1 2025. After accounting for reinstatement premiums, property catastrophe gross written premiums were nearly flat. Other property was down 7%, and casualty and specialty was down 13%. David will discuss this in more detail, but these movements reflect deliberate portfolio shaping towards the most attractive classes of business. Property catastrophe is generally our highest margin business, and we have successfully found opportunities to deploy capital to grow selectively, which help offset the impact of downward rate pressure. In casualty and specialty, we have continued to trim back exposure in general casualty. We have also reduced on certain specialty classes like cyber. Rates have been under more pressure. Professional liability premiums were up in the quarter. However, this is not reflective of growth in the portfolio. It was driven by lower premium adjustments last year, lower premiums last year related to negative premium adjustments and a reclassification from professional liability to general casualty. Looking ahead, in the second quarter, we expect other property net premiums earned of around $350 million and an attritional loss ratio in the mid-50s. And casualty and specialty net premiums earned of approximately $1.3 billion and an adjusted combined ratio in the high 90s. Turning now to fee income, where we generated $94 million of fees, with management fees of $48 million and performance fees of $46 million. Performance fees were higher than our expectations due to a combination of strong underwriting results, favorable development, and a one-time recognition of deferred performance fees related to a return of capital by DaVinci. Looking ahead to the second quarter, we expect management fees to be around $50 million, And performance fees will vary by quarter, but should come in around $120 million for the year, absent any large loss events or favorable development. Turning now to investments, where retained net investment income was $304 million. This was down about 3 percent from the fourth quarter due to lower average interest rates in the first two months of the quarter. We recorded $357 million of retained mark-to-market losses in the quarter. About half of these are related to our fixed maturity portfolio, and the other half related to equity losses, which were consistent with the volatility experienced in the broader market. While increased Treasury yields have a short-term negative impact, they also improve reinvestment yields, which support our longer-term earnings power. During the quarter, we took advantage of financial market volatility to adjust the composition of our portfolio. First, we reduced our retained investment portfolio's exposure to gold from 5% to 2%. In doing so, we realized gains from a hedge that has performed well for us and has been profitable both in the quarter and since inception. Second, we increased our exposure to high-quality investment-grade corporate credit, where spreads and all-in yields offered attractive, risk-adjusted returns. At the same time, we reduced our exposure to shorter-term treasuries. And third... Through these allocation changes, we extended duration on the retained portfolio to 3.4 years from three years and increased the yield on the portfolio. In the second quarter, we expect retained net investment income to trend slightly up. Finally, I want to briefly address private credit investments. Private credit assets are diversified across managers, substrategies, sectors, geographies, and vintage years. We invest through institutional closed-end structures run by high-quality managers. We emphasize senior secured lending and other areas where structure, collateral, and manager selectivity provide downside protection. Further, we have limited exposure to currently strained areas such as software or through BDCs. We believe current volatility provides opportunities to selectively increase our exposure to private credit. In summary, our investment portfolio performed well and we took advantage of market volatility to incrementally improve the investment portfolio composition. We believe these changes will improve expected net income on a growing invested asset base. Moving now to a few comments on tax and expenses, our overall effective tax rate for our GAAP net income was 6 percent. We had a few one-off items which benefited the tax rate, and we expect it will return to low double digits next quarter. As a reminder, Although non-controlling interest results are included in pre-tax income, we are not taxed on the earnings that belong to our capital partner investors, which reduces our gap-effective tax rate. This quarter, we also benefited from the Bermuda Substance-Based Tax Credits. As you will recall, last year we were able to realize 50% of the value. In 2026, we were able to recognize 75%. About two-thirds of the value is reflected in underwriting, and had a 90 basis point impact on the combined ratio with the remainder in corporate expenses. Inclusive of the credits, our operating expense ratio for the quarter was 4.1%, up from 3.7% in the comparable quarter, or flat when you factor in the impact of reinstatement premiums in the first quarter of 2025. There were a few one-time reductions in the quarter which pushed this ratio down, But looking ahead, we continue to expect our operating expense ratio to grow to 5% to 5.5% over the year as we continue to invest in the business. Let me close now with capital management, where our earnings strength and consistency continue to generate substantial capital. During the quarter, we repurchased 1.2 million shares for $353 million at an average price of $289 per share. And through April 24th, we have purchased an additional $105 million of our shares for a year-to-date total of $458 million. We expect to continue our disciplined approach to capital management in 2026, first by seeking to deploy capital into desirable underwriting opportunities, and second, by returning excess capital to our shareholders at attractive prices. So in summary, I'm pleased with our performance in the quarter. Each of our three drivers of profit continue to deliver strong results and demonstrate the benefits of our diversified earnings model. And with that, I'll now turn the call over to David.

Thanks, Bob, and good morning, everyone. In the first quarter, we delivered strong financial results across each of our drivers of profit and differentiated Renaissance III in the market through superior underwriting execution. I couldn't be more pleased with the underwriters' performance. The team retained profitable business, grew selectively, and maintained underwriting discipline with a focus on preserving margin. Great adequacy across the portfolio remains attractive and should continue to support strong shareholder returns. At each renewal, our underwriting team has two objectives. First, deliver our market-leading value proposition to clients and brokers. That supports a durable pipeline of renewable business, first-call status, and favorable signings that are resilient to competition. Second, construct the optimal underwriting portfolio across business segments to support each of our three drivers of profit. and generate capital-efficient, attractive returns both in the current year and over the cycle. Our underwriting team's excellent execution of both objectives continues to differentiate Renaissance REIT. We combine underwriting expertise, portfolio management, and capital flexibility to identify the best opportunities, and we are able to convert those opportunities into signed business because of the value we bring to our clients. We support them consistently over the years, offer large lines, and lead market quotes, often when others will not. We transact with them holistically across products, geographies, and balance sheets, and when they have claims, we differentiate with speed of payment and claims insights. This is why we are successful in securing the lines we target, even when programs are oversubscribed. It is also why we have been able to capture more than our market share of new demand and continue to shape the portfolio toward more attractive risks. Our first quarter results demonstrate the continued efficacy of these actions. Our portfolio drove underwriting income of over $580 million, supported by a strong current accident-year loss ratio of 53 and favorable prior development across both segments. Let me cover our segments in more detail, starting with property. As we discussed last quarter, the January 1 book saw property CAT reinsurance rates down on average in the low teens for our portfolio. U.S. accounts were down closer to 10% and international and global accounts closer to 15%. At today's rates and favorable terms and conditions, property CAT is still highly accretive with strong rate adequacy. We successfully deployed capital into this attractive market. We retained the majority of our portfolio and deployed $1 billion of new limit. This was a strong team effort and it demonstrates our ability to access high quality opportunities in a competitive but still very profitable market. As a result, gross written premiums in property catastrophe, our highest margin business, were roughly flat, down only 3% from Q1 2025, excluding reinstatement premiums. Specifically, we deployed additional limit by focusing on two main areas, First, we grew on accounts and layers with the most attractive margins, such as select California deals impacted by the wildfires and certain nationwide accounts. Second, we grew with several large U.S. clients where we captured new demand on business which remains highly rate adequate. Global accounts and international business experience more rate pressure than the U.S. portfolio. These accounts remain attractive due to the diversified portfolios we maintain with them and the pipeline of renewable business they represent. We also saw opportunities in the retro market to purchase additional protection at attractive terms. Seeded rates were down high teens across our portfolio. We are a significant buyer of retrocessional protection and our first call for purchasing opportunities, similar to our position in the Inwards book. In addition, we upsized our Mona Lisa cap bond at significantly more attractive terms and conditions. Looking ahead, we are making good progress on the U.S. mid-year renewals. We've already bound about half of our U.S. mid-year portfolio, and roughly half of that has been on private terms. The Florida market continues to benefit from strong pricing, reduced social inflation due to tort reform, and robust terms and conditions. As a result of this improved environment, policies at Citizens are at a record low. The shift from public to private markets benefits the entire distribution chain, including increasing demand for reinsurance. We grew in Florida through the Validus acquisition and organically in 2025. I feel confident in the current positioning of our portfolio and our ability to access profitable business from existing programs and new demand in Q2. In other property, we continue to shape the book to reduce peak exposure while preserving attractive margins. The business is performing well with strong current and prior year loss ratios, reflecting the quality of our underwriting decisions and our disciplined management of the book. Terms and conditions remain strong, but pricing is under more pressure. We are trimming exposure in the most pressured areas and improving expected net profitability through seeded reinsurance. Turning to casualty and specialty, market conditions are a continuation of what we experienced at 1.1. We see ongoing rate increases in general liability, which are necessary in order to keep pace with lost trend. And we see increased competition in specialty and credit lines in response to recent profitability. We've been optimizing the casualty and specialty books through risk selection, portfolio mix, and greater use of seeded reinsurance. Our team has done a fantastic job of underwriting our clients' business across the various classes they purchase. This is especially important for the casualty and specialty business, as it allows us to pick the best deals within each class and construct a more diversified portfolio. In general liability, we have reduced on deals which are most exposed to social inflation. Our exposure to this class is down 40% over the last two years, but premiums are down significantly less because of rate increases. In addition, we have been proactively shifting the portfolio mix to weight the best returning business, with specialty and credit now making up more than half of the portfolio. We've consistently used seeded reinsurance in the segment to manage risk and optimize returns, and at 1.1, we found new attractive opportunities to increase these protections, on long-tail lines of general and professional liability, and specialty classes such as marine energy. Today we see 20% of casualty and specialty premiums compared to 13% a year ago. As in property, we see the entire market from an inwards and outwards perspective and are uniquely positioned to construct the optimal net portfolio. These actions are important examples of how we shape the portfolio. They allow us to stay on the right panels, preserve valuable options, and enhance the overall quality of the book. Improved margins will take time to emerge, but at the same time, we continue to benefit from the investment income generated by float on casualty reserves. So even in a period when underwriting margins and casualty remain tight, the business continues to support book value growth and shareholder returns. Before I close, I want to address the war in the Middle East. Based on what we know today, we do not believe the war will have a significant impact on our book for several reasons. First, we have low underwriting exposure to the region. war is excluded from standard property policies. Finally, our potential exposure would come primarily from our specialty portfolio, specifically war on land and marine war, and we purchased retrocessional protection on these portfolios. War on land is a line where property damage from war is explicitly covered, modeled, and priced for. Some of the damaged hotels and refineries in the region have purchased this cover, but take-up rates and coverage limits are relatively small compared to property policies. Marine war coverage is included in most marine policies but can be canceled and repriced on 72 hours notice. We have detailed information on locations and vessels that have been hit and will continue to monitor developments closely as the war evolves. Stepping back, we continue to manage our underwriting portfolio to generate attractive returns, even in a competitive market. We are growing where economics are attractive and reducing where they are not. That discipline supports all three of our drivers of profits. Property is contributing mostly through underwriting income and fee income, while casualty and specialty is contributing mostly through fee income and investment income. All of these factors support strong shareholder returns and sustainable earnings power. And with that, I'll turn it back to Kevin.

Thanks, David. In closing, this was a strong quarter and another good example of the earnings power and resilience of our business. Each driver of profit performed well. Underwriting was especially strong, including excellent current accident year performance and significant favorable development. Fee income exceeded expectations. Net investment income remained robust, with stronger reinvestment economics supporting future earnings power. And we repurchased shares in a disciplined way while maintaining a strong capital and liquidity position. Taken together, this quarter demonstrates what Renaissance RE was built to do, generate active returns across environments by combining underwriting expertise, third-party capital management, and investment capability. Three diversified drivers of profit rather than any single one allow us to deliver more consistent earnings through the cycle than we could have produced even three years ago. The market remains competitive, but opportunities remain attractive. Most importantly, we remain focused on the same objective that guides our decisions every quarter, grow earnings, compounding book value over term, and creating long-term value for our shareholders. And with that, we'll open it up for questions. Thank you.

Thank you. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. If you wish to remove yourself from the queue, you may do so by pressing star 2. We remind you to please unmute your line when introduced and, if possible, pick up your handset for optimal sound quality. In the interest of time, we ask that you please limit yourself to one question and one follow-up. And we'll take our first question from Elise Greenspan with Wells Fargo.

Hi, thanks. Good morning. My first question is on the mid-year renewals. I was hoping, I guess it's a couple parts, right? You guys said, I think you bound around half of the U.S. book already. So I was hoping to get a sense of the pricing you saw on what's been bound, expectations, right, on the remainder that will be bound between now, right, and

and the mid years and then are you guys observing any changes in demand um across that renewal hey elise this is david um so i think you know the q2 deal that we've seen so far is a pretty much continuation of what we saw in q1 you know in q1 our rates were down mid-teens as a portfolio but that was split between closer to 10 for us cat and closer to 15 for international and globals so we've seen that mostly continue Into Q2, we were still seeing a lot of opportunities for private terms. If you recall last year, Q2, there was a lot of Florida business that we were able to access a lot of private terms. What we're able to do with these early renewals is lock up our capacity early at terms better than the market, and the clients are able to fill out the placement from there. So we're really encouraged by how the team has been able to engage in that. New demand is actually higher than we thought at 1.1. If you go back a little bit, we were saying $20 billion of new demand in 2024, $15 billion in 2025, and we thought $10 billion was our estimate for 2026. That's looking closer to $15 billion now, but we won't know until all the Q2s are done. So we're seeing really good opportunities across the normal Q2s and the Florida book. That growth in demand, I'd also add, is from a lot of core personalized clients, which are buying new reinsurance because they have growth in TIV and keeping up their programs with inflation. So... really good combination for us to deploy capital into that.

Thanks. And then my second question, can you just give us a sense of how much losses you booked for Iran in the quarter? And I'm assuming that all stays within the specialty casualty segment within the combined ratio there. And then would you expect to book additional losses in the Q2?

So let me start there. The As David had mentioned, we're generally somewhat underexposed to the lines that are most exposed to the Iran war. We have good transparency on the ships that were hit and the other on-land targeted properties as well. And those are all reserved within our portfolio. Additionally, we are being cautious in thinking about the uncertainty from the ongoing war and being cautious about releasing IV&R within the casualty specialty segment. The losses are within specialty. They are within marine and marine energy. but it is fully reflected. If more happens in the second quarter, we'll have to reflect that in the second quarter, but we feel good about where we are. It's really just a couple points into the casualty specialty segment, but it doesn't foreshadow what could be happening going forward.

Thank you.

Thank you. And we'll take our next question from Josh Unker with Bank of America.

Yeah, thank you for taking my question. So in Bob's prepared remarks, he spoke about the operating expense ratio moving to somewhere around 5.5%. You said on the last conference call that you were talking 5, 5.5. You did 4.1 this quarter. I guess a few questions. Number one, that's a lot of money, 150 basis points in annual expenses. What are you investing in? And two, don't you get the offsetting tax benefit from the payroll tax adjustment? And isn't that pushing that down at the same time you're guiding investors think it's going to rise?

Josh, thanks for the question. I did address in the prepared comments, but let me expand a little bit more. The 4.1 percent that you saw in the first quarter was down because of some one-time items that came through, typically non-recurring in the first quarter. The core is probably closer to mid-4%, maybe mid-4+, maybe mid-4.6% that we have out there. Yes, we are investing in business. Here's how I see it. 4.5%, 5% is a very relatively low expense ratio relative to the industry. So we feel good about that. That gives us the opportunity to invest in people and our platform to be able to operate at scale, and we will continue to operate at scale. Specifically, we're building out a new front office system for REMS that we've talked about before. So these are significant investments, and we expect to continue over time to grow, so we need that operational expense base to be there. And, yes, for expenses that we incur in Bermuda, we will get that tax credit relative to the people and what we invest in non-people. So we did reflect whatever we're investing will come in as a small offset to it. And I did also say we expect to grow into this over the course of the year. Okay. So it's a gradual.

Okay. So 5.5% is not your targeted 2026 expense ratio. You expect it to creep towards 5.5% through year end.

Five to 5.5%. We have control over that, you know, in terms of how we spend it. But it will grow.

And are these one-time expenses, or is this like an investment in capabilities that will moderate in 27, or do you think that's going to be the new normal?

People are part of our run rate. You know, when we build out a system in REMS, that's a non-recurring over time.

Okay. Thank you very much. Thanks.

Thank you. And we'll take our next question from Mike Saramski with BMO.

Hey, great. Thanks. Going back to the commentary about specialty segments, the net gross kind of changing, it sounds like that's a permanent change. But there was no guidance change on the the kind of combined ratio in that segment. So just curious how we should think about it. Are you laying off just more tail risk? I know that segment, especially on the marine side, has had some cats in recent years, even though I don't know if cats are embedded within that high 90s guidance for that segment too. Thanks.

Hey, Mike, this is David. I can address what we're doing from an underwriting perspective on that. So first of all, in the casualty and specialty segment, we've used seeded for many years. If you go back about 10 years, we seeded about 28%, 30% of the book. So this is in the normal course of how we use seeded to shape the portfolio. We see the whole market inwards and outwards, so we're able to make those trades and construct a portfolio with all that in mind. The types of seeded that we've grown into, it's been more quota share on the long-tail book. And on the marine energy book, we've bought more excess of loss with broader coverage. So those are the two things. They perform distinctly different roles. The quota share provides risk income in the short term, but it also provides protection if losses deteriorate. And on the energy side, it would provide some protection for events such as the Iran war, to the extent that those might grow. So it's a really effective way to position the portfolio. And that's what we're accomplishing now on it, and we expect to continue to see opportunities throughout the year as capacity comes into the market and the year develops.

Got it. That's helpful. And then switching to the investment portfolio, Bob, you talked about some fairly material changes, so I think we'll all have to kind of go through the transcript. But I guess at a high level, I just want to confirm, you know, moving – taking profits in gold puts a good chunk of additional assets into the fixed income bucket, which probably extended duration, so we should add an additional bump to the fixed income run rate from that reallocation, or are there other more moving parts that we should be thinking about?

Thanks for the question. I did try. There was a lot going on in the portfolio, but when you really break it down, it comes in probably three kind of distinct buckets. One is the gold we reduced. I mean, as Kevin pointed out in his prepared comments, we knew that was going to be a good hedge. The value just accreted to us faster, so we reduced the exposure, and we still have a small piece of gold in our portfolio, which we think that's a prudent allocation across our investment guidelines that we have internally. Second is we focused on the structure of the portfolio, kind of holding in a higher rate for longer. My comment about reducing short-term treasuries that had a high yield and moving that out to investment-grade credit in a significant way allowed us to extend that and lock it in, hence the duration increased. And therefore, we have a higher credit quality and gave us an impact to our new money yield that went from 4.8 to 5.1. So that we saw was a good structure and a long-term position. And then we wanted to clarify the importance of private credit to our investment portfolio. We feel good about it, and I think that's what I was trying to share in the comments. So if you break it down, it's really those three areas with an outcome of a little bit longer duration and overall a higher yield that you'll start to see trending in next quarter.

And, Bob, just quickly, if you move further into private credit, opportunistically, just roughly, what type of yields are you seeing?

We don't really share. We are capturing the liquidity premium that we get above the investment grade positions out there which can range from, you know, 200 to 300 basis points. And then we have – because it's hard to look at it because when you think about it, we've got direct lending, we've got distressed, and we've got secondary. And they have different return profiles over time. So they're all performing within our expectations, in some cases exceeding them.

And our next question comes from Andrew Anderson with Jefferies.

Hey, good morning. On the new demand at June, is that skewing towards more traditional layers versus aggregate covers and, you know, of the aggregate business? What is the appetite to write that?

So, the new demand has been, I think the most important thing from our perspective is the quality of the pricing, the quality of the overall risk, and the quality of the buyer. So, We've seen demand come from sustained buyers, the nationwide personal lines companies, which are a big core client base for us. There are some aggregate programs in there. I think our view on aggregate is that there is good aggregates and bad aggregates. The aggregates that are placed in the market now and the ones that we write as part of our portfolio are well-structured. They're attaching at the capital level, not the earnings level. They're also either well-priced, and the level of attritional losses is really well understood by the market at this point. So they do make an attractive piece of the overall tower. But our approach to that new demand, we're a go-to market on that middle and bottom end, regardless of whether there's an aggregate program in there. So we can secure our line there and then use efficient capital sources to play on the top end as well and provide that one-stop shop across the board and then have really attractive returns on that meat of the program for Rennery shareholders.

Thanks. And on other property, can you maybe just talk about how durable the mid-50s attritional loss ratio there is as competition increases on that line?

This is David. I can talk about what we're seeing in the market. So the other property has had really good performance. It's had several years of sustained rate increases and improvements in terms and conditions. The rate is coming under pressure, but terms and conditions are still holding, and we've seen favorable claims trends. With the current pressure on rates, we have shifted some of the capacity there, taking some risk off the table, finding it better priced in the cat book, mainly some Florida risk there. So we have confidence in continued sustained returns on the other property book. We have options to manage through some of the softening, but I'll let Bob comment on the going forward.

Yeah, this is Bob. As I said in my prepared comments, mid-50s is where we feel comfortable given the mix of the portfolio. I mean, it'll have some ups and downs based on, you know, large events that come through. But right now, mid-50s, I think I said 55 plus or minus is kind of where I think about it.

Thank you.

Thank you. And our next question comes from Mayor Schiltz with KBW.

Thanks so much. When we think about this year's pricing for Florida at mid-year, is there any reduction in maybe the provision for initial skepticism over how well the reforms were going to work? In other words, besides risk-adjusted pricing, is there another discount working its way into pricing, or is that not relevant?

Yeah, so I think often we talk in terms of risk-adjusted pricing. So I would say that if we look back at our credit for the reforms when they were originally put into place, we have seen more tangible benefit from the reforms, which is coming into pricing. But I would say that the overall economics within Florida are reducing on a comparable level to what we saw at 1-1, and the portfolio is extremely well-rated. I think we've got good flexibility to leverage into the market. We're finding new opportunities to growing in Florida to give you some sense as to how much we like it. David's comment, you know, between other property and PropertyCat, right now PropertyCat is returning, particularly in the tri-county area, stronger returns than some of the other property, and we've made some shifts there. So we like the portfolio. We have begun to give more recognition for the reforms, which I think is warranted. and continue to think the market is highly accretive.

Okay, that's very helpful. And then a question for Bob. So you did guidance for fees in the second quarter, but the press release also noted some funds returned to some of your partners. Does that have an impact in future quarters management fees?

Just make sure I get the question, Meyer, correctly. You're talking about the capital return we had this year for the joint ventures, the $730 million. That's really a distribution that would be out there. Does it affect this year's performance? No, we'll keep in each of the vehicles the capital we need to deploy versus currently in our expectations. I mean, we had a good year. I mean, they had a good year in 2025. You can see the NCI was $900 million-plus that we earned. We're returning some of that back to the investors in those funds. So I think that's a good thing. That was the bulk of it, the $700, and we're positioned well as the underwrite in 26.

Yeah, one thing I'd add to it, the vehicles are about the same size as this year's last year, so this is really just returning earnings, and it's our normal process. We do it every year.

Okay, thanks so much. That helps.

Thank you. And our next question comes from Pablo Singson with JP Morgan.

Hi, thank you. Most of my questions have been answered already. Sorry about that. I'll drop off.

Sure. Thank you. And we'll move next to Ryan Tunis with Cantor.

Thanks. Just one from me for Kevin. Kevin, I was hoping that you could just remind us of the history of REN in terms of appetite for writing for domestic companies. I feel like at one point there were a good number and then there were almost none. And maybe put in perspective, given where the health of the market is today, how you compare that relative history in terms of your willingness not just to write in terms of

size but just breadth of seamless thank you yeah you know i've been here almost 30 years and i've seen us participate in lots of different ways in the florida market we remain highly influential in the florida market even today although it is a much smaller percent of our overall premium you know i can reflect back into early 2000s, probably late 90s, where that was about 30% of our premium coming from Florida, broadly participating, highly structured. Over the years, and I think we've talked probably starting five to seven years ago, that we decided to take more of our Florida risk coming through nationwide programs. We always had good participations on some of the larger programs in Florida, larger writers and Florida, and then kind of selected more aggressively as we went through the stack of domestic companies. Right now, our participation remains split between some of the larger Florida companies, probably a little bit more breadth into the mid-tier companies, and a lot of exposure still coming from the nationwide. So a smaller percent of the portfolio still large enough to drive the tail in our tail capital for the property cat portfolio for Southeast Hurricane. So it's a constantly evolving strategy in Florida, but it's one in which we know extremely well and we have all the levers to be able to think about where best to take it, other property, nationwide, large domestics, small domestics.

Thank you. And our next question comes from Tracy Bengeke with Wolf Research.

Thank you. Most of my questions were asked. I'll just have one for me. I was going through your proxy and your 2025 ROE target of 10.27% in the SDI plan. It stood out given how far above you've been operating, and it naturally raises questions about potentially being in the long haul of pricing decreases. given it will take a lot for your ROE to fall to that level. But you convinced me very well that you could land at 15% just from NII and fees. So could you help us understand how you want investors to interpret this ROE target?

It's not a target. It's simply something that is used formulaically to produce a change in the slope of the curve in our compensation program. So we are We try to be careful not to put it out there as a target. It's simply a formulaic input to a formula for long-term compensation. You know, there's no perfect way for compensation to work for the types of risks we're taking where casualty risks are stretching seven years and volatility from property CAD doesn't always reflect the performance of the quality of the underwriting. So it is simply... I think, a good way for us to think about how to compensate employees over the long term. If you look at me, my compensation varies with the performance of the company, but more importantly, I am deeply invested in the company with a large holding, and I put myself very much aligned with shareholders in the way I think about the performance of the company. One process for that is you could think about it as closer to cost of capital than a target for ROE, but it's not exactly that. It is really simply a mechanism for us to think about changing the slope and the curve of a compensation scheme.

Got it. Thank you. Thank you. Our next question comes from Matthew Hamerman with Citi.

Hey, good morning. Two quick questions. First, let's just... Thinking about having fewer opportunities to deploy your capital than you do quantum of capital, and recognizing you've repurchased all the shares you issued with Validus, I'm just curious whether or not inorganic corporate development is on the table for you as you think about the outlook and how that, if so, just like at this point, given what you've grown into, what would be additive?

Thanks. Firstly, obviously, we're well positioned to think about inorganic growth having fully integrated our last acquisition being validus. Nothing's changed. If we see something that advances our strategy and is financially actionable, we would take a look and be able to execute. You know, we are not looking – we're looking to advance the strategy that we have. We feel like we're a complete company with each of the components for us to continue to be successful. So, you know, if something becomes available, I think we'd be on the list for people to call. But, you know, we're focused very much on executing the strategy that we have, and we see inorganic growth as an accelerant, not as a change.

Is it – just following up on the complete platform comment, is it unreasonable to think about perhaps – business development that might have historically we would have thought about in traditional M&A terms maybe taking place more in dedicated third-party capital solutions?

Yeah, you know, I think we're always looking at adding different capital to our franchise, you know, if it serves our customers. So I don't think of that necessarily as inorganic growth. you know, if we start a vehicle or, you know, bring a new structure online. But that's something that is kind of, I would say, fundamental to our strategy, not something that I would think of as inorganic, even if it is a strategy that we don't otherwise attack today.

Yeah, that's fair. Just for clarification, I was thinking about it more in terms of, like, maybe there's a book of business at a subscale participant and buying something An entity doesn't make sense, but solving for both parties with additional capital in an off-balance sheet way could make the difference.

We can do that. Again, I think of that not to get too technical. Often that type of structure is a renewal of rights structure if it's a takeout from an existing, and that's something we're pretty comfortable in knowing how to do. So all of that stuff are things that we look at. It's really, you know, some of the more production-focused stuff, the multiples still remain quite high, though.

Yep. And then one clarifier was just that with respect to the $15 billion of potential incremental demand at midyear, can you just remind us relative to what, just to put it in kind of like, you know, underlying exposure growth terms?

Yes, the $15 billion that we referenced was $10 going to $15, and that is for U.S. cap limit. So a limit that is exposed to primarily from U.S. cap buyers and U.S. cap exposure. We had $20 billion a couple years ago, $15 billion last year, and it's between $10 to $15 this year.

And I can just use a rate online, similar rate online for that relative to REST to kind of think about what the incremental exposure growth is then? Yeah, that would be a good start. Okay. Thank you.

Thank you. Our next question comes from Alex Scott with Barclays. Hi.

First, my headpiece on some of the comments you're making around the reduced exposure, what I guess over 40% exposure reduction to social inflation impacted the most social inflation impacted parts of casualty. Could you just extrapolate on, you know, what do you see in there? What's preventing, you know, enough rate coming through that that doesn't become attractive at some point? Like, how far away are we from that? Or, you know, any of the you know, initiatives in states other than, you know, Florida, who's already adopted some tort reform. Is any of that working? We'd just love to hear, you know, the thoughts behind the reduction and whether at some point that could become a growth area again.

Yeah, I could give you a more detailed update as to what's going on there. So, for about the last 24 months, the market has recognized that social inflation and inflation in general in claims has accelerated. And that's when rates started going up. And 10 to 12 is our estimated range for loss trend, but that will vary by class. It will vary by subclass. And insurers are getting rate. Sometimes it's above that. Sometimes it's around that. The key is trend is cumulative, and that rate has to keep going, or we'll see slippage in combined ratios and loss ratios in the casualty space. So we're happy with where the business is headed. The insurers are doing the right things. Rate is the most easy way to measure that. The other areas that are important to the future success of the business is how insurers are investing in claims handling. And the plaintiff's bar has been highly successful in combating insurers and winning increasing awards. Insurers are now investing in the right data and technology. They're coordinating through the towers better. It's a C-suite issue all the way from the top down. that gets a lot of focus with insurance companies. The flip side of that is that it'll take a long time for the investments they're making to start coming through the numbers because of the way these claims get processed. So we're watching that really closely, too. But the third area that we have in order to optimize our own portfolio is figure out an inflationary environment, which deals we want to be on, which deals we do not want to be on. And so that's where we've been saying we've been reducing on the deals that are most exposed to claims inflation and social inflation, That would be deal structures where there's a lower layer excess of loss or covering the parts of the business that are most at risk for social inflation, or if an insurance company isn't making the right adjustments in claims handling. That's been the primary area of focus for us. You think going forward, like we said, the business is on the right track. We have a substantial position in that market. We have a leadership position. We're well positioned to grow if we see those margins turning around. But with the length of time it takes for margins to come through, we're going to be cautious there for now.

Got it. That all makes sense. And then the growth opportunity with some of the large seedings on nationwide contracts, could you Give a little more color there on what's the opportunity? Why are you finding that more rate adequate? And do we need to think at all about just is it enough makeshift for us to think about convective storm versus hurricane risk and having a little more exposure to some of the convective storm?

Yeah, that's a great question. If we just step back a little bit. So first of all, we've been able to deploy a billion dollars a limit in Q1 into the market. That's the easiest metric for us to measure. There have been some rate decreases, so rates are roughly flat rather than showing the decreases that are going on in the market. But the rate adequacy overall in U.S. CAT is still highly adequate, coming off the highs of the best markets we've seen in a generation. So we're really comfortable with the returns in the U.S. CAT space. But not every CAT deal is created equal, so not every layer, not every client. Our goal is to underwrite each deal, each client, make sure we have our confidence in our independent view of risk. And once we get that, we see a wide dispersion in terms of where the best deals and the worst deals are. And while there's overall strong level of rate adequacy, the team's done a great job in not only recognizing where the best deals are, but also having their client relationships to lock up the lines in those deals early. And that's another differentiator. So that's how we're approaching it and how that growth in deploying capital in to a high margin business is going to continue to impact returns going forward.

Thank you. And our next question comes from David Motsmaiden with Evercore.

Hey, guys, thanks for squeezing me in. Just a quick one on casualty and specialty, just on the accident year loss ratio. If I back out the Iran losses, it looks like the loss ratio deteriorated by about 120 basis points year on year, and that's definitely above sort of where it's been running recently. I was hoping you could elaborate on what was driving that underlying movement there.

I think if you go back and compare it to last year in the first quarter, again, comparisons to last year are difficult because of the wildfires, and we did take some specialty losses there, which would have elevated the current accident year loss rate. As Kevin said, we printed a current accident year of 70, but that included a couple points related to the Iran war going on right now. So that's kind of a better starting point when you think about it. in terms of where we are before you get events that will come through and drive that up?

We are not seeing an uptick in our loss ratio, other than we've added a couple points for Iran. So I'm not sure about the reconciliation you're doing, but that's not something that is part of our dialogue in managing the book right now.

Got it. Thank you. And then maybe just quickly, you know, just – I know you guys don't disclose PMLs, but maybe just an update on how you think that will shape up just as we go through the mid-year renewals here. I think you had talked about that being flat for southeast wind, so I'm just wondering, is that still the case? Is it going to be a little higher now just because it sounds like there might be more opportunities and more demand coming? Just hoping for an update there.

Yeah, it's a – that David had mentioned, we're deploying a little bit more capacity into the market. That'll push up the exposure we have for southeast hurricane a bit. I would say if I was giving 10,000 foot guidance, I would say relatively flat, biased a little bit more exposure, but it's not really going to change the overall profile, the risk that we're taking as an organization.

Great. Thank you. Yep.

Thank you. This concludes our question and answer session. I will now turn the meeting back to Kevin O'Donnell for any closing remarks.

Thank you for joining the call. We're proud of the results we achieved this quarter. We feel like the book is in great position, and we look forward to talking to you next quarter. Thank you.

This concludes the Renaissance Free First Quarter 2026 Earnings Call and Webcast. Please disconnect your line at this time and have a wonderful day.