Good morning. My name is Chelsy and I will be your conference operator today. At this time, I would like to welcome everyone to the RenaissanceRe Second Quarter 2022 Earnings Conference Call and Webcast. After the prepared remark, we will open the call for your questions. Instruction will be given at that time. Thank you. And I will now turn the call over to Keith McCue, Senior Vice President of Finance and Investor Relations. Please go ahead.

Thank you. Good morning. Thank you for joining our second quarter financial results conference call. Yesterday after the market closed, we issued our quarterly release. If you didn't receive a copy, please call me at 441-239-4830 and we will make sure to provide you with one. There will be an audio replay of the call available from about 1:00 PM Eastern Time today through midnight on August 2nd. The replay can be accessed by dialing 800-938-2806 in the U.S. or 1-402-220-9034 internationally. Today's call is also available through the Investor Information section of www.renre.com. Before we begin, I am obliged to caution that today's discussion may contain forward-looking statements and actual results may differ materially from those discussed. Additional information regarding the factors shaping these outcomes can be found in RenaissanceRe's SEC filings to which we direct you. With us to discuss today's results are Kevin O’Donnell, President and Chief Executive Officer, and Bob Qutub, Executive Vice President and Chief Financial Officer. I'd now like to turn the call over to Kevin. Kevin? Kevin O’Donnell: Thanks, Keith. Good morning, everyone. And thank you for joining today's call. We are pleased to report that RenRe generated strong second quarter results that combined consistent bottom line profitability with continued top line growth. For the quarter, we delivered an annualized operating return on average common equity of 18%, our third sequential quarter of double-digit ROEs. Importantly, we also increased our net premiums by 23%. On a year-to-date basis, we have a reported operating ROE of 14.4% and growth in net written premium of 21%. Overall, our strong financial performance this quarter reflects the resilience of our business model across macroeconomic environments. It demonstrates that our strategy can consistently deliver profitable growth with improved performance across all three of RenRe's drivers of profit, underwriting…

Thanks, Kevin and good morning, everyone. Q2 was a strong quarter for RenRe as we reported operating income of $238 million and an annualized operating return on average common equity of 18.4%. These are excellent results that demonstrate strong underwriting performance, the capabilities of our platform and our continued focus on executing our strategy to consistently deliver profitable growth. As I said last quarter, we believe that there is further upside to our earnings across each of our three drivers of profit. We progress each of these drivers in the second quarter. First, our casualty and specialty business is on track to consistently deliver a mid 90s combined ratio on a growing premium base. This quarter casualty and specialty reported a 94% combined ratio and generated $52 million of underwriting income. Second, our net investment income is benefiting from rising interest rates and increased investment leverage. This quarter, our managed net investment income was $107 million, up almost 30% from the first quarter and we anticipate continued improvement as our new money yield is nearly double our current net investment income yield. And finally, fee income increased to $34 million and we remain on target to earn fee income in the range of $45 million per quarter, by the end of the year, absent any large losses. All of these factors should reinforce a stable earnings foundation that we believe will benefit our shareholder returns. Now moving on to capital management. And as you know, our first priority is to deploy capital into the business, which we view as our highest return potential and then return excess capital to shareholders over time at attractive levels. In the second quarter, we chose to return a modest amount of capital to shareholders through share repurchases at attractive levels. We also continued to…

We’ll now take our first question from Elyse Greenspan with Wells Fargo.

Hi, thanks. Good morning. My first question on the capital side of things, you guys mentioned that you wanted to have some dry powder to capitalize and opportunities as they emerge. Does that imply that you guys are going to be on the sidelines with buyback until there’s more clarity on the January one renewals or how should we think about the timing and when you guys might consider returning to buying back your shares?

Yes. Thanks for the question, Elyse. It’s Bob. Hope you’re doing well today. Yes. In my comments, I did indicate we’re not going to buy any more shares back in the third quarter and we’ll keep a careful eye on the fourth quarter and how we see the opportunities developing for the one-one renewal. So in short, dry powder, it’s better deployed into the business than returned highest return value.

Okay, thanks. And then my second question, Kevin, you guys – you said, right, that you guys pulled back in Florida, but Southeast wind remains the peak portfolio. How is the net exposure to Florida this year compared to last year? And then of the reinsurance treaties that you have with the Florida domestics, are there termination provisions in the event as seed and is downgraded below A by Demotech and were you guys also successful in efforts to obtain upfront payments? Kevin O’Donnell: So let me break it down. With regard to the PMLs across property and other property, we kept the Southeast wind PML roughly flat from a dollar amount from where we were last year. So with that, we’re getting a lot more rate and a lot more margin in the business, even adjusting for inflation and climate change. So we feel really good about the portfolio, but we decided to hold risk levels relatively consistent to where they were last year. The – a few accounts that we have, I think I mentioned we had six major relationships with Florida domestics. These are companies we think are better positioned than most in the Florida market and it’s ones in which we’ve had longstanding relationships. There are provisions for cancellation, not each of them are the same. And we did not get upfront payment on the premium. We’ve known these guys for a long time. We’re pretty comfortable with the portfolio we’ve built down there.

Thank you. We’ll take our next question from Jimmy Bhullar with JPMorgan.

Hey, good morning. So first just a question on the pricing environment. Your comments are obviously pretty positive. I just wondering if you’re seeing any of your competitors or the market as a whole soften up on rates a little bit, just given the fact that interest rates are higher and that’s benefiting investment income? Kevin O’Donnell: No. If anything, we’re seeing continued discipline from competitors, not only with price, but with terms and conditions. So I think we’ve seen some contraction, particularly on the cat related capacity side, where there’s increasing reluctance for competitors to put cat capacity out which is helping support pricing. And then generally across, as I mentioned, within Casualty and Specialty programs are less oversubscribed than they were last year. So that’s again, pushing more power to the reinsurance market.

Okay. And then on the non-cat side, have you seen any changes in session rates by any of your clients? Kevin O’Donnell: Not meaningfully, but they’re not increasing. So we’re seeing on well performing accounts, we’re seeing session rates be relatively flat on accounts that need some remediation work. There is increasing pressure on session rates.

Thank you. Our next question comes from Meyer Shields with KBW.

Thanks. Good morning. A couple of quick ones. One Kevin, Bob, can you give us a sense in terms of with the one third of the cap premium you’re retaining where the significant geographic exposures are? Kevin O’Donnell: It’s the peak risk around the world. The number one peak risk that we manage is Atlantic Hurricane and within Atlantic Hurricane is specifically Southeast Hurricane. So when we think about that, that’s where our capital decisions and that’s what’s dominating the tail of the distribution, even with the larger Casualty and Specialty portfolio. It’s the mix has been pretty consistent with what it’s been for several years the major exposure regions around the world, California earthquake, North Europe then followed by Japan.

Okay, perfect. Second, in Casualty and Specialty, I guess the year-over-year loss ratio improvement slowed a little bit. Is that connectivity in that segment or something else?

No, that’s when you’re talking about just the current action and your loss rate that we have in there. It’s a blended rate between our Casualty Specialty, specialty credit moved around a little bit, but we did take an adjustment for Surfside this quarter. Once the settlement was announced, that was going to be paid small management less than a point.

understood. And I think this is mostly an accounting question, but if I look at the operational expenses in the cat segment, they’re up in the mid 30% range on a year-over-year basis. And it’s something you could talk us through that?

It’s mainly the fees that come through the offset expenses that are reflected in our underwriting expenses. That’s a lion share of it. There’s also been some investments that we’ve made in the property cat modeling that Kevin has talked about.

Okay, perfect. Thank you.

Thank you. Our next question comes from Ryan Tunis with Autonomous Research.

Hey, thanks. Good morning. First question for Kevin, could you give us some sense of how much better would pricing have had to have been at midyear for you to wanted to increase your Florida PMLs? Kevin O’Donnell: With the book that was renewing and some of the issues in Florida, the reason I'm hesitating, I'm not sure what rate would have enticed us to put more capacity out. I think had there been more nationwide programs and with the rates that we were seeing, we were pretty close to wanting to put out more within the whole organization on balance. We did put out more limit, but more of it was shared with our partners than kept on our retained balance sheets. So I would say, we're pretty close to where rates should be for us to want to begin to think about adding to PML. Florida, specifically being a different story because of the issues within the low – to the domestic market there but for Southeast wind, I would say we're pretty close.

Understood. Thanks. And then just a follow up, from a loss ratio perspective, the mortgage business you're having in Casualty and Specialty, is that it sounds like that's a decent mix shift. I'm assuming the loss ratios are quite a bit lower than the casualty business. Is that the right way to think about it? Kevin O’Donnell: Yes. The credit business generally – specialty is generally outperforming casualty currently from an expected ultimate developed loss ratio. And within that, the mortgage portfolio is kind of leading the pack.

Thank you.

Thank you. Our next question comes from Josh Shanker with Bank of America.

Thank you. Question on, you did mention a little bit, but obviously one of your whole profile competitors said they don't want to be in the property reinsurance market anymore. And property reinsurance has increasingly come in negative word for a lot of your competitors. To what extent, do you measure the amount of capacity available in the market has declined over the past 12 months? Kevin O’Donnell: So we definitely measure the amount of limit purchased and we can measure that quite precisely. It is a little bit more difficult to manage how much supply is uncommitted to the market. So, we look to see and from the demand side, how many deals are repriced? How many deals are we getting? How many deals are we getting preferred private terms on because that's an indication that the capacity is at pretty close to equilibrium with the demand. I would say right now, the sense that we have is that supply is decreased, but it's pretty closely matched to where the market is buying. I think with increased demand at one-one, we're going to see further rate pressure come into the market and reinsurance led pricing, which we haven't seen for a long time, or at least that's what I'm optimistic for.

And when I look at the premium ceded in your P&L, and then I also look at the fee income you're generating on third-party vehicles, it seems like there's been a lot less third-party retro purchase and a lot more first-party retro. To what extent is that the pricing has changed to the point where you want to be buying it from your own book. And to what extent is it that there's the third-party capacity, just out there in the market. Kevin O’Donnell: And so I answer your question, third-party mean outward ceded and first part mean…

Meaning ceded to one of your own sponsored vehicles, as opposed to ceded to a non-RenRe related party. Kevin O’Donnell: Okay. Yeah. Ceded reinsurance has become more expensive. And with that, we are looking carefully, we've got some long-term partnership deals that continue to support the portfolio that we have more straight excess of loss. We've been very successful buying a similar program to support the London business. Some of the other portfolios we have reduced the amount of third-party outward ceded that we purchased just from a capacity and from a pricing standpoint. With that, the flexibility of our platform, we have added more capital to some of our joint ventures and allowed them to participate on the risk that otherwise would have been written and protected and limited. Excuse me, render limited. So the answer to your question is, we are buying less third-party and we are sharing more with partners.

Okay. Thank you. Kevin O’Donnell: Yes.

Thank you. And our next question will come from Michael Phillips with Morgan Stanley.

Thanks. Good morning. Quick numbers question first, I think, property expense ratio, you talked about some of the reasons why that was elevated, mix shift, and then some other nuances there. Any way you can quantify the magnitude of that second piece of nuances specifically the lower amount of managed capital that impacted the expense ratio? Kevin O’Donnell: In fact in your question, you were talking about the performance and management fees coming through as an offset to it, less of it coming through management fees also enables management fees have remain relatively stable. The performance fees come off against that. It's you can do the math on it. I don't have the number exactly on what the reduction here is in front of me, but that would be less of an offset this year than there was last year. We've also made, like I said, some investments in the property cat space and also in the other property space to understand the risk better.

And Bob because of the mix shift component of that some of – with more other property versus property cat. But comments about kind of opportunities and property cat should that mean that maybe we could see a little bit more of a benefit to the expense ratio going forward than otherwise we might.

Yes, it's fair to say.

Okay.

A lot of the other property portfolio is written on a proportional basis. So with that, there's much higher acquisition costs. If our property cat is a pretty consistent portfolio with much, much lower acquisition costs. So if we weight more towards property cat, the overall property segment expense ratio should decline.

Okay, good. Thank you. And then the second question relates to the reserving process. Kevin, you talked about a little more due diligence because of inflation. I guess another angle on the reserving pieces, I'm curious if you've seen any kind of backlog or on claims payment or slower payment pattern at all, maybe your segments that it leads to kind of a bigger body of claims that are out there than otherwise is the case that could also impacted by inflation. Have you seen any kind of slowdown in payment patterns is the question? Kevin O’Donnell: Yes, that’s a great question. And it’s very hard to quantify. We believe that some of the good news we’re observing in looking at our reserves warrant, additional conservatism because of the COVID-related slowdown in the courts and potentially in processing. So we are – we believe that there’s a slowdown again, very difficult to measure it, but with that we are being even more cautious and recognizing good news in our reserves.

Do you think that’s more pronounced that slowdown? It’s hard to recognize. Is it more pronounced in one of the segments than the other? Kevin O’Donnell: You’ve cut out for the last thing?

Sorry. Yes. Do you think that the slowdown, that’s hard to quantify. Is that more pronounced in one of your segments than the other? Kevin O’Donnell: I think that’s difficult. I think it – No. No, I would say the longer tail lines is where we’re most worried about it. So it’s something we’re probably more concerned in casualty and specialty than in property. But within the casualty and specialty classes, I would say we’re equally concerned among most of the classes certainly in casualty.

Okay, cool. Thank you very much.

Thank you. Our last question will come from Yaron Kinar with Jefferies.

Good morning. Thanks for taking my questions. First question is one that I actually asked last quarter and I apologize that I’m still a little confused over it. And that’s with regards to the buybacks. I think you’ve said in the past, you’re tying the buybacks to net earnings, that said, there is a little bit of a transitory component there mainly you had some marks on interest rates that I guess you’re expecting will reverse and therefore you can continue with buybacks. I just want to make sure that I’m thinking about the moving parts correctly. Is it tied to net earnings? Is it tied to temporary net earnings? Is it tied to operating earnings? How should I think about buybacks?

There’s two parts to that one, Yaron. One is we had tied it to income. We declared it as net income. We did have temporary differences, but we see it as an opportunity too. It’s not an absolute test, but we did buy shares back when we did have a mark to market loss. We tried to clarify that on the call. But more importantly, what we’re looking at is deploying it into the best opportunity. And right now we’re looking in the macroeconomic environment. We see that opportunity as deploying it into the business. So in the absence of doubt, we will not be buying any more shares back in the third quarter, which I outlined here earlier. And we’ll be looking cautiously at the fourth quarter to see if those opportunities continue to develop at the 1/1 renewal process that Kevin feels optimistic about. So I hope that’s clear in terms of our guidance. There is no single metric that we have out there. It’s where it is the best opportunity for us to deploy it and create long-term shareholder value.

Okay. Kevin O’Donnell: We’re excited about what we’re seeing in the markets and preserving capital to be able to deploy it as we approach year end and we think this is the smartest thing to do right now.

Got it. And then in terms of the opportunities you’re seeing in the market, maybe tying this back to one of your competitors’ decisions to pull out of the property reinsurance. Do you see that as offering you additional opportunities in the casualty and specialty book as well? Kevin O’Donnell: Yes, I’m generally pretty optimistic right now where the market’s going. The way I think about it is I look at what is the drivers of our results through the lens of kind of the three areas of profit Bob highlighted. So if we take our underwriting, we’re still seeing very strong casualty rates. We have great access to the best business and rate is continuing to be above trend. Looking into what’s happened to the yield curve and the new money rates we’re seeing on the investment portfolio, lots of opportunity for us to continue to grow investment income and have that be a major contributor to earnings. Our fee business is continuing to grow and doing great. I think there is a little bit of reticence among third-party capital investors, but there’s been a flight to quality and we’re certainly the winner of that. And then from the property perspective, we’re continuing to see new demand come to the market. We’re seeing increased reluctance from competitors to put out capacity with that we’re seeing strong rate change, which we think will persist. So when I break down the things that are currently embedded in the things that drive our earnings, there’s no reason for me to think that they’re going – they’re going to do anything but persist and probably get even more beneficial to our strategy.

I appreciate that. I guess what I’m trying to get to though is ultimately, I guess there is a view in the market that says that you have to be able to compete in both property and casualty and reinsurance in order to compete effectively. Do you think that is – that’s a dynamic that could play in your favor considering the pullback from some of your competitors? Kevin O’Donnell: So we definitely benefit from providing coverage across all lines at scale to our seasons. I think a lot of times a buyer looks to how much property CAT they’re going to purchase and starts thinking about their sessions first from a property CAT lens that should additionally put us in the most preferred position going into year-end as well.

Thank you.

Thank you. I would now like to turn the floor back over to Kevin O’Donnell for any additional or closing remarks. Kevin O’Donnell: Thank you for joining today’s call. We’re pleased to deliver the strong quarter that we did and hopefully our comments reflect the optimism we’re seeing in the quality of the current portfolio and for what’s to come. Thanks again.

Ladies and gentlemen, this does conclude the RenaissanceRe second quarter 2022 earnings call and webcast. Please disconnect your line at this time and have a wonderful day.