Good morning. My name is Chelsea, and I will be your conference operator today. At this time, I would like to welcome everyone to the RenaissanceRe Third Quarter 2023 Earnings Conference Call and Webcast. After the prepared remarks, we will open the call for your questions. Instructions will be given at that time. [Operator Instructions] 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, Chelsea. Good morning, and welcome to RenaissanceRe's third quarter 2023 earnings conference call. Joining me today to discuss our results are Kevin O'Donnell, President and Chief Executive Officer; and Bob Qutub, Executive Vice President and Chief Financial Officer. First some housekeeping matters. Our discussion today will include forward-looking statements, including new and updated expectations for our business and results of operations following the Validus transaction. It's 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 renre.com. And now, I'd like to turn the call over to Kevin. Kevin?

Thanks, Keith. Good morning, everyone, and thank you for joining today's call. I'd like to begin today by highlighting two significant accomplishments. The closing of the Validus acquisition and our overall strong performance in the third quarter. Both are a direct outcome of the disciplined implementation of our strategy. This has provided us the clarity of focus and consistency in execution necessary to seize the many opportunities that have presented themselves this year. Beginning with Validus, since announcing our planned acquisition in May, many teams have been working diligently across multiple workstreams. Our collective goal has been closing the transaction as quickly as possible. It is a testament to the team's hard work that we were able to get this all done by November 1st. I would like to express my gratitude to everyone at AIG, at Validus and at RenRe who contributed to this outstanding achievement. Bob will walk you through the financial details. Before he does, however, I would like to reflect on how the Validus acquisition accelerates our strategy and provides us a competitive advantage. Adding Validus to our existing platform makes us a leading global P&C reinsurer, positions us to be the premier broker market for P&C reinsurance. Adds further scale and diversification, provides efficient growth in attractive lines at a highly favorable point in the market cycle and further increases our access to risk by providing new customers, lines of business and platforms to access new geographies. It enhances the economic outcomes for each of our three drivers of profits. Deepens our relationships with AIG, one of the world's leading insurance companies through this win-win transaction. In return, they are making significant investments in our common equity as well as our capital partner businesses. And finally, it adds valuable new tools, talents and capabilities by…

Thanks, Kevin. And hello, everyone. As Kevin said, this was another strong quarter, both financially and strategically. Financially, we delivered net income of $194 million, operating income of $422 million, and an annualized operating return on average common equity of 25%. These operating results are strong on their own, but reflect a 5 percentage point dilution from the additional capital we raised for Validus acquisition. With the closing of the transaction yesterday, this capital has been now been put to work. Our three drivers of profit: underwriting, fees, and investments continues to contribute significant income for our shareholders. Strategically, we were pleased to close the Validus acquisition yesterday. This transaction builds a solid foundation for the continued execution of our strategy. It is immediately accretive to each of our three drivers of profit, as well as our book value per share, earnings -- operating earnings per share, and operating return-on-equity. Today, I would like to highlight a few key financial takeaways from the quarter before I discuss our results in more detail. I will also discuss the Validus transaction, which including how we'll report it in our financials , and the impact on our fourth quarter results. And finally, I'll provide an update on the recent Bermuda corporate income tax proposal. Starting with some highlights. First, we delivered a solid underwriting performance in the quarter with a significant level of cat activity, reporting a combined ratio of 78%. While this was a quieter third quarter than we experienced in the last three years, industry cat loss estimates in the US are approaching $20 billion, exceeding the 10 year median. Much of the industry loss this quarter came from secondary perils, and our results are benefiting from the higher rates and attachment points Validus Re required in 2023. Second, fee income…

Thanks, Bob. As usual, I'll divide my comments between our Property and Casualty segments. Starting with Property. Our Property segment performed well this quarter, delivering over $350 million in underwriting profit. It also demonstrated its resilience and ability to produce attractive loss ratios in both property cat and other property. Going forward, each will benefit from the addition of the Validus portfolio. Property's strong performance this quarter is against a backdrop of continuing catastrophe activity. This cat activity has had a much smaller impact on us than it would have had in previous years. This is due to the underwriting changes we have made, namely requiring higher rates and attachment points. Catastrophes this quarter were a mix of large events and secondary perils. Beginning with Hurricane Idalia, which made landfall on the Florida Peninsula in August 29th as a strong Category 3 hurricane. This storm impacted a sparsely populated area of the state, which should limit industry loss to low-single digits billions of dollars. Additionally, the Hawaiian town of Lahaina was impacted by severe wildfires in August. Industry loss estimates around mid-single digits billions still persist. And finally, there were a handful of other events in the third quarter. These included ongoing severe convective storm in the United States, flood in Hong Kong, and a tornado that hit a Pfizer plant in North Carolina. Over the course of 2023, natural catastrophe activity has persisted. Although, the nature of these events has deferred from 2022, we have experienced increased prevalence of smaller events and secondary perils. Our scientists at RenaissanceRe Risk Sciences believe that weather events have been influenced by a combination of slowly evolving large-scale factors. These factors include specific to [indiscernible], short-term volatility due to the transition to El Nino conditions, and enhanced energy in the system due to…

[Operator Instructions] Our first question will come from Elyse Greenspan with Wells Fargo. Your line is open.

Hi, thanks. Good morning. My first question was on the January 1 renewals. Kevin just looking for more color just on how you think rate increases could trend at 1/1 really on the cat side on a risk-adjusted basis, assuming, I guess, losses for reinsurers given where we are right now are modest for the rest of the year? Kevin O’Donnell: Great. Right. Thanks, Elyse. I'm going to divide my answer between where RenRe is and where the market is. And the reason being is, because RenRe with the closing of Validus, we're in a very different position going into this 1/1 than we were going into last year's 1/1. As I've said in my comments, we are already one company. We have all of the Validus risk reflected on a pro-forma basis in our risk systems. And we have, by the end-of-the week, all of the Validus employees co-located with us. We've been talking to our clients and to our brokers. So, we go into this renewal in a very, very strong position as a single company into what is a very accretive market. Last year we had a conversation where we talked about the step-change that was required in -- that was achieved over the course of the year. So when we go into -- let me just start with Property. When we look at the property renewal, we're going into what we think will be a significantly easier renewal than what we experienced last year, because of the achievements over the course of the year. I think buyers had reset expectations. One thing that didn't materialize over the course of this year is the increased demand that we anticipated. We believe that demand will come in, in 2024. So there'll be relatively steady supply because capital has not been flowing into the business at an accelerated pace. We think there is increased demand and that should create a healthy tension for pricing. So from a relatively strong pricing environment, we have expectations of private -- a positive rate change, but rate change that's not disruptive. I would consider last year's rate change is disruptive. This year's will be positive, but more manageable. From the casualty perspective -- no, go ahead. Sorry.

No. Keep going Kevin. Thank you. Kevin O’Donnell: Yes, sure. So from the casualty perspective, we've talked before that we looked at casualty over a 10-year rolling basis. Most lines of business right now on an underwriting year basis are providing strong returns to capital, but more rate is required because of the prior year rating cycles. So we look at this market as very accretive, one in which rate is above trend, but perilously close to trend in many classes. So, what our strategy will be as we're going to reward companies that are committed to increasing rates to stay ahead of social inflation, economic inflation and overall trend. So it's really meaning that risk selection, portfolio construction and underwriting discipline will be rewarded, which really plays to our strength. So, I think that the casualty market is in a very strong place, but one in which underwriting will be rewarded, which puts us in a preferred position, property very strong, and specialty is kind of like property, where we went through a step-change last year. We believe it's a strong market. We think there's good adequacy in most classes. Not all classes within specialty rates above-trend. So again, underwriting discipline and underwriting expertise will be rewarded, which should play strongly to our hand.

Thanks. And then my follow-up, Kevin, you mentioned incremental demand. I know, right, we're still a couple of months out from the 1/1s. But if you had to peg it, how much incremental demand do you think we could see? And do you think that will all come at January 1 or will that be something that we'll be talking about throughout 2024? Kevin O’Donnell: It's a great question. It will come throughout the course of 2024. I think it's too early for us to put a number on what's available. I think the one important point I would highlight is, new demand will come at the more remote layers. People will top-up their programs, I think it will be continue to be difficult to reduce retention. With that, there'll be more peak exposure coming. So, there'll be some -- some additional supply constraints, just because of the concentration, which will add to the overall positive rate environment. So, I feel we are in a good position with Validus portfolio coming on, with our capital position, with Premier, with Top Layer play into this is quite specifically. And it should help the overall portfolio, but it's difficult to calibrate exactly how much of that demand will come into the market, but it will be our expectations it's in the billions, single-digit billions.

Thank you.

Thank you. Our next question will come from Yaron Kinar with Jefferies. Your line is open.

Thank you. Good morning. And I guess, maybe a follow-up on the last question, sticking more on the supply side. So, are you -- I'm trying to understand, we haven't seen new entrants in ILS still seems to be holding back, but at the same time, you're talking about 25% return, it's actually depressed given the Validus capital because that was waiting to be deployed into Validus. So, if I look at that and think about others that are also generally 20%-plus returns right now, that does suggest what a good $60 billion do more of generative capital by incumbent reinsurers over the course of 2023. So I guess my question is, do you think that additional supply will still not exceed incremental demand over the course of 2024. Kevin O’Donnell: It's a really good question. The demand is not proportional to the portfolios that are already built. So demand is -- the demand that's likely to come to the market, which would be the pull on the additional supply that you referenced from retained earnings is going to on balanced portfolios, because it's going to be peak driven, because that's what primary companies need to protect. So that capacity -- that supply can tamper some of the demand or need some of the demand, but it's not -- it cannot all be deployed against what is likely to come to the market, which is those top players. If you look at what we did this year, that is exactly why we bought Validus. So we raised the money over the summer. And what we said is, that money will be fully deployed, which happened yesterday. Our portfolio is 100% diversified, similar to what it was prior to that and fully deployed, which is not something that can be achieved in the short-term by growth. So, I think when I -- when we look at this the expectation of how the market is going to change in 2024 is consistent with our forecast and our strategy to buy Validus [indiscernible] against diversified basis against the capital raised, I think it's even more important to point out recognizing where we are in the market.

Got it, thank you. And then maybe shifting gears to investments. So, Bob. I think you'd referenced $260 million of expected retained NII in the fourth quarter. Does that contemplate the reallocation of the investment portfolio. Obviously, you are holding a lot of liquidity and risk-free essentially waiting for the Validus deal to close. How quickly can you reallocate that into maybe a more -- in-line with longer-term expectation investments and how much of a lift do you get from that?

That's a good question. We've been working through that. As we spoke, we had an ability to reposition some of the portfolio to the $500 million. So we actually were able to direct payments to some shorter-term securities lot of T-Bills and shorter-term notes. And I think that's -- sorry, we had the ability to position the portfolio pre-purchase with that $500 billion -- $500 million allocation. The $217 million will come down when we redeploy the. $1.4 billion -- that $3 billion a little bit, because that was being invested in there. But we had pretty significant upside already. We were 2%, when we looked at it probably five months ago with the repositioning of the portfolio to the shorter-duration similar to ours. That is going to take us up to $260 million. So $260 million is a better reflection of the run-rate this quarter. And as we go into 2024, we should expect to see that continue to lift.

And that continued look, is that just coming from higher interest rates or also from the reallocation of the portfolio?

Our new money, what I alluded to or I said in the call was that our new money rate is 6% right now, and we're closing in on that. So, we have upside of 4.9% in what we've seen this quarter, 4.7% for the book yield. So, we'll see upside, we'll see it continue to grow as rates --rates are kind of all-around right now, but we're still benefiting from where they are at.

Thank you.

Thank you. Our next question will come from Josh Shanker with Bank of America. Your line is open.

Yes. Thank you very much. Given [indiscernible] and the Fed's comments yesterday and whatnot, maybe either there's going to be an ending to the inverted yield curve and a steepening, does this change at all how you orient the investment portfolio. Would you have a smaller allocation to short-term and be willing to go out to three or four years or what's normal in the portfolio income securities that are currently maybe three months in duration? Kevin O’Donnell: That's a great question. We have a lot of agility in the portfolio and the teams is looking at how do your leg into some longer duration right now. We've seen rates moving around, but it's a balancing act between what you've seen with the Fed has said, [indiscernible] the economy still seems to be on fire. For the bond market players, well, I think it took some -- captured some duration of what you're seeing right now with the 10 year and in the five year. But we're actively looking at it, Josh. It’s a good question. Duration will not happen overnight, we'll leg into it over time.

And so, Bob, when you have a phone with us after this call here and you have all this $4.6 billion in investments, you've just received from AIG. How you shape that rate now and [indiscernible] currently investing in a bunch of securities that AIG is choosing. What are you going to do with that portfolio in 45 minutes.

On the portfolio has -- a lot of it's been pre-positioned. We got out of that since we had a $500 million allocation that we could remove assets from that portfolio and put into T-Bills. And that's what we get. We directed them to do it -- fund administrator and they took care of that. So that of think about things like single-asset backed securities, we don't want to hold. There things in there that we don't like that are not in our portfolio. We got rid of most of that. So the portfolio is more like ours than not. So, I think that gives us a very distinct advantage and it's a pretty short-term portfolio. It’s around 2 point -- just under 3. So it's getting close to our duration. Q - Joshua Shanker And if I get one more in, any guidance. I'm having a big boost in the investment portfolio for the last two months of the year. Sequentially, what that's going to do to net investment income comparing 4Q 2023 to 3Q 2023.

Two factors in that. The $3 billion that we put out there for Validus will come out of our existing portfolio and be refunded back in by $4.5 billion. So you're going to get a net increase of about $2 billion. And that's why you get up to that net change is up about $40 million to $260 billion. That’s how we get there.

Okay. Thank you very much. Kevin O’Donnell: Thanks, Josh.

Our next question will come from Meyer Shields with KBW. Your line is open.

Great, thanks. Kevin, in your comments you mentioned that you didn't really see an uptick in demand for cat cover this year, but you expect it next year. Is there something you could flush out why you think that will play out that way? Kevin O’Donnell: I think we may have even touched on it once or twice in our calls earlier is. I think many buyers were surprised about the discipline for the change in rates that was required by reinsurers at the beginning of last year. With that, they ran at a wallet for demand that they already had identified that they wanted to purchase. I think as they are more prepared for this renewal, having seen the rate stick throughout the year, they'll have a budget process that is more flexible to include the wallet to pay for the new limit.

Okay. That makes sense. Second question, I guess one area where we have seen some capital come in is in the cat bond market. And I was wondering does that have any implications for Vermeer? Kevin O’Donnell: You know I think the capital market is -- has had a good year. I think it's probably slowing a little bit for the pace of new money coming in. But it's something that Vermeer is designed to be an efficient vehicle to compete with both cat bonds and traditional players. So the more [indiscernible] activity tends to be at the Vermeer internationally at the top layer type level. But we continue to have great success deploying Vermeer. In lieu of people issuing cat bonds, but also alongside people who have chosen issued cat bonds as well, so.

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

[Operator Instructions] And our next question will come from Alex Scott with Goldman Sachs. Your line is open. Q – Alex Scott: Hi. First one I had for you is just sort of high-level on growth as we look across property and casualty. It seems like at least relative to one of your peers who recently reported, there is a little more restrain around where and how you're willing to grow. And yes, I just wanted to understand what are you seeing in the environment? What are the underlying drivers of those decisions? Is it seeing more opportunity at 1/1, is sort of to do with the Validus transaction, what are the underlying reasons for that if you could?

Yes, let me they start-off and then Kevin may add couple of comments. We've seen growth all year. The third quarter is a difficult quarter when we look at on a year-over-year basis, because most of our renewals are done by the end of the second quarter. Think about 1/1 over half our growth. That's why in my prepared comments, I really want to point you back to the year-to-date number. Year-to-date property cat has grown by 40%, once you take-out the reinstatement premiums. Specialty, which again, when we looked at the rates had a trend we saw that grew by 38%. So, we saw the opportunities over the course of this year, but we also were selective in professional lines, we dropped by 30%. So, we made choices that were out there and we have the opportunity in the market to show that growth. And we've had a really good opportunity throughout the course of the year. And that's why we pointed it back to full-year. Kevin O’Donnell: Yes. If I can add. I think Bob is absolutely right. The year-to-date numbers look great. I think it's important also that we were positioning the portfolio for yesterday. What happened yesterday is, we brought in the Validus book into a portfolio that had been optimized to accept it. The way -- from an underwriting perspective, that book is now reflected in REMS. And the way we reflect that book is through in-force gross written premium. We have said that we believe going-forward the gross premium that we will retain $2.7 billion with upside. The actual portfolio on an in-force basis that we brought into REMS yesterday was $3.7 billion. What in-force premium means is, that's the amount of premium that underwriters have the ability to touch over -- that's embedded in the Validus portfolio. So we have significant optionality when we talked about the $2.7 billion. And we have grown tremendously because we brought in $3.7 billion of diversified premium against our capital base yesterday. So when I think about it, we can't isolate a quarter without talking about Validus because so much of what we did was to be prepared to accept that portfolio and to be operational against it today.

Yes, that all makes a lot of sense. Second one I had is, I guess, just on new capital formation in the market, any observations around what you're seeing headed into year end and how impactful that maybe to the supply and demand dynamic. And I guess, sort of in the same vein, any commentary around your third-party vehicles and ability to go out and get capital to take advantage, rethinking [indiscernible] Kevin O’Donnell: Sure. You know, one comment, I mean, since I don't believe there'll be a class of 2023. I think it's very late in the cycle for that capital to come in. It certainly can't be operational by 1/1. If we were raising equity, we would have done it by now, because we would want to have interactive conversations with clients and brokers. So there may be equity raise between now and year end. But from the lens that we would place on it, it's late. From an ILS perspective, we're a different capital partners business than others. We traditionally -- most of our vehicles are rated. So draft, collateral and other things that has been the bane of the market don't really exist on our platform. The fact that we underwrite all the risk, we are the largest investor in DaVinci. We share the risks in [indiscernible] across our other -- across our platform. So there is a sense of security in the underwriting that's achieved at RenRe for investors to feel comfortable. The structures of the vehicles provide them more flexibility than traditional ILS platforms. And many of our investors, for that reason, are in more than one vehicle. We are not constrained to grow ILS. We are optimizing the platform against the ILS opportunities. We want to bring to that capital and the risk that we want to retain on our own balance sheets. I think the rest of the market will remain a bit challenged to increase -- certainly will not be able to increase at a scale that's disruptive to our strategy.

Very helpful. Thank you.

Our next question comes from Brian Meredith with UBS. Your line is open.

Yes, thank you. Kevin, I'm just curious. There's been some other companies have talked about some potential significant opportunities in the casualty reinsurance marketplace. Could you kind of talk about what you think from that perspective? Kevin O’Donnell: Yes. I think -- from a reinsurance perspective, I think we're in a strong position. I think our capacity is strongly needed coming in with the bigger portfolio with Validus were more important to bigger clients. We believe that there is increased recognition for the required rate at the primary level that nearer to the benefits proportional. And reinsurers seem to be developing disciplined press on ceding commissions. So when I look at it, I think not every line-of-business is equally attractive. Not every client is equally skilled in leveraging into those attractive markets. I think we're in the best spot to grow with the most skilled cedence in the most preferred lines. There's been a lot of discussion about rate change in D&O and professional lines. And I think all of those things are things that we are looking at carefully. But I think the platform that we've built and the scale that we have puts us in about a stronger position as one can be going into the renewal.

Great. That's helpful. And then my second question, of the $2.7 billion-plus premium that is coming in. I think Bob you kind of alluded to this, but how much of that do you believe are like a percentage will sit on your balance sheet versus going to your third-party capital vehicles?

When I said we just did. That's the email I got before coming into the call. So -- which I have to say I'm extraordinarily proud of the team to be able to turn this around that quickly. I can tell you we are shifting not only Validus, but RenRe's risk-sharing to optimize DaVinci, Fontana, and all of our own balance sheets. So it's not as simple of a question of saying we're going take 50% of the property cat from Validus and move it. We're actually shifting what is coming from RenRe Limited as well. I would say the overall -- Fontana will grow, DaVinci will grow by a smaller percentage, RenRe will drop its percentage share with DaVinci and Fontana with ballpark be 50-50. So that's without reading the email. So more to come on that, but that's about where we think the optimizations will lie. Q – Brian Meredith: Great. Do you anticipate raising some more capital in the third-party DaVinci to handle the Validus portfolio. I mean, obviously as AIG coming in, but more than that. Kevin O’Donnell: Well, we've got retained earnings in AIG coming in. I think again, this is a control that we -- that is -- it’s a lever that's in our control. And I think if you look at the capital generation at limited, and then what's going to be generated at DaVinci, Fontana, and then the other vehicles. I think we're going to hold relatively flat on additional raises with DaVinci, may be a little bit more in Fontana.

Thanks for answers. Kevin O’Donnell: Yes. You're welcome.

Thank you. That does conclude today's Q&A portion. I would now like to turn the floor back over to Kevin O' Donnell for any additional or closing remarks.

Well, thank you. I would say that the last few days have probably been my proudest and most exciting days at Renaissance. We've seen the Validus portfolio come over. We are delighted to welcome the new team, every diligence we did reaffirmed the quality of the portfolio and the opportunity to bring shareholder value. We're looking at accretive markets in 2024. And I think we are in a very enviable position as we think about servicing our clients and bringing shareholder return over the course of 2024. So thank you for your time and we look forward to reporting back.

Thank you, ladies and gentlemen. This concludes the RenaissanceRe third Quarter 2023 earnings call and webcast. Please disconnect your line at this time and have a wonderful day.