S&P highlights potential for RenaissanceRe rating upgrade

S&P Global Ratings revised its outlook on RenaissanceRe Holdings Ltd. (RenRe) and its subsidiaries from stable to positive, reflecting the potential for a one-notch upgrade within the next 12 to 24 months if the Bermuda-based reinsurer maintains excellent capitalisation and positive results.

S&P also affirmed its ‘A-‘ issuer credit ratings on RenRe and its intermediate holding company, DaVinciRe Holdings Ltd., as well as its ‘A+’ issuer credit and financial strength ratings on all core operating subsidiaries.

The ratings agency highlighted RenRe’s stronger and more diverse operating earnings over the past two years, driven by the Validus acquisition, despite elevated catastrophe losses.

Since early 2023, RenRe has benefited from structural changes in the reinsurance sector, including higher attachment points, improved terms and conditions, and a hard market in property catastrophe reinsurance. RenRe also strategically chose not to renew certain business lines that did not meet its hurdle rates.

S&P noted that RenRe’s competitive edge remains anchored in its leading position in the property-catastrophe reinsurance market, its status as one of the top third-party capital managers, and its growing footprint in casualty and specialty lines.

S&P outlined that RenRe’s ratings could be raised by one notch within the next 12-24 months if: “The company sustains its enhanced earnings diversity, supported by underwriting profits from property, and casualty and specialty segments, capitalising on still-favourable reinsurance pricing.

“RenRe delivers strong consolidated operating performance in line with ‘AA-‘ peers, alongside maintaining excellent capitalisation, with redundancy at the 99.99% confidence level.”

Conversely, RenRe’s outlook could be revised to stable or its ratings lowered within the next 12-24 months if: “RenRe’s underwriting performance fails to demonstrate earnings diversity, or the company’s combined ratio underperforms compared with ‘AA-‘ peers or exceeds 100% for two consecutive years.

“The company’s capital adequacy falls below 99.99% confidence level due to significant underwriting or investment losses and we believe RenRe would be unable to restore capitalisation to 99.99% within 12-24 months.”

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