RenaissanceRe Holdings Ltd. (RNR) Q4 2025 Earnings Report, Transcript and Summary

Good morning. My name is Nikki and I will be your conference operator today. At this time, I would like to welcome everyone to the RenaissanceRe Fourth Quarter and Year-End 2025 Earnings Conference Call and Webcast. [Operator Instructions] I will now turn the call over to Keith McCue, Senior Vice President of Finance and Investor Relations. Please go ahead.

Thank you, Nikki. Good morning, and welcome to RenaissanceRe's Fourth Quarter and Year-End 2025 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'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. The company we have built is fundamentally different from what it was just a few years ago. We are larger and significantly more diversified, geographically by line of business and by source of income, with much larger contributions from investment and fees. I begin with this context because this time last year, a few would have predicted the strong financial performance we delivered in 2025. Our industry faced multiple headwinds, including the California wildfires, a softening reinsurance market and lower interest rates. In the face of these headwinds, our larger size and greater diversification allowed us to deliver strong financial results. Bob will, of course, walk through the financials. But first, I would like to highlight some of the most notable achievements. Operating income was $1.9 billion. Operating ROE was 18% and tangible book value per share plus accumulated dividends, our primary metric grew by 30%. This is the third year in a row where we have grown this metric by over 25%. As a result, over the last 3 years, we have more than doubled tangible book value per share. Capital management was also notable. We repurchased $650 million of our shares during the fourth quarter, 13% of our shares over the course of 2025 and 17% of our shares since the first quarter of 2024 when we began repurchasing post Validus. I am pleased to report that we have now repurchased more shares than we issued in connection with the Validus acquisition. The cumulative return on our share since then a little over 2 years ago has been around 30%. This demonstrates our ability to raise capital and we have an attractive opportunity, reward investors by returning capital as we realize its benefits and execute transactions with minimal long-term dilution. Bob will speak to you in greater depth regarding our financial results, but overall, I am proud of our performance. Moving now to address strategic results in 2025. Strategically, if 2024 was about retaining the Validus portfolio and successfully integrating the company, 2025 was about maintaining our underwriting book and optimizing our larger and more dispersed operations. We undertook a number of internal initiatives to improve efficiency and effectiveness and better manage our increased scale. We are upgrading our underwriting system to be more customer-centric and enhancing the architecture to be more efficiently organized to benefit from the growing influence of artificial intelligence. Moving now to some remarks on our Casualty & Specialty segment. Aggregate underwriting profits on the portfolio have been almost $500 million over the last 5 years without the impact of purchase accounting. As we have discussed, however, earnings from this business emanate from 3 separate income streams, underwriting fees and investments. It's harder to see the full benefit of Casualty because fees are offset in our NCI and investments are not split by segment. This year alone, Casualty & Specialty contributed about 1/3 of our operating income across our 3 drivers of profit. The goal of any line of business is to grow tangible book value per share over time. In Casualty, there is a trade-off between underwriting results and investment results. Typically, when one is high, the other is lower and vice versa. Over a 10-year cycle, this balance of profit shifts back and forth, but nevertheless contributes to growth in tangible book value per share. Currently, the balance within the officially portfolio is heavily skewed toward investment returns. As a result, the market has tolerated rising technical ratios. This reduces underwriting margins available to compensate for inherent volatility. My belief is that technical ratios will fall, but is difficult to predict when. For now, we will continue to monitor this class closely and make appropriate adjustments. That said, while margins are tight, Investment in fee income from Casualty are currently a substantial driver of book value growth. So we are not recognizing much underwriting profit today, which we think is the right approach in the current environment and are still making a strong overall return. I want to briefly touch on the January 1 renewal and our outlook for 2026. David will address this in more detail. Property CAT rates for us were down low teen percentages. We found some opportunities to grow, which should keep top line premium in Property CAT down only mid-single digits, excluding the impact of reinstatement premiums. Terms and conditions mostly held solid including retentions. As I previously mentioned, we are a larger and more diversified company. Two drivers of these changes occurred in 2023. The step change in Property CAT and our acquisition of Validus. So I think a comparison of our present opportunity set to the pre- '22 to 2023 period is constructive. To begin, rates in Property CAT remain attractive and well above return levels realized in the years before 2023. Equally important, most of the structural changes made in 2023 are still in place. As a result, our reinsurance portfolio in 2026 is still one of our best, a few other favorable comparisons to 2022. Our underwriting portfolio is roughly 1/3 larger. Our retained net investment income has tripled and our fee income has more than doubled. In aggregate, when we look at our current state versus where we were before 2023, all points of comparison are favorable. Our increased scale and diversified sources of income mean we are more resilient to loss. This gives us great confidence in our reinsurance portfolio and our continued ability to deliver consistent, superior returns to our shareholders. I'd like to finish my comments with a discussion about how we plan to continue growing tangible book value per share this year at an attractive pace by employing a similar strategy to last year. This strategy was something I discussed last quarter and was composed of the following factors: first, to maintain or grow our property business; second, focus on preserving underwriting margin; third, prioritize Casualty cedents who focus on claims handle practicing over those who solely focus on rate; fourth, continue to grow fees in our capital partners business; fifth, continue to grow invested assets; and finally, continue returning capital to our shareholders by repurchasing shares at attractive valuations. I should add one more point to this list, which is continue to execute our gross-to-net strategy to arbitrage competitive cap on market and retro markets. As you can see, we have quite a few strategic levers to keep returns attractive. This is the playbook we successfully ran in 2025 and is the one we will run 2026. That concludes my initial comments. I'll turn it over to Bob to discuss our financial performance for the quarter and for the year before Dave provides a more detailed update on renewal in our segments. Thank you.

Thanks, Kevin, and good morning, everyone. In 2025, we demonstrated the efficacy of our strategy and the persistence of our earnings profile, delivering operating income of $1.9 billion, even with a $786 million net negative impact from margin. My comments today will focus primarily on the drivers and sustainability of these annual results. I also want to touch on some highlights from the fourth quarter, where we delivered operating earnings per share of $13.34 and an operating return on equity of 22%. In the quarter, all 3 drivers of profit produced strong results, specifically, underwriting income was $669 million with a combined ratio of 71%, fee income was $102 million and retained investment income was $314 million. Both fees and retained net investment income are among the highest we have ever reported and demonstrate that we have continued to optimize these drivers as our underwriting portfolio has grown. Building on this, there are 4 numbers I have consistently highlighted that demonstrate the strength of our earnings profile and our ability to absorb volatility. The first number is 15 points which is the annual aggregate contribution to our overall return on average common equity from our investment and fee income in 2025. This is consistent with 2024 and creates a stable base of earnings each quarter, which we then build upon. The second number is $1.3 billion, which is the underwriting income we generated in 2025 including a $1.1 billion underwriting loss from the California wildfires. Underwriting is the core of our business and provide significant upside to the earnings base from fees and investments. The third number is $1.6 billion which is the amount of capital we return to shareholders in 2025. Throughout the year, we purchased over 6.4 million shares. The average price of these share repurchases was near book value, essentially returning all of our operating income with minimal dilution. We believe that our stock represents excellent value at current levels and expect share repurchases to continue in 2026, in line with our long history of being good stewards of our shareholders' capital. And finally, the fourth number is 31%, which is the amount we grew tangible book value per share plus change in accumulated dividends in 2025. As Kevin highlighted, we have more than doubled this metric over the last 3 years through a combination of strong retained earnings and disciplined capital management. Now I'd like to turn to a detailed view of our three drivers of profit, starting with underwriting where we delivered excellent results with an adjusted combined ratio of 85% for the year. This performance is particularly strong, given that we absorbed several large losses across both segments. For Property Catastrophe specifically, we reported a current accident year loss ratio of 64% for the year and an adjusted combined ratio of 60%. This current accident year loss ratio included 50 percentage points of losses from the California wildfires and 3 percentage points of losses from Hurricane Melissa. Property catastrophe also benefited from 24 percentage points of prior year favorable development primarily from large events in 2022 through 2024 and changes to attritional loss estimates. Note that in the fourth quarter, in Property Catastrophe, we reduced our total estimate of net negative impact from the California wildfires by $42 million driven by lower case reserves reported by our cedents during the renewal process. In Other Property, we delivered exceptional results in 2025 with a current accident year loss ratio of 62% and an adjusted combined ratio of 60%. This is the lowest annual combined ratio we have delivered since we started reporting the Other Property class of business. The Other Property current accident loss year ratio for the year included 8 percentage points from the California wildfires and 2 percentage points of losses from Hurricane Melissa. Other Property had 33 points of favorable development from prior years, primarily related to attritional losses. In Casualty & Specialty, we reported an adjusted combined ratio of 102% for the year. This includes 4 percentage points from large loss events in 2025. In the fourth quarter specifically, we reported losses on two recent events, the UPS aircraft crash and the Grasberg mine landslide in Indonesia. These 2 events impacted our quarterly adjusted combined ratio by 4 percentage points, pushing it to 102%. Prior year development and Casualty & Specialty on a cash basis was slightly favorable for both year and the fourth quarter, before the impact of 50 basis points of purchase accounting adjustments. Across our underwriting portfolio, gross premiums written for the year were $11.7 billion and net premiums written were $9.9 billion. Both roughly flat compared to 2024. In Property Catastrophe, we leaned into opportunities in the U.S. and grew gross premiums written by 5% this year and by $17 million in the fourth quarter in both instances without the impact of reinstatement premiums. Gross premiums written in Other Property declined by 11% in the year. We have been holding exposure flat in this class while managing a declining rate environment. This book continues to produce strong results. In Casualty & Specialty, gross premiums written in 2025 were roughly flat compared to last year. We found opportunities to grow our credit book, primarily through seasoned mortgage deals. This offset declines in Casualty, where we have been optimizing the book and negative premium adjustments in Specialty, largely from rate deceleration in cyber. Looking ahead to the first quarter, we expect other property net premiums earned to be approximately $360 million and attritional loss ratio in the mid-50s. In Casualty & Specialty, net premiums earned of around $1.4 billion and adjusted combined ratio in the high 90s, absent the impact of large losses. Moving now to our second driver of profit, fee income in our Capital Partners business. Fees were $329 million for the year, up from 2024. Within this management fees were $207 million and performance fees were $121 million. This performance is particularly impressive given that the California wildfires suppressed fees in the first quarter. We fully recovered from this event in the first half of the year and performance fees have surpassed our expectations for the last 3 quarters due to strong underwriting results and favorable prior year development. Capital Partners produced excellent results throughout 2025 and continued strong engagement from our third-party investors and fees should remain a key driver of our financial success. Looking ahead to the first quarter, we expect management fees to be around $50 million and performance fees to return to around $30 million, absent the impact of large catastrophe losses or favorable development. Moving now to our third driver of profit, Investments where our retained net investment income for the year was $1.2 billion, up 4%. We increased retained net investment income every quarter starting at $279 million in the first quarter and rising to $314 million in the fourth quarter. This outcome is primarily the result of net growth in underlying assets as well as proactive actions to selectively add credit throughout the year. This included increasing exposure to investment-grade credit, agency mortgage-backed securities and high yield. Additionally, we have retained mark-to-market gains of $1.1 billion, driven by gains from equities, interest rate movements in our fixed maturity portfolio, and commodities, mainly gold. As we have previously discussed, we took a position in gold at the end of '23, which we added over the last 2 years as an inflationary and geopolitical hedge. Since we made the investment, gold has doubled in price and led to over $400 million in retained mark-to-market gains this year. Our retained yield to maturity of 4.8% reduced from 5.3% in December of 2024 due to falling short-term yields. And our retained duration decreased from 3.4 years to 3 years. This was primarily related to our decision to reduce duration at the long end of the curve, while increasing exposure to securities with a 3- to 5-year duration. Looking ahead, we expect investment income to remain a persistent and meaningful contributor to our results and anticipate retained net investment income around similar levels in the first quarter. Now moving to some comments on tax. 2025 was the first year we incurred a 15% corporate income tax in Bermuda, and we demonstrated our ability to continue producing excellent returns in a higher tax environment. As a reminder, our overall effective tax rate on our GAAP net income is often lower than this 15%. This is related to noncontrolling interest, which is subject to a minimal amount of income tax. You'll see this in the rate reconciliation in our 10-K when it's filed. In the fourth quarter, the Bermuda government introduced substance-based tax credits designed to encourage investment in Bermuda. There are two main components of the credit. Compensation-related and expense-related. The credits will be phased over time, scaling from 50% of the benefit in 2025, increasing to 100% in 2027. We have a significant presence on the island and the credits provide a positive tailwind to our results, acting as an offset to certain operating and corporate expenses. Due to the timing of the legislation, we recognize all the 2025 credits in the fourth quarter, that were applied at the phase-in rate of 50%, and you can see the benefit to our expense ratios. Specifically, the credits reduced our annual operating expense ratio by about 60 basis points and our annual corporate expenses by about 15%. Starting in 2026, we will recognize the credits on a quarterly basis at 75% of their value and then their full value in 2027. We also recognized about $70 million in cash benefit from our Bermuda deferred tax asset in 2025. This is in addition to the tax credits I outlined above. Next, moving to expenses, where our operating expense ratio for the year was 4.7%, down slightly from last year. This reduction is largely driven by the substance-based tax credits I just discussed and partially offset by continued investment in our business and the year-end bonus accruals. Looking ahead, we expect our operating expense ratio to average between 5% and 5.5% as we continue to invest in the business. In conclusion, we delivered strong results in the fourth quarter and throughout 2025, driven by meaningful contributions from all three drivers of profit and disciplined capital management. As we look forward, our three drivers are positioned to produce similarly strong results in 2026 for the benefit of our shareholders. And with that, I'll turn the call over to David.

Thanks, Bob, and good morning, everyone. As Kevin and Bob both explained, we have maintained profitability throughout a wide range of market conditions because of the diversification across our 3 drivers of profit. Strong underwriting underpins the stability of our earnings because each of our 3 drivers of profit are ultimately fueled by our portfolio. I'm proud of the underwriting portfolio's contribution to our financial results in 2025 and equally proud of our execution at the recent renewals, which will support sustainability of strong returns going forward. I will expand on both topics, beginning with our 2025 performance and how superior underwriting supported strong results across each driver. Starting with underwriting income. During 2025, we shaped our already attractive portfolio to make it even better, growing Property CAT, holding our profitable positions in other Property, Specialty and credit and reducing in the Casualty lines that were most exposed to high levels of claims inflation. As a result, in 2025, our underwriting portfolio generated $1.3 billion in income with solid current year performance despite several large Property and Specialty events. Prior year performance was highly favorable, reflecting the strength of our historical underwriting decisions and a disciplined reserving approach. With respect to fee income, we deployed efficient partner capital in both Property and Casualty & Specialty. This enabled us to trade broadly across programs with large capacity while also resulting in $329 million of fee income for the year. With respect to investment income, our underwriting portfolio has generated a $22 billion diversified pool of reserves. These reserves are our primary source of float, which gives us meaningful investment leverage and result in substantial sustainable net investment income for our shareholders. Both segments contributed significantly to our overall return on equity through these 3 drivers of profit. Property contributed primarily to underwriting and fee income and Casualty & Specialty contributed primarily to investment and fee income. This was by design. And as our results demonstrate, it was a highly profitable to construct our portfolio in this market. Moving on to the January 1, 2026, renewal. As an underwriting team, we have 2 primary goals at each renewal. First, deliver our market-leading value proposition to clients and brokers. This ensures a sustainable pipeline of renewable business, first call status and favorable signings, which are resilient to competition. Second, construct the optimal underwriting portfolio across business segments to feed each of our drivers of profit and generate capital-efficient risk-adjusted returns in any given year and over the cycle. I believe we achieved both objectives at January 1. Competition follows favorable reinsurance results, and we saw increased supply of reinsurance capacity with pressure on rates and margins. We were starting from a strong position, however, and remain confident in rate adequacy across the portfolio. As I mentioned last quarter, this is not a market where all risks are equally attractive or equally accessible. We succeeded in building a differentiated portfolio by deploying our underwriting expertise to select the most attractive risks and our broad client relationships to achieve the most attractive signings. We took a deal-by-deal and client-by-client approach, trading our participation on programs holistically across lines and geographies. This resulted in us securing our desired lines when many others were signed down due to competition. It also facilitated targeted reductions in some cases without impacting the lines we wanted to maintain. I'll now walk through our actions at the January 1 renewal in more detail by segment, starting with Property. Our goal in Property Catastrophe was to maintain our existing portfolio and deploy additional capacity into attractive opportunities. Reinsurance supply was up following several years of strong results. This additional supply resulted in increased rate pressure globally with rates down on average in the low teens for our portfolio. Retentions and terms and conditions remain consistent with recent strong levels. We successfully renewed our existing line and deployed new limits selectively across our owned and managed balance sheets. Overall, we expect to see a reduction in gross premiums written in Q1 due to rate decreases, which will be partially offset by growth from new demand. Modeled margin in the Property Catastrophe book remains well above the cost of capital. And as we described last quarter, there are several mitigants to the effect of rate decreases on our net retained business. First, we shape our portfolio with ceded reinsurance, which improves our net result. Ceded rates were down high teens across our portfolio. In addition, we renewed a series of our Mona Lisa CAT bond at a larger size with spread tightening by more than 50% on a risk-adjusted basis. And finally, we share a significant part of our portfolio with capital partner vehicles, which produces fee income, which is less sensitive to rate movement. This strategy has resulted in an average underwriting margin of over 50% over the last 3 years, and we remain confident in our ability to continue producing strong returns in our Property CAT book. In other Property, our goal was to optimize the book to reduce peak exposure and maintain attractive margins. Following several years of profitable results and favorable claims trends, we are experiencing rate pressure. Terms and conditions such as deductibles and policy supplements remain strong. At the January 1 renewal, we maintained our positions across other property but reduced exposure in areas with the most rate pressure and managed net profitability through improved ceded purchases. Shifting now to our Casualty & Specialty book. In Casualty, we aimed to fine-tune our positions to continue to manage exposure to areas most at risk of continued loss inflation. After reducing exposure significantly in 2025, our approach at the January 1 renewal was lighter time. We trimmed back on programs where we saw below average results while continuing to benefit from rate increases across the book. Over the last 18 months, clients have been keeping up with trend in general liability by increasing rates. Many clients are further differentiating themselves through investments in claims handling. These improvements will take time to be reflected in results, but we like the progress that is being made. We measure the success of our Casualty business over a 10-year period and believe we have made the right underwriting decisions for this point in the cycle. Maintaining our Casualty positions on the best panels gives us options to benefit from improved underwriting margins as the market strengthens, while still allowing us to earn a strong return from the float in the interim. For every dollar of Casualty business we write, we benefit from more than $0.20 of investment income. This is the best way to construct our portfolio in this market and makes our casualty portfolio highly accretive to book value over both the short and long term. And finally, in Specialty and Credit, our goal was to hold our positions in profitable lines and shift the balance towards the highest margin classes. In Specialty, we have a strong leadership position across lines, and we're successful in achieving positive differential terms on several placements. Our ability to trade with clients across classes of Property, Casualty & Specialty enabled us to successfully maintain lines despite competition, and we increased diversification by geography and line of business. In Credit at this renewal, we maintained our shares in profitable business and selectively grew into opportunities across the portfolio. We expect profitability to remain strong. We purchased a significant amount of ceded reinsurance in the Casualty & Specialty business and found attractive opportunities at 1/1 to increase our protection. Putting this all together, gross premiums in our Casualty & Specialty portfolio are likely to be down in 2026 compared to 2025. Net premiums will be down more than gross given increased ceded purchases. Underwriting margins remain tight in the segment. We continue to expect an adjusted combined ratio in the high 90s. As I described earlier, however, we are confident that we have effectively balanced trade-offs between underwriting margin and investment income, driving healthy returns for shareholders. In closing, we enter 2026 with deep client relationships and an underwriting portfolio built to optimally support our 3 drivers of profit, all of which position us to continue delivering superior shareholder returns this year and over the long term. And with that, I'll turn it back to Kevin.

Thanks, David. To close our prepared comments, our performance in 2025 gives me great confidence in the future. We anticipate that each of our 3 drivers of profit will remain robust sources of income in 2026. More importantly, we have the strongest team in the industry, and I couldn't imagine a company better positioned to succeed in any and all market environments. As a result, we expect to continue to deliver outstanding shareholder value over the course of the year. Thanks. And with that, I'll turn it back to you to take the questions.

[Operator Instructions] We will now take our first question from Elyse Greenspan with Wells Fargo.

My first question is on Property CAT. You guys said that you expected, I think, premiums to be down mid-single digits, right? Because due to some changes, right, that's obviously better than the price decline you saw. I just want to confirm, is that -- that's a view for all of '26? And then if that is the case, I guess, what are you assuming within that guide happens for pricing during the other renewal seasons of the year?

Thanks, Elyse. Yes, that is our expectation for the year. If you look at the supply-demand dynamics at 1/1, we expect them to persist. So we anticipate that there'll be continued rate reductions going into the midyear renewals. That said, if we look at -- I think there's a lot of focus on rate change. If we look at rate adequacy, it's a bit of a different story. There's very strong rate adequacy in the midyear renewals. A lot of those are U.S. focused and many were affected by the wildfires. So we go into that renewal at the same risk-adjusted reduction. So if top line reductions are a little less, I think the rating environment -- a little bit more, excuse me, the robustness of the rate adequacy should serve to produce results similar to what we got at 1/1.

And then I guess my second question, I guess, is just, I guess, a number question for Bob. You guided to an expense ratio, I think, in the range of 5% to 5.5%, right? I think it was 4.7% in '25. Is that including the benefit of the Bermuda tax credits, which I know go up, right, you'll see the 75% in '26? Because I know you said your investments in the business? Or is it before or after? I just want to make sure I'm understanding the numbers correctly.

That would be after. That would be after giving effect to all things that we understand in 2026 that we'll be investing in and other dynamics. But again, I'll point out, it's still an incredibly low expense ratio.

But then what are, I guess, is it just like talent and underwriting? I guess, what are the things that you guys are investing in that, I guess, that is taking that ratio up a little bit even with the tax credit benefit?

Sure. That's a good question. We bought Validus. We brought them on Board in 2024. And as we talked about the integration of it. Each year, we layer on another $11 billion to $12 billion of premium. Each year brings more operational complexity, and we continue to invest in that. We have the scale. We've gone through a lot of work internally to be able to process that, but that takes people as we get to scale. But again, we are managing that as efficiently as we can. It comes in through new systems, better efficiency on technology, but we'll continue to manage that. I give you a range. We'll probably be at the low end of that range.

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

Yes. I'm going to ask 2 questions. I start with the odd ball because it's so interesting. Let's talk about gold. Can you talk about how that appears on your balance sheet, whether the $400 million gain is in the book value? And two, let's just say the political situation on Planet Earth doesn't change. Do you care whether gold is $5,000 an ounce or $10,000 an ounce, you're going to hold it until political circumstances change?

Let me -- I'll take the second part of your question first, and Bob can answer the accounting question. We looked at -- we put the gold position on in '24 -- '23, sorry, in '23 as we looked at the world and saw different risks emerging, and we think about the enterprise risk that we have to manage. And we thought it was a good hedge against the underwriting portfolio and a good hedge against some of the interest rate risk in the investment portfolio. It continues to serve as a hedge in the portfolio. So whether it's at $4,000 or $5,000, it's something that we're constantly looking at, but we don't have a price target to say that it's an investment and we're exiting at this point. We continue to monitor it actively against the enterprise risk we're managing.

Josh, on the second question, it represents because these are futures contracts, it's the unrealized gain on the mark-to-market. And we have a modest margin up against it. It doesn't really draw a lot of capital.

Okay. And then on the question of capital, there's a lot of companies give us PMLs and things and RenRe does not. It's part of the secret sauce. But can you talk about in any way that we can think how much more aggregate you want to put to work in property risk in 2026 or whether it's going to be a similar year 2025 and the money you make basically can be returned to shareholders?

Yes. We normally talk more about this at the next call. But our plan as we put together the pro forma for where we're going to structure the business, on a net basis, I would say we'll probably hold risk relatively flat for the hurricane -- Southeast hurricane, which is still our dominant peak. That could change if we see more opportunities or better-than-expected pricing going into the summer renewals. But at this point, I would say our risk will be on a net basis, relatively stable as far as our plan at this point, but that could change.

Our next question comes from Yaron Kinar with Mizuho.

Just want to go back to the Property CAT market. Given the declines that we saw in rates in 1/1 renewals, and I think there's some expectation of further declines in 4/1 and 6/1. How are you thinking of expected returns and rate adequacy in that book in 2026? And how are you looking to deploy capacity into that market? What areas would be more or less interesting compared to '25?

Yes. This is David. I can take that one. I think, first of all, like we said, we did see pressure, but we were starting from a very good spot. So rate adequacy is still strong. I can break that down a little bit more for you and the low teens that we saw in the overall CAT book, that is a bit separate. The U.S. CAT book that renews in Q1 at 1/1, it's about 1/3 of the U.S. CAT book. That was down about 10%, whereas the International and Global portfolio was down about 15%. So part of what we're faced with is not all risks are the same. Both of those risks are attractive in their own ways. But rating level is still high. We also see really strong terms and conditions consistent with the last 3 years. So it's not as much about how will we react to rate decreases. We have a strong level of adequacy, access to all the business and a lot of options to construct the portfolio. We do see growing demand on the U.S. side that we saw at 1/1, and we expect more in Q2 that will present opportunities. But our approach is to select the best opportunities, make sure we get the best signings and construct an attractive portfolio.

Okay. And then my second question, on recent calls, we've heard brokers talk a lot about the large opportunity for data centers in the insurance market. And I'd imagine that while a lot of that would fall into the reinsurance market as underwriters in an attempt to be prudent would look to manage their exposures. I guess I'd be curious to hear how you as a reinsurer that has both a traditional balance sheet and a large JV business, how you think about that opportunity and how you go about managing that risk?

Yes. This is David again. I'll continue to take that. So first of all, data centers are something that we currently reinsure. What's the new opportunity is the fact that there are more mega projects, which do require reinsurance capacity or third-party capacity. So it is early stages of a positive opportunity, and we're working with our clients and brokers to understand the risk as well as we can and how we deploy capacity. Our focus first is to get the underwriting and pricing right and get terms and conditions and coverage and also get the aggregation right. So we're well along the path there, and we think it will continue to be an opportunity as it grows as a market.

We will move next with Meyer Shields with KBW.

So I'm inferring from the high 90s expected combined ratio in Casualty & Specialty that you're not anticipating much of a change in reserve philosophy for Casualty lines. And I'm wondering if you look at the older accident years that are close to being settled, I was hoping you could talk about how reserves for those accident years have played out where conservative reserving is just less relevant?

Yes. I think overall, I think we're trying to be as transparent as we can on kind of the Casualty & Specialty segment and specifically GL. The book -- the Casualty & Specialty looks great. We've had favorable development last year. But the overall reserve pool for Casualty & Specialty, I think of it as the old story of a duck. It's relatively stable on top, but there's a lot of pieces moving around down below. It's moving by year and it's moving by line of business. And we continue to be extremely cautious in thinking about how to reflect and particularly in GL, the increased pricing that's coming through where pricing actuaries are putting it through on the pricing. But from a reserving perspective, we're being cautious and continuing to not reflect that at this point. So from the overall portfolio, it's behaving well with regard to the years. Most of the years that are older seem to be settling down. And much of those older years still have the protections with regard to the protections that were part of the acquisitions of both Validus and Platinum. So they're less relevant for us than they are for some others.

Okay. That makes perfect sense. And so going in a slightly different direction. One of the, I guess, chatter points for the 1/1 renewals was the increased inclusion of riot and civil commotion coverage. I was hoping you could talk about whether your exposure to that specific risk is materially different than in 2025?

Meyer, this is David. There's no real change in our exposure there. It's apparel, which was -- is covered in a very specific way with tight terms and conditions. So while the risk is in there at the levels we attach at, the retentions keep us insulated from a lot of attritional loss, and there's really no change into 2026.

We will move next with Mike Zaremski with BMO.

Bob, back to the tax credits and all the tax legislation. I think clear about '26 the expense ratio net of the credits. I guess we'll just have to see how the tax credits go up in '27. So I guess we'll have to decide if we want to also kind of re-spend some of that -- the credits as an investment unless you want to comment. And the DTA, is there clarity on how that's going to play out? Or is there going to be a write-down? I know it was a benefit this quarter.

That's a good question. I'll tackle them both. The DTA, I'll start with that one. That's a legislation here by Bermuda. So it's a matter of law, we used it this year to defer our tax liability, and we fully intend to use it in 2026 to defer the liability. The only way that changes is if the law changes, and I don't control that. I haven't been any conversation about it. So we're still moving forward on it. With respect to the credit, I kind of led in my prepared comments that it was 60 basis points on the annualized operating expense. It goes up to 75% next quarter. So it means it goes up to around 90, all things constant as my economics feature used to say, and then it goes to the full impact of 2027. We don't intend to spend that specifically as a part that comes in on the back of our spend. It does reduce our net spend. But I stick by what I was talking about with Elyse was the -- we're investing in our infrastructure, technology to be able to operate at scale.

Okay. Great. And maybe pivoting back to the Casualty & Specialty segment and specifically on Casualty, I know you've given us some good commentary so far. But if we -- let's say, if we use the Marsh pricing gauge, excess Casualty rates, which Bermuda writes a lot of, you're seeing pricing kind of accelerate up into the close to 20% range. I know Ren is taking -- you guys have taken a lot of positive reserving actions to put in conservatism. But curious, is there something brewing for the industry that is causing rate to accelerate so much in excess Casualty?

This is David. So you're right to point out that the excess Casualty, the high layers that are written by the Bermuda insurance market, some of which are our clients, although we service the global casualty portfolio, that is accelerating more than the lower layers. And that's just the effect of what the market has been doing for the last 18 months or so, where Casualty rates for all excess Casualty has accelerated as a response to accelerating loss trend. At the higher layers, it's -- the market is taking more rate than at the lower and the mid-layers. But that's what's going on there. There's nothing unique about those layers. What we're seeing overall is it's not just the rate acceleration, but it's also the investment in the claims handling. That helps all open claims, not just the new underwriting years. So really encouraged by the signs, but it's going to take time for that to come through the numbers.

Our next question comes from Ryan Tunis with Cantor Fitzgerald.

First question, just looking at the trajectory of fee income, in particular, management fee income, I would think that, that would move with the growth in the partner capital, but that was down in 2025. And it sounds like Bob's guidance was for that to kind of be flat in '26. Could you just kind of walk us through, I guess, why we're not seeing growth on that line?

Ryan, specifically, my guidance was in the first quarter. It was at 59% based on what we had.

First quarter?

Right. Yes.

That was down from the fourth quarter...

It's around the same. There was some -- a lot of noise in 2025. But the guidance what I was trying to give you was it 59% in the first quarter. And you're right, if we grow the asset significantly, the fees will follow. Performance fees are a different measure based on the volatility that can happen in the earnings stream in each of the JVs.

If it's helpful, the joint ventures are all -- none of them are smaller going into '26 than where they were in '25, and we haven't changed the fee structure on our -- on any of the vehicles that we're managing. So just as a starting point, there will be ups and downs as new capital comes on Board or there will be changes in the existing capital, but it's relatively stable from last year to this year.

Helpful. And a follow-up probably for David and Bob, but on the other property side, curious at 1/1, what you're seeing from a demand perspective? Clearly, a lot of cedings have had really strong accident years in '24, '25. Are you seeing them buy down? Or what are the trends there? And then I guess, separately, just given the competitive environment in Property, I was a little bit surprised that the other property margin guidance is still for mid-50s. I guess just walk me through your confidence in that.

Ryan, this is David. I'll start with your question on retentions in terms of conditions. So terms and conditions across other Property and CAT remain strong and a big piece of that is retention. So the other Property CAT exposed structures or risks have had a step change after 2022. Those remain at strong levels. There's competition on price, and we're able to move around that portfolio to make sure that we're getting the best return on the risk that we put out. But we're really comfortable with the way the terms and conditions have held strong there. And on the CAT side also, clients elected generally not to buy down their retentions as they save money on their CAT towers, they didn't spend it on cover below.

Ryan, on the mid-50s, that was our guidance for the other property book. And that's kind of a mix issue that you have between the attritional versus the CAT exposed, non-CAT exposed. But we view that as a strong current accident year loss ratio. It's a little elevated this year, obviously, because of the events that came through, but that's what we're steering is the mid-50s.

We will move next with Matthew Heimermann with Citi.

I guess just a couple -- one, Kevin, following up on your comment on Casualty with technical ratios eventually decreasing. I'm curious if you think that will have more to do with a change in loss trend turning out to be better than you think or rates going up?

Yes. I think right now, our pricing actuaries are reflecting the benefit of the price change. So if all works out well, I would hope our reserving will ratios trend to the pricing ratios. So I would say it's more of a reflection of the benefit of price having persistence and us increasing our confidence in that. I would love to say that I see the trend decreasing over time. I think if we'll certainly monitor that. Any change in trend will reflect over time, whether it's going up or going down. But I would say more likely price.

And I guess I was curious, I mean, happy to listen if there are more details you want to share on some of the investments you're making around the platform and embedding that in underwriting systems. But I also am curious whether or not from a talent perspective, being in Bermuda, there's any limitations in terms of the speed or with which you can execute your technology road map?

Yes. So with regard to our thinking about how to manage our risk, this isn't the first time we've used the capital markets to think about hedging risk in our underwriting portfolio or in our investment portfolio, obviously. With regard to talent, we have a global platform. Our investment team is split between New York, Bermuda and Dublin. So we've got kind of good coverage there, good access to talent. And almost all of the groups that we have within the company are split across multiple platforms. So I don't see any constraint with our ability to access talent. And with the technology that we have for collaboration, we can easily link teams in any location. So we have access to the best talent, I believe, anywhere in the world.

And just any color on the types of add-ons that you're -- or enhancements you're making to the underwriting side. And I wasn't sure if you meant REMS specifically or other platforms.

Yes. We are enhancing our REMS program, which is the underwriting platform. We're probably 1 year, 1.5 years into the actual technology rebuild. And that really is a shift in a couple of kind of material ways. As we've diversified, we want to make sure that our system is not as much of a deal system, but more of a client system. So it's easier for us to look at profitability per client and understand how to engage with the client to best bring our capacity to their problems. And then secondly, we're updating our architecture so that as AI becomes more meaningful in either automation or augmentation of our processes, we will have the infrastructure to plug it in much seamlessly than what we currently have. So we think these investments put us in a very strong competitive position to continue to adopt the best technology as it becomes proven.

Our next question comes from Dean Criscitiello with Wolfe Research.

I was hoping if you could talk about how ceding commissions in your Casualty book trended during January 1 renewals.

Yes, absolutely. So ceding commissions and Casualty were pretty flat overall. Most of the improvements that are coming in the market are on the insurance side with insurance rate going up and insurers investing in claims handling to better be able to fight the plaintiffs bar. But the transfer to reinsurance and the reinsurance supply/demand was pretty stable. The best accounts might have gotten the tick up. The worst accounts got a tick down, but that's pretty much the case across Casualty and professional lines.

Got it. And then within the Casualty & Specialty segment, you guys have been growing a lot within like the credit line. So I was wondering what kind of impact that would have on like the underlying losses and maybe the expense ratio going forward?

Yes, we did see some good opportunities in credit. Credit is one of the 3 main pillars of the book. We have Casualty, Specialty and Credit with Casualty being split into the general liability and professional liability. Credit has been a really profitable class. The pillars of the credit book are the mortgage business and the standard credit bond and political risk and then some structured credit business. All of those are performing well. What we found in the last quarter and the last year was we found opportunities in the structured credit business and in the mortgage business. Both of those are high profit margin and good opportunities for us to add to the portfolio.

We will move next with Peter Knudsen with Evercore.

In the prepared remarks, you noted prioritizing Casualty cedents who focus on claims handling practices. I think going back to 2024, you had made a couple of comments around making a larger effort to work more closely with Casualty cedents to sort of ramp up information flow at renewals. So now at 1/1/26, can you maybe talk a little bit about how this renewal period was different and how it's evolved in that regard, if at all? Would you say there's a material difference in what's being collected now versus 1/1/23 before you guys were calling that out, for example?

Yes. It's been 2 strong renewals since we started that, and we're working collaboratively with clients. We get materially better information than we got previously. And that information is not only geared towards understanding claims trends, but also geared towards how do we then understand our overall business approach and has led a lot into claims conversations. So where we can then use that in our underwriting to make sure we're picking the best risks and avoiding those that are worse. It's been a very positive process and collaborative with the clients. One of the things on the -- that we've noticed overall on the claims side is there is -- the trend is not -- the plaintiff's bar has not let up in how they're approaching trying to get big settlements. But the insurance carriers have gotten much more proactive from the top down. There's a lot of awareness of how they can invest, how they can use data, how they can collaborate across the tower -- and so it's not always the quantitative things we get from that process, but it's those qualitative things, which we're confident will have a strong impact over time.

Okay. Great. And then just a quick one for me on the Casualty favorable ex the GAAP adjustment. I know it was minor, but I was just wondering if -- and maybe I missed it, I'm sorry, but if you could talk about the drivers, the puts and takes on that?

On the Casualty, I talked about the favorable -- favorable development on a cash basis. The purchase accounting layers in around -- somewhere around $8 million on top of it. So that kind of pushes it around. That's what I was trying to point out that we have been favorable at the top of the house for that segment this year.

We will move next with Rob Cox with Goldman Sachs.

I just wanted to follow up on the artificial intelligence technology discussion from earlier. I think a lot of the programs that we hear in insurance, there's an automation efficiency component that often results in lower employee costs. And the reinsurance businesses tend to have lower employee costs and noncompensation operating costs relative to other insurance businesses. So I'm just hoping for some color on how that dynamic informs your plans to use AI and how we should be thinking about potential benefits.

Yes. I think it's -- your observation is consistent with ours. I'd say from the top of the house, many companies are looking at trying to measure ROI, the way to measure that is with automation and efficiency. And then I think a lot of the improvements, certainly what we're seeing in how we're thinking about our processes and our analysis augmentation coming from the bottom up. So our focus really is becoming a stronger, better underwriter if we become -- and those 2 co-mingle at a point where if we -- like one example with -- we have some work that we've done with AI in some of our investment analysis where we're taking what -- I'll make the numbers up 10 hours of analysis and doing it in 1. Well, that allows for better judgment to be applied to stronger data. So one could argue that, yes, we've increased efficiency, but it really is to augment our decision-making process. So I would say I don't anticipate that AI is going to materially improve us as a company through efficiency and automation as much as it will over time through augmentation of our judgment.

Okay. That's very helpful. And I just wanted to follow up on Property CAT pricing. You guys laid out the supply-demand dynamic that's out there right now. I'm curious if we model forward sort of a normal year of weather Catastrophe losses in 2026, how would you expect Property CAT pricing to change next year in 1/1 renewals in 2027? I realize that's pretty far out there, but curious your thoughts.

Yes. I would -- markets tend to move in curves. So if it's going one direction, I think our planning will be that the direction will continue, but it's way too early for us to think about building our '27 pro forma. Our portfolios have been constructed with our best judgment and reflect where we think we'll be on October 1, so sort of the heat of wind season. Where it goes from there, I think there's a lot of things that can shift. Interest rates can change, geopolitical situations can change materially and then certainly, losses can change. So I think of it as in curve. So it's going a direction. I generally think it will continue, but it's not something that we have a strong view on at this point.

I will now turn the floor back over to Kevin O'Donnell for any additional or closing remarks.

So we're proud of the performance we achieved in '25 and eagerly working to build the best portfolio and maximize returns in 2026. I want to thank you for your attention and your questions today.

Thank you. This concludes the RenaissanceRe Fourth Quarter and Full Year-end 2025 Earnings Call and Webcast. Please disconnect your line at this time, and have a wonderful day.