RenaissanceRe Holdings Ltd. (RNR) Q2 2026 Earnings Report, Transcript and Summary

Good morning. My name is Tasha and I will be your conference operator today. At this time, I would like to welcome everyone to the RenaissanceRe Second Quarter 2026 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, Tasha. Good morning, and welcome to RenaissanceRe's Second Quarter Earnings Conference Call. Joining me today to discuss our results are Kevin O'Donnell, President and Chief Executive Officer; Bob Qutub, Executive Vice President and Chief Financial Officer; and David Marra, Executive Vice President and Group Chief Underwriting Officer. To begin, some housekeeping matters. Our discussion today will include forward-looking statements, including new and updated expectations for our business and results of operations. 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 us today. For the second quarter, we reported operating income of $548 million and an annualized operating return on equity of 20%. Tangible book value per share grew approximately 6% in the quarter and 27% year-over-year. Each of our 3 drivers of profit, underwriting fee and net investment income contributed meaningfully to these strong results. This reflects the long-term disciplined execution of our strategy that enables us to continue to grow tangible book value per share. . Our strategy does not change from quarter-to-quarter. We manage the business to build efficient portfolios of risk that maximize profitability. What does change, however, for the tactics we employ to achieve that strategy as markets shift. You can see this in action at the midyear renewals. David will discuss these in more detail with property catastrophe rates were down high teens, which was consistent with our expectations. Our leadership position allowed us to grow property cat limit with high-quality clients. The result is at today's pricing. We continue to like the property cat market. Recent rate decreases have come off the step change in pricing and terms that reset this market in 2023. As a result, property cat rates remain broadly adequate and that is what dictates our underwriting behavior. Thinking about our business in terms of rate adequacy provides us more nuanced strategy than having one playbook for a hard market and another first soft market. What sets us apart is that we know how to navigate the transition between the two as well as having more tools to do so. We've been navigating the property ad market for decades and know when to grow and when to exercise discipline. Rate changes tend to be asymmetric. Periods of gradual decreases are punctuated by rapid large increases, which is what occurred in 2023. We recognize the -- the opportunity at the time and aggressively grew both organically through the Validus acquisition. This positions us well for the current market. Ultimately, this is a margin business, not a growth business. In a declining rate environment, discipline is not about how much you write. It's about how much you keep. We start by seeing the entire market on both the inwards and the outward side. This gives us an informed view of where the best risk actually sits. We exercised risk selection to concentrate on the specific accounts and layers where the economics are strongest and managed line size aggressively. We then deploy the rest of our tool [indiscernible], including retrocessional buying and capital partners vehicles to shape what we have retained. That combination lets us grow the gross portfolio where we see opportunity while managing the net portfolio to achieve the optimal risk -- the optimal mix between risk and return that maximizes long-term growth and tangible book value. Shifting to capital management. This quarter, we repurchased $350 million of our shares at valuations rapidly accretive to tangible book value per share. We buy our own stock the way we underwrite when the risk-adjusted return warrants it. In this market, managing the denominator in the ROE calculation through proactive capital management is as important as managing the numerator by protecting margin. It is the combination of the two that allows us to continue compounding tangible book value per share, independent of changes to our top line. Let me now shift to a few comments on reserves. Once again, we reported significant favorable development. We recognized this benefit as the business seasons and if the data supports it. This was the case for most lines this quarter, where uncertainty remains and in casualty, it does, we remain cautious. Social inflation continues to impact casualty, and we have been proactive in recognizing trend over the last several years. You can see this is our reserve -- and you can see this in our reserving actions where we've been strengthening and you can see it in our pricing decisions, which reflected the higher initial loss picks for casualty. Focusing now on casualty and specialty results. We reported a combined ratio that was above 100% this quarter. Our results were impacted by the settlement of the Baltimore bridge collapse, which resulted in a shift of losses from property to specialty. The net effect on our bottom line was relatively small. The reason you see this as a shift between the two, whereas we review it as largely unchanged is because we divide our reinsurance business into two reporting segments. This can sometimes lead to confusion as we manage our accounts holistically across both property and casualty and specialty, we'll report them separately. Underlying casualty and specialty performance is in line with our guidance, and Dave will walk you through the mechanics. On the balance of the year, our view is positive. At this point, our underwriting portfolio is largely in place. The portfolio is well constructed and well protected as we approach the peak of the hurricane season. There has been much discussion regarding to what extent potentially historic El Nino may influence the hurricane season. This is not how you think about underwriting risk, however. We have built a portfolio to perform across a range of outcomes rather than one that depends on a benign season. Another topic of much discussion recently has been AI. As an organization, we are highly focused on continuing to integrate AI into our operations. Our vision for AI is to [indiscernible] impact of our people and enable better visions. I think about this as a combination of augmentation and automation. Regarding augmenting, we have made a variety of generative AI tools broadly available to our employees. They are actively and creatively producing innovative use cases that should provide greater insight into the risk we assume. It has been satisfying to see the number of ways AI is being incorporated to our business that it's probably fair to say that it is being used in one way or another across everything that we do. We are now moving towards automation. That said, one thing we have learned is that AI is not a silver bullet. It does not automatically make everything better. Rather, especially in the case of automation, it needs to be employed carefully and thoughtfully. To maximize the benefit of AI, it is not sufficient to simply overlay it on top of the existing processes. Rather, many processes need to be reimagined from the ground up. This is progressing from humans in the loop to humans on the loop, and we are developing significant resources to this endeavor, and I expect impact increasing portions of our business over time. As I've discussed in the past, we are rebuilding our REMS underwriting system, and one of the updates is to include the integration of AI into underwriting. This is more augmentation as the goal is to enhance judgment and expand what is possible, new risks, new clients and new models. Before I conclude my remarks, a word on our leadership transaction. We have previously announced Bob will retire at year-end and Ross Curtis, our Chief Portfolio Officer. It will both remain actively involved in our operations until that time and are focused on ensuring a smooth transition. In 2027, Matt Neuber become our Chief Financial Officer, bringing a proven record of financial leadership and deep expertise in corporate finance and capital management. He played a central role in building our capital partners business and scaled our treasury function in step with the growth of our company. That has been with for over a decade, and has been deeply involved in every acquisition, capital decision and significant change over this time. This gives him a deep appreciation for our history, culture and business, and I look forward to him meeting more of you in the coming months. To conclude my opening remarks, the goal that guides every decision we make has been consistent to maximize long-term growth and tangible book value per share. We pursue it through underwriting choices that optimize each of our 3 drivers of profit, combined with capital management that optimizes our efficiency. Bob will now discuss our financial performance for the quarter, followed by David, who will provide an update on our underwriting performance.

Thanks, Kevin, and good morning, everyone. This is another strong quarter where we generated operating earnings per share of $12.92 and an annualized operating return on equity of 20.1%. Annualized return on common equity was 24% with $154 million of retained mark-to-market gains primarily from equity. We continue to steadily grow tangible book value per share by 6% in the quarter and 27% over the last 12 months. These strong results reflect the consistency and strength of our earnings with diversified income across 3 diagrams. There are a few numbers in the second quarter that help demonstrate this. First, 15 points, which is the continued contribution from fee and investment income to our ROE, which forms a stable base of earnings quarter-over-quarter; second, $600 million, which was our underwriting income, underwriting builds upon a stable base of income from fees and investments; and finally, $350 million was the amount of capital we returned to shareholders share repurchases a consistent level to the first quarter. So far in the third quarter through July 20, we repurchased an additional $83 million of our shares. I'd like to spend some more time on capital management because it is an important lever that we have been employing to our shareholder value over the last 2 years. Kevin spoke of our focus on managing both the numerator and the denominator in the ROE equation. On the denominator side, since the beginning of Q2 2024 through Q2 2026, we have bought back $3 billion of our shares at an average price of $258 per share. On the numerator side, over that same period of time, we generated $4.6 billion of operating earnings. Since the beginning of Q2 2024, our diligent capital management, coupled with consistently strong income from our 3 drivers of profit, has enabled us to grow tangible book value per share by 66% and benefit operating earnings per share by more than 20% as a result of the lower share count. Going forward, we remain focused on growing tangible book value for shareholders by optimizing our income and managing our capital. Our underwriting book remains attractive. We continue to expect a similar level of management fee income and continue to have a positive outlook for investments. We will continue to take a disciplined approach to capital management and anticipate continued share repurchases in the third quarter. Now I'd like to turn to a more detailed view of our 3 drivers of profit in the quarter, starting with underwriting, where our portfolio continues to perform well with an adjusted combined ratio of 72%. We reported strong accident year results with a low level of catastrophe activity and 9 percentage points of favorable development. In property catastrophe, the current accident year loss ratio was 12%, and the adjusted combined ratio was 9%. This included 25 percentage points of favorable development from a variety of accident years. Other property had another excellent quarter with a current equity loss ratio of 53% and adjusted combined ratio of 52%. We had 35 percentage points of favorable development, primarily related to the attritional book. In Casualty and Specialty, the current accident loss ratio was 67% -- excuse me, 68%, and the adjusted combined ratio was 102%. We reported 4.4 percentage points of prior year adverse development in this segment, which included 4.1 points related to the Baltimore bridge collapse. This was a result of a shift in reserves from other properties to specialty and David will talk more about this in his prepared comments, but the overall impact to the company was an increase in net negative impact related to bridge of only $12 million in the quarter. Additionally, there were 0.4 percentage points from purchase accounting adjustments impacting the prior year. Overall, gross premiums written were $3 billion, down 12%. The largest movements were in property catastrophe, where the top line was down 14%, excluding the impact of reinstatement premiums and casualty and specialty work was down 15%. For property catastrophe specifically, lower rates at midyear drove most of the decline. In favorable -- in detail, we continue to find this business to be rate adequate and successfully held our lines while finding select opportunities to grow, helping to offset some of the rate decline. We chose not to deploy our collateralized vehicle Upsilon at the midyear renewal, instead renewing the business on whole owned balance sheets. This should serve to limit the impact on the top line decrease on the bottom line capability. Other property gross premiums written were up 9.5% this quarter. Last year, there were a few one-off downward adjustments. And without these top line was roughly flat. In Casualty and Specialty, we continue to shape the book. A portion of the decline in the top line growth was driven by proactive reductions and a portion was driven by funding of deals or premium adjustments, specifically. General casualty was down 17% as we continued to reduce our general liability portfolio. Specialty was down 16% due to a combination of exposure reduction in classes like cyber, rate reductions and premium adjustment and credit was down 19%, driven by timing of a few large deals that were not up for renewal this period. This quarter, we purchased additional ceded protection across our portfolio. And our property catastrophe book, our purchases were at more attractive rates than last year. This resulted in ceded spend being about flat. The decline in our ceded in our financials relates to the non-deployment of Upsilon, which I previously is referenced. In Casualty and Specialty, we have increased our cession rates across the portfolio, particularly in casualty line, which you can see reflected in the growth in ceded spend and a decline in net premiums written. This quarter, between our ceded program and capital partners, we shared about 35% of casualty and specialty gross premium written compared to 25% a year ago. Looking ahead to the third quarter, we expect other property net premiums earned of around $330 million and an attritional loss ratio in the mid-50s. Casualty and Specialty net premiums earned of approximately $1.3 billion and an adjusted combined ratio in the high 90s. Turning next to fee income, where we generated $83 million in fees, including management fees of $48 million and performance fees of $35 million. Management fees remained strong, although down compared to last year. And as a reminder, in the second quarter of 2025, management fees were elevated because we recaptured da Vinci fees that have been deferred because of the California wildfires. Performance fees were particularly strong, reflecting the favorable development we discussed earlier. In the third quarter, we expect management fees of around $50 million. Performance fees are highly dependent on underwriting results, which should average around $30 million per quarter. However, this can change as a result of large loss events or prior year development. Turning now to investments. Retained net investment income was $314 million, up 3% from the first quarter or 10% from a year ago. This is an all-time high. Net investment income was a significant contributor to our results with fixed maturity, short-term investments and credit contributing strongly. We reported $154 million of retained mark-to-market gains. This was driven by gains in equities, partially offset by losses in fixed maturity tied to higher rig treasury rates and lower commodity prices. We continue to extend duration to lock in the benefit of higher rates. In the quarter, the retained portfolio duration modestly increased from 3.4 years to 3.5 years, and this is up from 3 years at the end of 2025. For the third quarter, we expect retained net investment income to continue to trend modestly higher. Finally, a few comments on expenses and taxes. Our operating expense ratio was 4.3%, which is down from last year due to Bermuda tax credit and higher overrides from our casualty ceded program. We continue to invest in the business and expect the expense ratio to build towards 5% as the year progresses. On tax, our overall effective tax rate on GAAP net income was 12%. But as a reminder, we are not taxed on the earnings attributable to our capital partners, investors, which sits in noncontrolling interest. The tax rate on the income applicable to RenaissanceRe shareholders was [ 17% ], which reflects the 15% Bermuda corporate income tax as well as some tax and other jurisdictions. To wrap up, this was a strong quarter. demonstrating the power of our diversified earnings model and the benefit of the actions we have taken to manage capital to continue to drive strong shareholder returns. And with that, now I'll turn it over to David.

Thanks, Bob, and good morning, everyone. In the second quarter, our underwriting team led the market at the midyear renewal and constructed an optimal portfolio of risk. We applied rigorous risk and portfolio analysis to identify attractive opportunities. and drew on the strength of our client relationships to turn those opportunities and design lines. I couldn't be more pleased with the team's execution and with the attractive diversified portfolio we have built. Underwriting judgment at its essence, is balancing margin risk and the value of a client relationship. This is institutionalized within our underwriting culture and our integrated operating model, and we do this better than anyone. It has driven our strong underwriting results over the last several years and is quarter RenaissanceRe's long-term success. As I've discussed on prior calls, at each renewal, our underwriting team has two objectives. First, to deliver our market-leading value proposition to clients and brokers. That supports a durable pipeline of renewable business, first call status and favorable signings that are resilient to competition. Second, to construct the optimal underwriting portfolio across lines to support each of our 3 drivers of profit and generate capital efficient, attractive returns, both in the current year and over the cycle. In a competitive market, you can see the benefit of the first objective, delivering our value proposition consistently year after year. Increasingly, we are seeing a 2-tiered market emerge in lines like property catastrophe and specialty. Clients are coming to us first to anchor their programs because we support them through the cycle, deploy significant capacity, bring an expert view of risk and engage with them across [indiscernible]. This dynamic means that we can retain full lines where we choose to participate and grow where there are profitable opportunities. Excess bookings, the following markets are signed down and don't get the lines they want. This brings me to our second objective, which is what the majority of my comments are about this morning. We maintain a diversified book across property, casualty and specialty because that diversification is what fuels all 3. Our job is to know when to grow certain lines and win to shrink others. We then use retrocessional protection to optimize margin and capital efficiency across the portfolio. I'll step through our actions in the quarter starting with property. At the media renewal, our leadership position in client relationships enabled us to grow property catastrophe limit with high-quality clients in the U.S. rate decreases in our portfolio were in the high-teen percentages. This is down somewhat from the low teen percentages we saw at January 1, but we view the rate adequacy in our portfolio to be equally strong for both sets of renewals. Rights at the media renewal last year held up better than January 2025 because many programs were repricing after the California wildfires. To put this in perspective, over the last 2 years, rates in our January 1 and June 1, U.S. property cat book, are both down by about 20%. Rates increased by around 50% in 2023. Set against that increase and improved terms and conditions, we continue to believe U.S. product adequacy. At the midyear renewal, we successfully grew U.S. Property cat limit by $600 million. We did this by growing our nationwide accounts of key clients and California programs were adequacy is particularly strong. In addition, we held our share on Florida domestics after 3 years of successful growth and maintained our private pricing on 65% of this Florida premium. We also reduced on some programs with a clear price did not reach a hurdle. Year-to-date, even though rates are down in the mid-teens, our property cat gross premiums written are only down 9%, excluding the impact of reinstatement. This is excellent execution and demonstrates our ability to deploy capital into high-margin opportunities. Our Florida book is a good example of how we use all the tools at our disposal to shape a position over time. We reduced this business significantly in 2020 as we found it unattractive due to inadequate rates, poor claims practices and excessive litigation. However, we maintained excellent client relationships. And over the last 3 years, we rebuilt our position to historical levels as rates improved, to outperform stabilize the margin. We have a very attractive to both sort of domestic accounts. In the second quarter, we successfully retained the business and maintained our favorable pricing above market terms. In other property, the business continues to produce strong results with low current year losses and favorable prior year development. We have selectively reduced risk in some areas such as South Florida, where rates are under pressure, and we see better returns in the property cat book. This business benefits from our expertise in individual location underwriting and portfolio shaping was ceded. If rates continue to deteriorate, we will reduce our exposure in a targeted way to maintain attractive expected returns. Turning now to Casualty and Specialty. We continue to successfully shape our portfolio by maintaining our positions in preferred classes, actively managing our net exposure through ceded reinsurance on Fontana and supporting customers who are demonstrating the strongest underwriting and claims performance. As Kevin discussed, there are some shifts in how we reserve the Baltimore bridge loss that impacted Casualty Specialty results this quarter. Specifically, we have been part of that loss from other property to specialty. This resulted in an underwriting loss in adverse prior year development for the Casualty and Specialty segment. Excluding the Baltimore Bridge and purchase accounting adjustments, our year development for this segment overall would have been modestly favorable with an adjusted combined ratio in the high 90s consistent with our guidance. This shift between segments related to changes in the Baltimore Bridge settlement structure, which allows property insurers to recover against marine liability policies. The market's total industry loss estimate also increased. But as we reserve this event to a $3 billion industry loss from the start, the overall net negative impact to our bottom line was small. Most specialty business renews at January 1 and with the increase in the Baltimore Bridge loss, the war in the Middle East and recent energy and aviation losses, we believe rates need to stay firm. Moving to general liability. We are continuing to monitor improvements in claims handling as well as rate change to ensure it is keeping up the trend. The market has made good progress, but trend continues at an elevated level, and we remain cautious in our underwriting. We are continuing to support clients who are the most effective at managing both rate and claims and are selectively reducing on others. Credit continues to perform well and remains attractive. Profitability is resulting in increased competition, but we've been successful in holding our lines. Finally, a brief comment on the war in the Middle East. The war has returned to an active phase with the tax on shipping and infrastructure in the region. We are aware of assets that have been impacted and believe any impact will be covered in our current reserves, but we'll continue to monitor the situation closely as facts on the ground could change rapidly. Moving on to a few comments on our ceded strategy. As Kevin mentioned, our ceded purchases alongside our capital partners balance sheets play an important role in shaping the portfolio and preserving margin. In property catastrophe, we increased ceded limit, maintained retentions and improved coverage on a larger subject portfolio, while keeping spend flat. As a result, even though we wrote more property catastrophe limit, our risk going into wind season is essentially unchanged. In Casualty and Specialty, we also used ceded reinsurance to shape the net book. As Bob said, Between our ceded program and capital partners, we share about 35% of casualty and specialty gross premium written compared to 25% a year ago. This is consistent with historical levels for the segment. These ceded purchases helped preserve margin, generate fee income through overrides and manage underwriting volatility. For the casualty book, most of the session is proportional. Retrocessionaires pay an override, which covers our expenses plus a margin to assume a share of our book and benefit from our access to business and underwriting acumen. For Specialty lines, we purchased proportional coverage, and we also managed cat like volatility to receive excess of loss structures. In 2026, we expect these covers in cyber, marine, energy and aviation. Looking ahead, we've already begun preparing for the January 1, 2027 renewal, and we're in active discussions with our clients about how we can support the portfolios across multiple lines. That forward engagement is central to how we manage these relationships and it is how we position ourselves well ahead of year-end. So to close, this quarter demonstrated both of our underwriting objectives working together. Our value proposition is first call in an increasingly competitive market, and we built a diversified well-protected portfolio, growing property catastrophe where the returns are strong, pulling back where they aren't and using our ceded protection to manage expected profitability. And with that, I'll turn it back to Kevin.

Thanks, David. In closing, this was another strong quarter. We are making underwriting and capital decision to compound tangible book value per share for the long term. Property cat business remains attractive, and we continue to find opportunities to grow the [indiscernible]. The interest rate environment continues to improve, supporting persistent net investment income. Fees remain robust and should continue to be a capital-light diversifying source of income. In short, each of our 3 drivers of profit performed well. and we continue to return capital to shareholders at attractive multiples, and we remain confident in the balance of 2026. And with that, we'll open it up for questions.

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

Building upon that, right, if we see lack of significant losses this hurricane season, when do you guys think the property cat market might bottom? Or do you expect that we can continue to see rate declines right from a pretty attractive level until their loss is? Or when Kevin -- and David, do you think that we get to some kind of flattening in '27, '28, like, I guess, how do you think about the market developing in the absence of any significant losses?

Elyse, I think we missed the first thing that you said. There was a problem with the communation. Can you just repeat the first part?

Okay. I mean I was just trying to ask, I guess, you guys are talking about the property cat market remaining attractive. So building upon that, right, if we see the lack of these significant losses this hurricane season, how do you guys think about the market evolving from here? Would you expect that we continue to see rate decline coming off of this attractive level until there are losses? Or at some point, do you see us getting to a bottom in '27 or '28, like how are you seeing the evolution of the property cat pricing in the absence of significant losses for the [ reinsurers ]?

Okay. Thanks for the question. The market moves in cycles, I would expect that from a macro perspective, there's a lot of supply in the market. We're still seeing an increase in demand but at a reducing level compared to what we've seen over the last couple of years. That dynamic, I think, will set up for continued pricing pressure moving forward. That's kind of what's going on in the overall environment. . From our perspective, we have a long track record of executing into changing markets. This is not a soft market. It is a changing market, which I think you've highlighted well. We like where the rates are. We are building a portfolio that uses more of the tools that are available to us, which we've done historically over time. So I would expect that there'll be more rate pressure. But as the market continues to become more competitive, we will increase our output to the market, which is historically what happens in a declining rate environment. So when I look forward into '27, I would expect competition to remain robust but I don't anticipate that it will create major obstacles for us to continue to build a great portfolio and to continue to compound tangible book value per share.

So then my second question is on the Casualty and Specialty segment. You guys saw a reduction in premium there. You guys are still booking like the accident year or 2 around like 100 or slightly below that, right, adjusting for the Baltimore bridge this quarter and you get your conservatism right in your pick. So I guess my question is, first, like -- just a little bit more color on just why you're seeing such a big decline in premium there? And then, secondly, like we hear about loss costs, right? You guys pointed to just some high loss costs in the business in your prepared comments. So can you just help us think about just the comfort in the back book and the picks you have there? Because away from the bridge, right? I think you guys highlighted there really was not any significant movement in reserves.

Elyse, this is David. I can take that. I think one of the things I'll comment on is, you mentioned the movement in the book. So we're always optimizing the book with the opportunities we see. And what we saw this quarter, second quarter and a bit year-to-date was we have made some portfolio shaping decisions, mainly in the general liability space. I mean we're a couple of years into the market fully recognizing that trend was something that needed action. And the market has been doing a pretty good job taking action there, but some clients have done better than others. So the trend is continuing. We're watching that very closely. And what we did in the second quarter was we took action and reduced some of the portfolio there. The other thing that's impacting our net written premium is the ceded structures. And ceded is something we have used for years in the Casualty Specialty segment, also in the Property segment. We see more opportunities to see risk in attractive terms. It has a positive effect on the portfolio of reducing volatility, turning risk income into fee income through the overrides. Also lets us maintain an option on the upfront book. So with all the uncertainty that is in the market. This is the way that we're confident in the [indiscernible] to manage through in an environment where trend is insistent and there's still a risk of the book, and we're doing the right things to manage that.

Our next question will come from Josh Shanker with Bank of America.

Yes. I hope this works or more I'm on a train and I apologize. I wanted to dig a little bit into the credit decline. Bob said it was due to the nonrenewal of some large transactions in the quarter, they weren't up for renewal. Are they up for renewal in another quarter? Or has the decided to take all that business in [indiscernible]?

Josh, this is David. I can comment on that. What we see in the credit book is a lot of the transactions are multiyear and when they initiate, they're more lumpy. So it's not a smooth quarter-by-quarter renewable book. Our earned premium has stayed relatively consistent there. It's just that we had some multiyear transactions that we initiated last year that weren't repeated with this year's gross written premium. Overall, we're looking for opportunities in the credit space. We found some in 2025. We'll write more credit book. But I see our credit booking is essentially flat.

All right. And then with the higher sessions and the general cash people because you see pricing out of the track to ethernet versus combined ratio, when you see a bunch of business that was formerly retained and there's almost no underwriting profit on a calendar or a year basis, what is really the impact of the sessions? And how should we think about that?

Josh, you're breaking up a bit, but I think you were asking about the impact of the sessions on general liability in the casualty specialty business.

Yes. 100% combined ratio doesn't seem like it's impacted 1 way or the other.

Well -- and so what we -- the way it comes to the books. And one thing I'll comment on is we've -- we were buying more cover in 2026. That cover essentially in steps in the beginning of 2026, but covers everything that we'll write during the year. So the amount that will continue to ramp up and affect the books more and more over the year and into next year. It has a positive effect on the books in a couple of ways. We can override, so the override expenses and then some, so that will work to improve the net margin in the book, all of the things equal. We also get reduced volatility because as volatility may arise in the future, we've now ceded a portion of the book and there's less exposure at risk. So all those combined are the 2 effects on the overall book. The other piece is that we're able to maintain options on the inwards book with -- despite the uncertainty, and we're able to act on that when the market improves in the future.

We'll take our next question from Yaron Kinar with Mizuho.

I wanted to go back to the other property book and understand what the drivers for the 5% growth in the gross premiums written on an adjusted basis or it seems like it's going against the trend we've seen in recent quarters of some declines.

Ron, this is Bob. I'll take that. What I said in my prepared comments, I did acknowledge that it's roughly flat because last year, we had some premium adjustments that would have been downward pressure on it. So what you're seeing in terms of real risk change over the year-over-year, it's about flat. It doesn't look like it grew by 5% or 6%. That makes sense as an EPI adjustments, what we've talked about in the past before.

So I thought it was 9% growth and then 5% with the adjustments. Maybe I'm missing or so.

I didn't call out the adjustment. Actually, largely, it's flat. It's not 9%, the risk when you think about the underlying risk in terms of limits are flat.

Okay. That makes sense. And I guess I just misunderstood earlier. And then on the buyback front, I don't want to quibble too much here, but it seems like the quarter-to-date buyback is a little bit lower than what it was a quarter ago. Were you still thinking about $350 million is roughly the run rate for the conceivable future?

Great question. We're talking about a week earlier, okay? We're talking a week earlier than we did the quarter a year ago. In fact, we're -- I think right now, honestly, we're around $95 million as today. So we've pretty much exhausted the plan. And we're looking into wind season. We have the capacity and the capability and I said in my prepared comments. We didn't give you a number, but we're still focused on buying through the wind season and so the large events that occur. So nothing really changed in our capital plan.

We'll take our next question from Meyer Shields with KBW.

Kevin, in the past, you've talked about different views between the pricing and reserving actuaries for casualty lines. When you're increasing the sessions which of those actuarial opinions is driving that?

Well, each of the sessions are going to somebody who's doing their own analysis as to what they are assessing for the performance of the portfolio. we share with them what we believe the portfolio looks like. Right now, there's not that much of a difference between our pricing and reserving. And other times, there's been a bigger gap between the 2. So it's probably less of an issue. But they're doing an independent assessment, and we're sharing the information with them. I would say most of them are probably looking more at the pricing, but it really depends on who the season is. And some of these are more structured as well, so it's a little bit more complicated.

Okay. Understood. And then I guess this poll for Bob, but if we look at the acquisition expenses and other property, when we look at it on a year-over-year basis or quarter-over-quarter, is that about $20 million was long -- is there anything unusual in that?

You're referring to the operating expenses or the equity -- I kind of missed the focus on the question that you were looking at, sorry.

Acquisition expenses in other properties?

Right. It's down slightly because this is as a result of a prior year deal that boosted it up probably about 1 point. That was done so...

No. I'm talking about -- go ahead, I'm sorry.

So the current accident year loss rate is about right, okay? The current acquisition rate in this quarter is more in line with what we expect. No, I'm going to change that. I was referring to a different -- sorry, the acquisition ratio is I apologize. It is up. There was a onetime event that came through that did run through this quarter as opposed to last year. [ 29 ] to [ 30 ] is roughly the right acquisition expense ratio for the property. .

We'll take our next question from Mike Zaremski with BMO.

I'm thinking about some of the, I guess, opportunistic shrinking of the portfolio, especially in casualty and specialty on an exposure basis. Should we be thinking about material capital free up as well or not so much because when you grew that, there was a big diversification benefit? Any color would be helpful.

Yes. We -- with or without the changes in the portfolio, we're in a very, very strong capital position. I think you point out something that's important. We actually deployed more limit into the property cat space because we still find that to be quite attractive. As David mentioned, our exposure this year compared to last year going into wind season is relatively flat. This isn't a perfect transition. But with that, you can assume capital consumption within the portfolio reflects the flat exposure that we have going into wind season. The casualty has a lower capital charge per dollar of premium compared to the property changes that were -- that we made. So I wouldn't think about the changes in our top line being directly correlated to capital deployment. That said, we're in a very strong capital position to continue to grow the book where we find opportunities and return capital to shareholders. through share repurchases.

That's helpful. And then moving to operating expenses and investments, maybe for Bob. When we -- you pull out the Bermuda tax credit benefit this quarter, but then I think in your prepared remarks, you're still kind of guiding to the 5% OpEx ratio for the back half. So it caused a big bump. Maybe you can remind us just as your views changed on the tax credits are cumulative through '27, you got another big bond bar, are you still expecting to spend the vast majority of that. And if you are -- would those maybe be onetime expenses in '26, '27, so there's an eventual will kind of fall off some of those technology costs if we're thinking really '28 and beyond?

Thanks for the question. Yes, you got the tax right. We've modestly higher than 15%. The premium tax credits came in through operating expenses, reminding you that only about 2/3 will come through the operating and the other 1/3 comes through the corporate side of it. But we continue to invest in the business. That's something we talked about. We continue to invest in the business in areas as we continue to optimize at scale. So we're projecting growth, like I said, up to 5% by the end of the year. We had a couple of expense benefits that came through. So we feel that 5% kind of plus or minus is where we're at. I said 5% to 5.5% before we feel we're coming in at the low end on it now.

Got it. And no comment about just some of these investments are some of these maybe onetime that would fall off in outer years? Or this would be just...

Yes, that's fair. That's -- we're investing in our front office systems. That's going to be a surge in that expense. It will taper off over time. We have other investments we're building inside the company to help out with the scale that we've created over the last couple of years. So those are investments that we make that will taper off over time and create efficiencies. And as we talked about reinventing processes, we're using AI to help in that, but that cost some money upfront, but we do have a significantly low operating expense ratio, and we feel very comfortable that, that gives us the opportunity to make these investments and knowing that we've got the payback coming.

We'll take our next question from Andrew Andersen with Jefferies.

Specialty and credits become a larger percentage of that portfolio over the last several years within C&S. How much additional opportunity is there to increase the mix in that book? And at what point are you kind of running up against further competition or just internal constraints?

Andrew, this is David. I'll comment on that. So we're very focused on where we can deploy into high-margin businesses. As we think about the growth opportunities, credit is one. It's a high-margin business. We're looking at the same we can deploy more we will. But those deals are lumpy, it's hard to know what will happen quarter-by-quarter, year-on-year. We have a great market position in specialty, the loss activity in specialty, the Baltimore Bridge is now, I think, the largest marine loss ever on the marine liability side. So we think that will present some opportunity in Q1. Most of that business is 1/1 renewal. So it's a bit early to tell there's a lot that could happen between now and then. But we have a really strong team. Post Validus, we have a market-leading specialty team as we put 2 market leads together and retain the book. So we're really well positioned for that. I think -- but the counterbalance is that there's a lot of competition in the market, both in property cat and in specialty. So we'll be well positioned when the growth opportunities come, but may not result in top line quarter-on-quarter year-on-year.

And I think you mentioned you chose not to deploy Upsilon at the midyear, but maybe you could just talk about how you're thinking about growing the fee-bearing capital versus balance sheet capital over the next year or so?

Yes. Upsilon is relatively small anyway. So that was the strategic decision we made up for this year. We continue to see interest in our vehicles. we actually have more capital interest for the vehicles, then we have opportunity to include them into the structures. The capon mandate continues to perform well, and we're continuing to see interest there. So when we look at it, our capital partners business remains in a very strong position. We have very strong capital opportunities to deploy should the market provide those risk opportunities to match them with. So we feel good about where we are. But I would say right now, where their size now is likely to be whether size next year, this year was relatively close to where they were sized last year.

We'll take our next question from Chris Hartwell with Autonomous Research.

First question really is just on -- back on to the renewals and specifically terms and conditions. We've been hearing a lot of chat amongst brokers around the balance of risk showing between prior insurance and reinsurance. I was wondering if that had a bearing through the midyear renewals? And I guess more [indiscernible], I'd be very interested in your thoughts on how brokers or seeing may push on testing additions through next year, whether the reinsurers can really defend common level, I'm sort of thinking about sort of the [indiscernible] point aggregates, that sort of thing.

Chris, this is David. I can comment on that. So overall terms and conditions remain really strong on the property cat space. Since the step change in 2023, that was a big reset in terms of conditions, which was a coverage structure and level. And while we've seen pressure on rate, we've seen pretty stable terms and conditions. There's been talk about should companies buy down into the earnings level. In general, that's gone the opposite way. There's been more demand at the top end and some reduction in demand at the bottom end, which might have been creeping into the earnings level. So still very healthy there. The aggregate programs where there's been a bit of demand and growth recently, that's all definitely in the capital level that we are participating there. They're well priced from a [indiscernible] loss model perspective from a premium perspective. and attaching at the capital structure. So we look at terms and conditions and I think that leads a lot of stability to our ability to continue to take risk on the cat side.

Wonderful a follow-up question. I was wondering if you could give a little bit more color on the cyber environment. I noted that you've got some sort of volume adjustments that sort of came through. I don't know whether that's environmental or sort of relating to [indiscernible] activity, I'm bridging the latter. But if you could share some thoughts there.

Yes. So cyber, we grew cyber rapidly in 2021, 2022 when rates were increasing significantly, and the claims were also decreasing at that time. We've seen as the rate has come off those peaks and claims have been returning back to previous norms. So we've been taking some cyber risk off the table. There's been some reinsurance portfolio adjustments that we've made proactively there. also with the reducing rate, our clients end up writing smaller books. So those are some of the premium adjustments that come through about a year after the fact. But that's the way we're manning. We've also made some ceded purchase decisions on the cyber side as we have a smaller and better protected cyber book than we did at the peak of the market.

We'll take our next question from Ryan Tunis with [indiscernible].

First question, just on capital planning. So year-to-date, the equity base has grown. I recognize only 2 quarters in -- but just given the changing market environment, I wouldn't think that there'd be a goal to continue to grow the equity base? I'm just wondering if I'm thinking about that right.

Yes. Thanks for the question. Yes, year-to-date, we've grown through earnings with just over $900 million. We've repurchased probably close to, let's just call it, $800 million. So it's a modest increase year-to-date. Feel really good in the position that we're going into the wind season. And as I said in my prepared comments, we fully expect to continue buying shares back. But obviously, Q3, we started. We'll see where it goes. But backing up on buying shares is not were gone.

Got it. And then just a follow-up on the Florida Newell. Can you just share any general themes if there were any -- when you did walk or to business, what were some of the general themes involved there?

Ryan, this is David. It was mostly just too much pressure on price based on the exposure in that ceded portfolio and our view of that. As we model each individual portfolio from the ground up each individual apparel the market may have a different view. And if the client was pushing too hard, the clearing price was lower than what our view of the appropriate clearing price was, that's when we walked away. There were very minor attempts to broaden coverage and we would have walked away from those, but those largely unsuccessful. It was mostly great.

That's just on some of the stuff you're seeing on the casualty with rate and claims management?

Yes. And actually, that's a good point. So on the cloud -- casualty side, we did make some portfolio adjustments there. And while we're seeing rate continue to keep up with trend in aggregate, we've seen that some companies have been less successful than others. And with their portfolios showed a sign that they weren't able to keep up with trend head on the right track to improving profit margins, those are the targets that we use to reduce our support on the casualty side.

We'll take our next question from Pablo Singzon with JPMorgan.

Thanks for the detail you provided in your use of retrocession. I was wondering if you could provide perspective on the relative terms of the business arising on a gross versus net basis. It sounds like the returns on these placements are still attracted to you on a gross basis. Is that accurate?

That is accurate. I think we are using retrocessional coverage to position the portfolio for the future. One of the things we do, if you go back to October of last year, we built the pro forma portfolio as to what we wanted our risk to look like. And what we thought were -- we had for pricing expectations going into this year we've achieved our objectives on the portfolio included in those objectives was to manage the level of net risk both on the casualty and specialty side on the property side with the use of retro. We think that positions us well going into the [ 1 1 27 ] renewal, which, again, as I mentioned earlier, we expect that there will still be quite a bit of supply coming into the market and some rate pressure. So a lot of this is about positioning the portfolio for where we want to be over the next several years. We are still seeing gross portfolio that's well in excess of our cost of capital, and we're enhancing that with the use of retrocessional purchases on the net portfolio.

Makes sense. And then a follow-up. So many primary companies have flagged MGAs and the capital standing behind and whether funds or reinsurers as an area of increasing risk. So do you agree with that assessment? And can you talk about your participation in that part of the market, right? And I guess, maybe comment more broadly about your approach to client selection.

Yes. I think as the market softens and if you look back historically, careful monitoring of MGAs becomes increasingly important. I think that is going to be -- has been true and is going to be true as markets continue to change and evolve. From our perspective, we are not a very large writer of MGAs and the MGAs behalf are more concentrated with relationships we've had for a long period of time. Do you want to comment more specifically, Dan?

Yes. I would say on the underwriting side, where we deploy capacity through MGAs the most significant pieces on the other property side, where we've written cat exposed the NS property through MGAs, who are an efficient distribution source for that. In those kind of situations, we control the underwriting and the pricing and the cat exposure. So we're very hands-on systems are tied directly into the MGAs. So we make sure that we're on top of changes in risk there.

As an example, one thing we did earlier this year is we reduced significantly some of the other property risk in Southern Florida because we saw that we could deploy the capital more efficiently within property cat. So it's something we closely monitor and I think we have a degree of skill in thinking about how to deploy both with -- through the other property and then where we might enhance return to property cat.

We'll take our next question from Brian Meredith with UBS.

I was just curious, David, if you could comment a little bit about the new alternative capital that we've been seeing coming into the marketplace. Has it been disciplined? Or maybe are we heading towards a place with that where something like before 2020 where things got pretty competitive with alternative capital?

I think an area where we've seen a change over the last several months or even a year. It was the increase from private credit funds looking for long-term assets. I think we've talked about this before. If you look historically property -- sorry, capital has come in to the market looking for low beta risk from property cat and thinking about how that can enhance their portfolios. Capital that's coming in now has existing investment strategies and looking for assets that can fund the investment strategies that they have. Those vehicles, there's been a lot of talk of them. There's been vehicles that have done. They haven't moved the market at this point in time. It's something we're very close to. We're in all those discussions, and we continue to monitor how much capital is coming in and what effect it's having. At this point, it's been negligible.

That's helpful. And then I'm just curious, any kind of meaningful movement in terms of conditions or losing of terms and conditions at midyear renewals?

Yes. Terms and conditions have stayed very strong, really ever since the step change in 2023, we've seen pressure on rate, but the terms of conditions have remained strong. We're still attaching at the capital level in the earnings level, which is one of the most important and coverage has not broadened, so we're happy with that.

We'll take our next question from Tracy Bangee with Wolfe Research.

You mentioned that you're still seeing positive growth portfolio that's well in excess of your cost of capital enhanced by the use of retro on the net portfolio. Can you touch on the current pricing spread between retro and reinsurance prop cat pricing? And what is the profile of your retrocession partners?

We have -- so the vocabular we tend to use is how much we keep because we have so many different types of structures. We're sharing risk with balance sheets that are funded by third-party capital. We're trading with ILS funds. We're trading through traditional structures and some with our partners. It depends on the vehicle. We don't disclose what the spread is between the products we're buying and selling, but we have more tools and better transparency on that than I think anyone else. We've done this for a long time. And as I mentioned earlier in my comments, as markets become more competitive and rates compressed because of that competition, we tend to increase our alpha to the market. And one of the ways we do that is by managing the amount of retained risk we're keeping.

Great. Just a quick follow-up on the cyber discussion. On any of your reduced exposures reflect maybe a lower appetite in the week of Mythos specifically, if you've seen the same pullback, I see?

So I think Mythos is one example of how the risk landscape could be changing, and we're monitoring that very closely. We haven't seen any uptick in claims due to AI or Mythos an indirect on the market so far, but it's kind of that we'll continue to monitor. Overall, even without that, the claims have come up to historical levels and with some increase in ceding commissions and some rate reductions. We don't see the profit margins as attractive as they were a couple of years ago, which is the main reason behind our change in portfolio.

We'll take our next question from Alex Scott with Barclays.

I wanted to circle back on the casualty business and particularly the pieces that they weren't well into renew. Could you just talk about you did in terms of looking at the reserves and your comfort with the loss picks on particularly the areas of the business that you weren't willing to renew and just -- what would you say to help us gain some comfort with how those have been for in light of not wanting to renew that stuff.

Alex, this is David. I guess the way I would characterize our approach to the casualty business is we've been following for the last couple of years very closely, getting more data from our seasons monitoring their portfolio at a granular level. And overall, my underwriting view is that the market has been doing a good job getting rate, improving claims handling. 2-year check-in, we're still early stages of what is a long process to get -- to fight the social inflation plaintiffs bar. But it's been clear data that some clients were more effective doing that than others. And the way that shows up is we look at the actual versus expected emergence. We look at what they're -- how they've evolved their portfolio, the layers they're writing, are they in that kind of working layer right above the first excess where there's a especially high amount of claims being kicked into that because the personal injury awards are the claims that are seeing the most inflation. It's not the class actions that necessarily hit the 500 x 500 layer. It's the personal injury awards that might hit a 25 x 25 or 50 x 50. So it's some data driven, but also underwriting judgment in terms of our opinion as to whether client versus client B and structure A versus structure B will be the most resilient if inflation continues. And we do think inflation will continue. All the signs are -- while there is some tort reform, there have been some favorable court decisions at the Supreme Court level that could be reversing the tide that will still take time to come through, and we're planning for continued inflation.

Okay. Follow-up is tort reform as well, actually. I wanted to see what you think on Florida tort reform and how that could be impacting property loss trend and just your view of potential losses from wind and that kind of thing. I've heard is the reason for some of the softening. Is that something that you're giving credit for in your loss trend?

Yes. I think on previous calls, we we've talked about the tort reform in Florida and that we were conservative in our assessment of the impact it would have in Florida. It actually had more impact than that conservative original assessment anticipated. So we have seen a real benefit from it. When we were going in with a risk-adjusted view for Florida, part of that risk-adjusted view was the reductions taking into account the benefit of the tort reform. So we're pleased to see that other states are looking at that, and we've seen some expansion of it beyond Florida, but we do think it's been meaningful, and we were happy to give credit for it in this year as we now.

We'll take our last question from David Motemaden from Evercore ISI.

So just wanted to just ask about property cat rates, which is it's good to hear that they remain adequate after being down, call it, mid- to high teens after their big renewal this year. If we see similar rate declines next year, I'm just wondering how you are thinking about just rate adequacy in the market.

Yes, I'll start, and then I'll turn it over to Dave. So there's 2 assessments that need to be done when thinking about property cap because of the capital consumption of the correlations. One is what is the stand-alone economics and what's the marginal economics. Marginally, I expect that even with the same level of rate reduction and the associated increase in the loss ratio for the individual deals, we will like the portfolio. we will further enhance the capital efficiency of that port portfolio. So marginally, so increasing the marginal returns through the risk share mechanisms that we have. So when I'm looking into '27, I do anticipate that there'll be more competition. I also anticipate we're going to build a property cat portfolio that we really like.

Got it. And then heard the $600 million increase in limit that you guys deployed at mid-year but Kevin, you also mentioned that demand is increasing but at a reducing level going forward. So how are you thinking about the demand environment as we move into next year compared to this year?

David, this is David Marra. On the demand side, we've had increasing demand but at a slower rate over the last few years. 2 years ago, we counted $20 billion of demand in the U.S. cat side last year [ 15 ]. This year, it's just over [ 10 ]. So we think the long-term dynamics are very strong. The more Florida private market participation, lower public market bit growth in TIVs, clients are all over this, and they're buying more limited. That being said, we wouldn't expect an accelerating growth in demand going forward, and there's still competition and competition from the cat bond space. So a bit of a mix there.

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

Thank you for joining today's call. We feel like we're in a great position, having built a portfolio that we targeted as we go into wind season. and look forward to talking to you in a couple of months about the third quarter. Thanks very much for joining today's call.

This concludes our RenaissanceRe Second Quarter 2026 Earnings Call and Webcast. Please disconnect your line at this time, and have a wonderful day.