Winner: RenaissanceRe

Over the company’s 30-year history, RenaissanceRe has evolved from a property catastrophe reinsurer to a multiline, global reinsurer with access to the best casualty, specialty, credit and property risks. Last year, the company acquired Validus Re from AIG, bringing together two highly skilled underwriting teams and enhancing RenaissanceRe’s scale and offerings.

RenaissanceRe’s credit business is an important contributor to the company’s success and diversification, and the team’s value proposition as an innovative, expert, cross-class underwriter within the three pillars of the company’s credit business – structured credit, mortgage credit and credit, bond and political risk – has helped them solidify its market position. With 21 employees in five geographies and a credit portfolio of over US$550m gross premiums written in the first six months of 2024, the company has one of the largest credit operations in the reinsurance space.

RJ Shea, global head of credit for RenaissanceRe, attributes both partnership and the team’s willingness to explore innovation as key reasons for its success. “We operate in a very collaborative environment, and our team has proven experience providing effective structures to clients who are considering new and innovative risk transfer programmes. We partner with our clients through market cycles, taking a long-term view of the risks we assume and working closely with clients to ensure that we’re delivering the solutions they need beyond the here and now.”  

Working primarily with insurance companies (both diversified and monoline), banks and government agencies across the globe, RenaissanceRe’s credit team has demonstrated increasing leadership in the structured credit space through its distinctive approach to problem-solving.

In 2024, RenaissanceRe continued to grow its structured credit franchise with both a geographically diverse and an asset-class diverse portfolio, completing transactions referencing, but not limited to, large corporate loans, SME loans, real estate loans and fund financing. The company writes equity, junior mezzanine and senior mezzanine layers as it seeks to create a unique risk profile for its portfolio. Beyond SRT and always in the spirit of partnership, it has provided bank clients with credit risk protection on capital-intensive portfolios, “matching desirable risk with efficient capital”, as Shea notes.

RenaissanceRe continues to play an active role in the development of the unfunded SRT market, extending beyond its direct business with banks. As Mehdi Benleulmi, head of structured credit for RenaissanceRe and head of the company’s European credit business, notes: “Through thoughtfully structured credit risk transfer transactions, we assume risk on an unfunded basis as an alternative, or complement, to cash market participants. We believe that the unfunded market is where we add the most value to the overall SRT market and where we can achieve sustainable growth for our portfolio.”

The company also actively engages with industry stakeholders in this space, both directly and through industry groups such as the ICISA and IACPM, discussing key topics including the potential for an STS label for unfunded participants. “Our view remains that diversified and regulated (re)insurance companies, with strong balance sheets like ours, should be eligible to provide protection on STS transactions,” Benleulmi observes.

In the US structured credit space, RenaissanceRe is a leader in both the US Private Mortgage Insurance (PMI) and Government Sponsored Enterprises (GSE) credit risk transfer spaces. In 2023, the company brought third-party capital into the CRT reinsurance space for the first time. This first-of-its-kind transaction created an avenue for cash investors to access CRT reinsurance transactions, providing cash investors with cost-effective turns of leverage, while eliminating the need to mark-to-market these trades.

“Our unique approach provides clients with significant gross line sizes on a bilateral basis and provides us with fee income via our market-leading access to risk,” Benleulmi concludes. “It’s a win-win.”

Honourable Mention: Arch Insurance (EU) DAC
Arch has significantly increased its presence in the European SRT market over the last number of years, becoming a market leader in unfunded SRT execution. The firm has invested in its team, been an industry voice for unfunded SRT and provided execution certainty to our clients, which has led to a marked expansion of the unfunded SRT market.

Arch wrote its first unfunded mortgage trade in 2018. Since then, the firm has expanded into multiple EU and non-EU geographies and invested in trades across a broad range of asset classes. Indeed, its insured book has grown considerably and the firm is currently the largest insurer of unfunded mortgage SRT in Europe.

Arch has established direct relationships with Europe’s leading banks since it opened its European Mortgage Insurance office in 2012. Many of the transactions the firm has written in recent years are repeat trades with banks it has established an existing partnership with. Building a strong network of trusted counterparties is critical to its success in the SRT arena.

Arch sees a growing demand for SRT transactions from both IRB and SA approach banks and has concluded transactions across both regulatory approaches. Many SA approach banks are often first-time issuers and the firm works closely with these institutions to find a structure and portfolio which makes economic sense for both parties.

Arch has broken ground in 2023-2024 by writing trades in new geographies which do not have a history of private sector unfunded SRT. The firm is committed to growing its SRT presence across Europe and has invested heavily in its team to ensure it has the in-house capability to review and underwrite SRT transactions. Arch is a long-term investors in this sector and views SRT as a core part of its business.

For the full list of winners and honourable mentions in this year’s SCI Capital Relief Trades Awards, click here.