Good morning. My name is Thia, and I will be the conference operator today. At this time, I would like to welcome everyone to the RenaissanceRe’s Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Thank you. At this time, I would like to turn the conference over to Keith McCue, Senior Vice President of Finance and Investor Relations. Please go ahead, sir.

Thank you. Good morning. Thank you for joining our third quarter financial results conference call. Yesterday, after the market closed, we issued our quarterly release. If you didn’t receive a copy, please call me at 441-239-4830 and we will make sure to provide you with one. There will be an audio replay of the call available from about 1 p.m. Eastern Time today through midnight on November 26th. The replay can be accessed by dialing 855-859-2056 U.S. toll free or 1-404-537-3406 internationally. The passcode you will need for both numbers is 7440669. Today’s call is also available through the Investor Information section of www.renre.com and will be archived on RenaissanceRe’s website through midnight on November 26, 2021. Before we begin, I am obliged to caution that today’s discussion may contain forward-looking statements and actual results may differ materially from those discussed. Additional information regarding the factors shaping these outcomes can be found in RenaissanceRe’s SEC filings to which we direct you. With us to discuss today’s results are Kevin O'Donnell, President and Chief Executive Officer; and Bob Qutub, Executive Vice President and Chief Financial Officer. I’d now like to turn the call over to Kevin.

Thanks, Keith. Good morning, everyone, and thank you for joining today’s call. Regarding our financial results, this was a difficult quarter and a continuation of what we have been experiencing in the P&C industry over the last five years. That said, we believe that the market will continue to experience significant rate increases, which will accrue to the benefit of our shareholders. Let’s start by discussing the third quarter. Given the large catastrophe losses, I will focus my comments primarily on our property business where climate change, social inflation and other loss drivers have caused elevated losses. As you would expect, reinsurers have absorbed a significant share of this volatility. Absorbing volatility is an important component of our value proposition to our customers. Over the past five years, we have delivered on this promise. Ultimately, however, we need to be paid adequately for the risk that we assume and the returns for our shareholders over the recent five-year period were not sufficient for the capital they have deployed. Our industry has experienced more change recently than at any time since our founding in 1993. In response, we set out to build the capabilities and scale needed to generate superior returns in this marketplace. We began this journey by forming our Lloyd’s syndicate, continued with the acquisitions of Platinum and TMR, accelerated with the expansion of our Capital Partners business and culminated with last year’s capital raise, which afforded us the ability to lean into one of the best reinsurance markets we have experienced in a long time. We are now at an inflection point in our evolution. We have built an organization that will succeed in an industry impacted by low interest rates, abundant third-party capital, social inflation and climate change, and it is now time to monetize what we have built. Our fortress balance sheet will help us achieve this goal as it easily absorbed this quarter’s losses. Our shares have been trading at attractive levels, which provides us with more options to deploy excess capital than probably at any other time in recent history. As you saw, we continue to repurchase our shares in the fourth quarter and thanks to our strong excess capital position expect to continue to do so in 2022. The attractiveness of our shares versus other opportunities places an increasingly higher hurdle against deploying excess capital into our business. We have achieved competitive scale and will only pursue future growth to the extent new business is expected to clear stringent profitability hurdle rates. This will allow our underwriters to focus on building efficient portfolios through pricing discipline and strong underwriting. We will continue to engage with our clients, discussing our developing view of risk and the pricing and structures that are needed to provide fair returns to absorb the volatility. At times, these discussions may prove difficult or challenging. I am comfortable reducing any business that we do not believe will create superior returns for our shareholders. This results in additional excess capital. We have more tools than ever to manage it effectively. That said, I expect that we will write a larger and more profitable portfolio in 2022. To begin with, the property market has enjoyed material rate increases over the last five years, which will continue to earn through. Rate increases have been similar, if not steeper, in the casualty market over the last three years. Going forward, we believe rates will continue to rise across the industry for several reasons. First, due to continuing volatility, realized results have lagged expected returns in the industry at large for several years. As a result, substantial proportions of the reinsurance industry, in particular third-party capital, have failed to earn their cost of capital. Investor patience is wearing thin and they are requiring increased return profiles to accept the volatility. We expect retro capacity will shrink due to poor performance and substantial trapped capital. Any retro that is available will likely move up an attachment level, so we will shift protection from earnings to capital. With less retro and lower attachment points, reinsurers will be more exposed to income statement volatility. Since the cost of accepting volatility has risen, the supply of reinsurance will decrease and further push rates. Third, social inflation will continue to plague the industry, and price inflation will increasingly push up loss costs. And fourth, persistent losses and the fear of climate change will likely raise primary carriers' demand for hedges against their own volatility. We expect these various dynamics will reduce the supply of and increase the demand for the products that we sell. This will result in further rate increases and improved profitability. I should also note that our Casualty business is now beginning to reflect the substantial rate improvements of the last three years. As a result, this quarter, we reduced our initial expected loss ratio by 3 points. We absorbed the Casualty segment’s share of cat losses and still made an underwriting profit. I will discuss this further in the second half of my comments. But suffice it to say that we anticipate Casualty will increasingly contribute to our bottom line in the future. So when I look forward to 2022, I am very excited about our prospects. Our fortress balance sheet allows us to maintain our current underwriting portfolio or even grow if desirable. Increasing rates across our business will add to the portfolio’s profitability. Finally, prudent capital management will leverage our potential to generate bottom-line profitability on a percentage of equity basis. That concludes my opening comments. I will provide a more detailed update on our segment performance at the end of the call, but first I will turn it over to Bob to discuss the financial performance for the quarter.

Thanks, Kevin, and good morning, everyone. As Kevin highlighted, this quarter experienced significant catastrophe activity, which is reflected in our results. I'll discuss our performance in detail, but there are two key takeaways. First, we have maintained a strong balance sheet that allows us to create value for shareholders through effective capital management. We will increase our growth if underwriting opportunities are profitable, and we can also continue our share repurchase program at favorable valuations. Second, the areas we have invested in and grown this year, particularly Casualty and Other Property, are showing positive trends, and we are starting to see these results in our financials. This quarter, we confidently reduced our initial expected loss ratio in Casualty by 3 percentage points. Additionally, the attrition loss ratio for Other Property has been steadily improving due to our portfolio management efforts initiated last year. I'll begin by discussing our capital position and how we plan to manage it for the January renewals, followed by our consolidated results and the three profit drivers. Our capital management activities this quarter were significant, and despite share repurchases, our capital position remains robust. The weather-related losses were within anticipated levels, and we have adequate capital to manage them. We typically maintain an excess capital buffer of up to $1 billion, ensuring we can take advantage of future opportunities. Looking ahead to 2022, we are comfortable with our excess capital. Our first priority remains investing in profitable business opportunities, followed by returning any excess capital to shareholders, which we have been doing this year. Our stock valuation is very appealing, which means that our hurdle rate for attractive underwriting opportunities is higher than before. Ultimately, we aim to grow tangible book value per share. As we approach the January 1 renewals, our strong balance sheet gives us the ability to do just that. We have enough capital to support our existing risks and will continue to grow if price increases in 2022 are sufficient. At the same time, we expect to return capital to shareholders at a rate close to our net earnings. Moving to the capital management actions from the third quarter, we issued $500 million of our Series G perpetual preference shares. These shares carry a fixed dividend rate of 4.20%, and we used $275 million of the funds to refinance our 5.375% Series E preference shares, resulting in an increase of our preference equity by $225 million. We also repurchased 1.5 million common shares for approximately $224 million at an average price of about $151 per share, yielding an average price-to-book value of under 1.2 times our current book value. Since the end of the quarter, we have repurchased an additional 518,000 shares for $75 million at an average price of just over $145 per share. Year-to-date, we have repurchased 5 million shares for $780 million at an average price of $155 per share, which has reduced our share count by about 10% since the end of 2020. Even after weather-related losses and active repurchases, our equity stood at $6.75 billion at the quarter's end, relatively unchanged from our position after last year's equity raise, allowing us to execute our strategy with efficiency. Regarding our consolidated results, we reported a net loss of $450 million and an operating loss of $415 million for the quarter, primarily due to a net negative impact of $727 million from weather-related large losses, chiefly Hurricane Ida and flooding in Northwestern Europe. This resulted in a reported annualized return on average common equity of negative 28% and an annualized operating return of negative 26%. Now turning to our profit drivers, particularly underwriting income, we grew gross premiums written by $631 million, a 55% increase, with the Property segment contributing $346 million and the Casualty segment $285 million. This quarter, we reported $255 million of reinstatement premiums from weather-related losses, compared to $54 million from similar events in the same quarter last year. Excluding reinstatement premiums, gross premiums written increased by 39%. Year-to-date, our net premiums written rose 44% to $4.8 billion, putting us on track to significantly exceed $1 billion in growth for the year, even without including reinstatement premiums. Most of this growth is attributed to Casualty and Specialty sectors, both showing strong rate increases. We experienced underwriting losses of $679 million this quarter and a combined ratio of 145%, with 74 percentage points attributed to weather-related losses. Specifically, 43 points were from Hurricane Ida and 19 from European flooding. Our Property segment saw gross premiums written increase by $346 million, or 81%, with reinstatement premiums from large loss events in the third quarter rising by $202 million year-over-year, mainly affecting the property catastrophe sector. Excluding the growth in property premiums, the increase was $144 million or 38%, with Other Property growing $182 million or 73%, while the property catastrophe sector declined by $38 million or 30%. This decline is not significant for property catastrophe renewals, partly due to some unique, nonrecurring deals from the third quarter of 2020. In the Property segment, we reported a current accident year loss ratio of 180% and a combined ratio of 184%, heavily influenced by weather-related large losses adding 141 percentage points. The Other Property segment, which includes both attritional and catastrophe risks, had a current accident year loss ratio of 112%, incorporating 66 percentage points from weather-related losses, while the attritional portion continues to improve and remained below 50% throughout 2021. We also noted 18 points of favorable development in Property this quarter, mainly from past large catastrophe events. Turning to our Casualty results, we recorded gross premiums written of $1 billion, increasing $285 million or 40% from the comparable period. As we gained more insights, we began to reflect positive rate trends in Casualty seen over recent years. This quarter, we reduced our initial expected loss ratio by 3 percentage points, which should positively influence the current accident year loss ratio going forward. This is just one factor, and we expect the current accident year loss ratio to vary based on loss events and business mix. The combined ratio for Casualty was 99.6%, with a current accident year loss ratio of 69%, impacted by weather-related losses adding 3.5 percentage points. Excluding the effects of weather-related events and COVID-19, the current accident year loss ratio for Casualty marginally improved compared to prior quarters and the full year 2020. These improved margins in both Casualty and Other Property show promising growth in earned premiums, up 43% and 73% respectively from the third quarter, with a consistent capital base. This reflects the premium leverage we are starting to realize from our growth initiatives in these segments over the past 12 to 18 months. Moving to our second profit driver, fee income, total fee income this quarter was $28 million, impacted by the weather-related losses. Management fees were down due to year-to-date losses in DaVinci, leading to a deferral of those fees. However, we anticipate recapturing these fees in future quarters when DaVinci returns to profitability. Performance fees have risen compared to the third quarter of 2020, largely due to reversals last year. This year, performance fees have remained low due to losses from winter storm Uri, which eliminated the need to reverse them this quarter. Overall, we shared $198 million of underwriting losses with partners in our joint ventures due to weather-related impacts. Now, regarding investment income, we achieved net investment income of $78 million, consistent with the second quarter of 2021, but slightly offset by $42 million in realized and unrealized losses, resulting in total investment returns of $36 million. These losses primarily arose from our fixed maturity portfolio, linked to increased interest rates and a modest widening of credit spreads. The yield on our retained fixed maturity portfolio remained steady at 1.3%, and its duration decreased slightly to 3.7 years. We are comfortable with our investment portfolio's composition and believe it provides the necessary liquidity to support our underwriting operations. Regarding expenses, our acquisition expense ratio held steady at 22%. The casualty expense ratio rose by four percentage points to 28%, aligning with our expectations, while the property acquisition expense ratio decreased by three percentage points to 16% due to rising reinstatement premiums. Excluding reinstatements, this ratio increased compared to the prior year’s quarter. The Other Property business typically incurs higher acquisition costs than standard property and catastrophe, and we expect this ratio to grow as Other Property becomes a larger part of our portfolio. Our direct expense ratio was 5%, relatively flat year-over-year after adjusting for unique items. In absolute numbers, operational expenses increased this quarter, but the operational expense ratio declined by one percentage point to 4%. Before I hand it back to Kevin, I'd like to address recent global tax developments. We've been following recent announcements regarding a global minimum corporate tax and the OECD’s work on this issue. In October, the OECD shared a framework across several countries for a 15% global minimum tax, though many practical implementation details are still unclear. We are keeping a close watch on this matter and believe our global operating platform will continue to offer us a competitive edge. In conclusion, while this quarter's results were affected by natural catastrophes, we are observing positive trends across both segments. Our active approach to capital management has enabled us to build a strong balance sheet, providing several avenues to enhance shareholder value as we approach the important January 1 renewals. I will now turn it back over to Kevin.

Thanks, Bob. As usual, I will divide my comments between our Property and Casualty segments. Starting with Property, I thought it would be helpful to spend a few minutes discussing the loss drivers for natural catastrophes, including the evolving impact of climate change and the increasing costs due to inflation. For almost two decades, we have invested heavily to understand the influence of climate change on weather and its impact on the risks that we take. RenaissanceRe Risk Sciences is a large part of this investment. It provides us with a significant competitive advantage in assessing the impact of climate change. It also aids us in continually updating our models to reflect the latest science, such as the recent IPCC Sixth Assessment Report. Having this ability is critical. As an example, our many decades of research on the climate’s influence on Atlantic hurricanes helps inform our belief that the recent active epoch since 1995 appropriately constitutes a new baseline from which to further refine the assumptions that underlie our hurricane wind risk models. In other words, due to climate change, we believe that the elevated average of the last 25 years depicts a more representative view of hurricane risk for the present and that the long-term historic record, which serves as the baseline for the vendor hurricane models, is a poor guide for the future. Our proprietary models reflect this elevated view of frequency and severity, and our view of Atlantic hurricane wind risk in the context of hazard, frequency, and severity, as well as expected modeled industry losses, is significantly above the vendor long-term view of the risk. This supports our view that we are successfully incorporating the impact of climate change into our models. It’s important to note that while storms are increasing in both frequency and severity, some of those changes are cyclical in nature and not tied to climate change. So while it’s important to understand and price for climate change, it is not the only factor increasing losses in the P&C industry. In all likelihood, the recent clustering of weather events is more attributable to statistical fluctuation in arrival rates than the influence of climate change, in the same way that the 10-year period prior to Hurricane Irma was a statistical outlier due to the absence of U.S. landfalling hurricanes. The five-year period since then is also a similar outlier for its heightened activity. Unlike climate change, this is not a systemic issue and should average out over time. And then there is inflation, even though Ida is tied for the fifth strongest landfalling hurricane in U.S. history, a storm of Hurricane Ida’s characteristics simply does not generate enough energy to result in the industry losses that are being projected. The truth is that as much as storms are getting stronger and more frequent, which we can model for, social inflation and outright fraud are increasing loss costs in ways that are more difficult to quantify. Price inflation also plays a role in the elevated cost of catastrophes, in part due to labor shortages, supply chain disruptions, and rising commodity prices affecting building costs. So while we actively adjust our view of natural catastrophe frequency and severity for the influence of climate change, we also know that these other factors represent a substantial accelerator of loss costs. Consequently, we are focused on appropriately weighting all of these factors in our modeling, so we can be confident that we are being paid adequately for the risks we assume. We believe that we are successfully doing this. One indication is that actual hurricane losses in the United States have averaged about $18.4 billion over the last five years, which is below the average that our models predict. This strongly suggests that we are accurately capturing recent changes. We had an opportunity to test our models again this year with Hurricane Ida and believe that losses will be within modeled expectations. For example, PCS is currently estimating that Hurricane Ida’s industry loss is at $29 billion. Our models indicate that the Ida industry loss is about a one-in-five-year event for the U.S. and about a one-in-30-year event for the Gulf; in other words, a large event, but not an extreme outlier. The third quarter also experienced large European flood losses, which is further evidence of the expanding influence of climate change. The loss is likely to be about a $12 billion to $15 billion industry event, which in our view, is a 50-year to 100-year return period for the flooding in the U.K. and Europe taken together. Moving on from this discussion of loss drivers. This is the time of year we shift our underwriting focus to the January 1 renewal. We are optimistic that we will find ample opportunities to construct an improved portfolio of risks. Given the substantial losses in the quarter, our underwriters expect to obtain increased rates and better terms and conditions across our property book at the January 1 renewal. This effort will be particularly focused on the property catastrophe business, which has experienced larger losses and smaller rate increases over the last five years relative to other lines. Shifting to Other Property, our Other Property business, which was also impacted by weather-related large losses in the quarter, was already dislocated and experiencing substantial rate increases prior to Q3. Given the active quarter, we expect this favorable trend to continue. I am delighted with our ability to construct a high-quality Other Property portfolio. This portfolio has been built from largely cat-exposed excess and surplus insurance lines that we write on a proportional basis. This is the most impacted and dislocated segment of the property market, and our underwriters have definitely leveraged into this space, writing more than $1.3 billion in gross premiums so far in 2021. Catastrophes aside, the Other Property portfolio is enjoying lower attritional loss emergence, as Bob discussed in his comments. In general, this business is performing at or above our initial expectations, and we continue to realize material rate increases. Let’s now shift to the retro protection that we purchased for ourselves. Given the weather-related large losses, it is likely that this protection will be less available and more expensive in 2022. Consequently, we may purchase less retro protection and take more risk net. With the expectation of improved rates, we are comfortable with this potential outcome. Moving now to our Casualty and Specialty segment. Heading into the January 1 renewals, we continue to enjoy the benefit of accelerating underlying rate increases across multiple lines of business and geographies. As previously discussed, this quarter we reduced our initial expected loss ratios in some casualty classes. If pricing and trends continue as they are, we expect that our casualty book will continue to show lower combined ratios over the course of 2022. As should be the case, our reserving team is moving cautiously to reflect new information until we see more evidence of favorable loss trends. We have discussed our casualty book being rate adequate over a rolling 10-year period, while we continue to see rate change above loss trend; we believe more rate is required in the casualty market to produce adequate returns after an extended period of rate reductions up until about 2018. Finally, putting aside the ongoing organic growth we have planned for 2022, by simply earning through the Casualty portfolio that we have already written, we expect to grow net earned premiums by over $400 million. This demonstrates the enhanced premium leverage we are beginning to achieve, which is good news in an improving market. Our Capital Partners business continues to be core and a growing part of our platform. Over the past five years, we have grown our partner capital by approximately $5.2 billion, representing a compounded annual growth rate of about 30%. This allows us to bring more capital to the market and generate fees. Our fee schedules have remained constant, and we are turning away more capital than we are accepting. We are not an asset accumulator but rather see ourselves as managing these funds to solve customer problems by sourcing and matching the most desirable risk with the most efficient capital. This is a business that continues to mature. Investors are demanding more accountability for managers with respect to strong governance structures, robust internal audit capabilities, and a clear understanding of the importance of building ESG transparency, responsibility, and accountability. Given our long-term track record and robust enterprise risk management framework, we believe we maintain a considerable competitive advantage in this space. This was a difficult quarter marked by material net and operating losses. That said, we head into the January 1 renewals with ample liquidity and a fortress balance sheet. Our fundamentals are strong, our prospects are bright, and I believe that we will have the opportunity to underwrite an increasingly profitable portfolio of business such as the January 1 renewal that will generate superior returns for our shareholders. Thank you. And with that, I will turn it over for questions.

And the first question will come from Elyse Greenspan with Wells Fargo. Please go ahead.

Hi. Thanks. Good morning. My first question is just on capital. I am trying to piece together some of the comments throughout the call. Just are you guys willing to put, let us know exactly how much excess capital you have today? I know your equity levels are below where they were after the equity raise, but I think you said they were in line, right, because that was in the middle of the second quarter of last year. But and you said you would like to hold up to a $1 billion buffer, but where does that actually sit today just in terms of excess capital?

Thank you, Elyse. I hope you're doing well. I did mention $6.75 billion. Keep in mind that we began our capital raise efforts in the second quarter. My comments were primarily based on the end of the first quarter. In the second quarter, we recorded an unrealized gain in the portfolio, which serves as a point of comparison. As I mentioned last quarter, I provided a reconciliation regarding earnings, taking into account share buybacks and the returns to our investors. Regarding your second question about excess capital, it's important to clarify that we are not capital constrained. Looking ahead to 2022, we plan to build our book, and as Kevin noted, there are attractive growth opportunities we have observed. We expect to enter with a higher level of excess capital that we can allocate for future opportunities that may arise in 2022. Likewise, I also indicated that considering the earnings we will generate from that portfolio, we will continue to return capital next year based on those earnings.

So when you say higher side of that, it’s within range of that $1 million buffer?

It will be close to $1 billion. We will keep it higher, and as we go through the year, we will continue to manage that.

Thanks for the update. As a follow-up, you mentioned that it has been a challenging year for the industry regarding catastrophic losses. Over the past few years, this has been a recurring theme. Kevin, your optimism about the January 1 renewals is encouraging. Given the current losses in the U.S. and Europe, what do you foresee for the catastrophic market? What needs to occur for your team to write more property catastrophe business and reduce capital returns to shareholders?

I believe it's a good question, and we're currently in a phase where we lack clear price indicators. I want to emphasize the potential drivers that could lead us to increase the rates we receive for the property catastrophe insurance we provide. I anticipate a demand and supply imbalance, as we've already seen some major buyers expressing interest in increasing their protection purchases. The reduction in retrocessions will significantly affect reinsurers and their ability to service their existing portfolios, and pricing is typically determined by the margins. I am optimistic about the willingness to reduce risk if rates don't see significant improvement. When I refer to rates, I should actually say economics, as I expect shifts in attachment points, particularly in Europe, leading to better terms and conditions, and higher rates on a rate-adjusted basis. I am quite hopeful, definitely in the double digits, regarding the expected rate changes.

And the double-digit in both the U.S. and in Europe?

Europe is less important to us, but it certainly deserves double digits, and we are prepared to reduce if we don’t get it. I think more important than Europe is probably the attachment point. So if we get the same rate on a risk-adjusted basis and have double-digit improvement in economics, we will be satisfied.

Okay. Thanks for the color.

The next question will come from Meyer Shields with KBW. Please go ahead.

Thank you. The key question is about the Casualty and Specialty segment. You've provided detailed information regarding the improvement in the loss ratio. Have you observed any aspects of losses or loss trends that are deteriorating instead of improving?

It’s always a bit of a mixed bag on a quarterly basis when you do your actuarial reviews to close the books. I would say, in general, 2019 and forward looks pretty good; 2018 and prior is where there’s more challenge in the book. The good news for us is our book was growing and we knew at the time we were investing into a market that we expected to improve. So the biggest portfolios that we have are really 2021 and expect to be 2022. So the balance of our portfolio, I think, is in significantly better shape than others. What we are seeing in our portfolio will be pretty consistent with what others are seeing, because we are writing a proportional book.

Okay. That’s helpful. And I just wanted to get your perspective on development in Florida. I know you’ve been fairly pessimistic about what’s been accomplished so far, and I was hoping for an update.

Yeah. Florida is honestly not on our radar screen just yet just, because it’s a mid-year renewal. What we’ve done in building our performance is to hold our PML in Florida flat for 2022. That’s easily adjustable as we begin to learn more at the 1/1 renewal and transfer that into what’s likely to happen at 6/1 and 7/1. Florida is dislocating; one of the markers I generally look at to see the health of the market is to see the growth in citizens. Citizens continues to grow, which often is a sign of stress in the market, so the fact that the market is stressed. There might be an opportunity for there to be real legislative change that is beneficial, and reinsurers are probably going to continue to look for rate. So we’ve got great relationships down there. We have pulled back over the last several years. But I don’t feel impeded should we decide to grow.

Okay. Perfect. Thank you so much.

Sure.

The next question will come from Brian Meredith with UBS. Please go ahead.

Yeah. Thanks. Kevin, a couple of questions here. First, just curious, you gave us the $29 billion PCS loss event. What’s your view of what the Ida losses for the industry and how do you factor in demand surge into that, given the inflationary environment?

So the $29 billion is probably a reasonable estimate, not including NFIP. So, I think, from that standpoint, our loss numbers are always a little bit different than where PCS is. I think the important thing to note is we did include inflation, social inflation, and demand surge in the number that we put up for Ida and for Bern. So our numbers reflect our best estimate based on the energy of the Ida loss and the environment in which it incurred, which is with inflation, social inflation, and of course, demand surge.

Got you. So your number would be probably higher than PCS, given that inflation.

Yeah. I would say that’s probably a reasonable estimate.

Makes sense. And then, my second question, I am just curious, you made the comment that you are likely to kind of repurchase shares or your capital management in line with your net income that you are generating, but you haven’t generated net income over the past 12 months. Does that basically imply if fourth quarters zero for some reason the cat, I am sure you wouldn’t be buying back any stock?

I think we are going to take it each quarter as it comes, Brian. The question is really presented more. Kevin said we’ve reached a competitive scale, we feel good about the portfolio that we’ve built, and as we look at 2022, we are going to go in with some excess to buffer that probably at a high side of it. So it does give us capacity to continue to pull all the levers in our capital management portfolio.

I think Bob is absolutely right. The most important things for us is to maintain our fortress balance sheet and liquidity to pay our losses and have capital available should there be opportunities to grow. We will maintain all of that in 2022 and still have room to purchase shares back should we have normal cat activity.

Makes sense. Thank you.

The next question will come from Ryan Tunis with Autonomous Research. Please go ahead.

Hey. Thanks. First question, following up on some of the capital questions, I am just trying to understand, I guess, where the excess is coming from, because if we go back to the capital raised last year, you raised a bill. So, it didn’t seem like you had that much excess there and you said you deployed all of it earlier this year and now there’s less equity and there’s less capital than there was before the capital raise. So I don’t know the right way to ask the question, I mean, what was your view of excess maybe after the capital raise last year? I am just trying to understand where your excess is coming from.

No. That’s a good question for clarity. We entered COVID with surplus capital. We talked about that. So as we look at the capital base, we were looking at that in the context of the uncertainty that we faced with COVID, and we still have that uncertainty out there. So in the second quarter, we also saw enormous opportunities to continue to grow into the business. At that point in time, at the end of Q1 is when we were starting to think about raising capital. That’s my reference point of after $3.75 billion that I am talking about on a comparable basis. Subsequent to that, we generated significant earnings on the portfolio that came through unrealized gains and losses. In this case, they were mostly gains that came through that I talked about last quarter. That’s straight common equity that comes into the capital from our capital standpoint perspective. And as overtime and that crystallizes, we are able to return that and still maintain the adequacy of capital that we needed as we look into 2022. So we feel comfortable about it. We feel comfortable for the reason that we cited about, but that’s kind of the reconciliation in terms of earnings if you’re looking back where it came from. What it’s also provided us with is, I will say this, our premiums have gone up by $1 billion and our capital is the same. So it’s also reflecting the premium leverage that we have now embedded in our portfolio going forward in areas that we talked about.

Got it. Kevin, it's interesting that you mentioned the vendor models for hurricanes are actually lower than your internal view from the past five years, which suggests that you might have been over-earning compared to expectations. How do we reconcile that with the property catastrophe loss ratio, which has been around 80% since 2017? This would imply that much more rate or improved economics is needed beyond just double digits for this business to be appealing to underwrite.

Our perspective on elevated risk reflects our commitment to prudent capital stewardship and superior risk selection. This implies that we are maintaining the same deal with a higher loss ratio and lower expected return compared to those using different models. We believe this approach accurately portrays our profit without overstating it. More importantly, it enables us to construct detailed expected loss curves to better understand capital usage, benefiting our capital management by considering the impact of climate change, which we are confident in. When assessing our model, it represents a realistic view of risk without overly optimistic expectations about returns, instead focusing on a reserve that aligns with potential outcomes influenced by climate change. Additionally, I want to emphasize that statistically, we are experiencing a higher arrival rate of large storms than what our model predicts, which we consider a typical statistical anomaly similar to what occurred before Hurricane Irma. We remain within a confidence range around the 75th percentile for unexpected returns within our portfolio despite the increased average. While we are currently adjusting to climate change, we also anticipate that the arrival rate will revert to normal. Overall, I believe we've effectively addressed the models and demonstrated our thought process transparently during this call.

Got it. I have a couple of informational questions. First, for Bob, regarding the DaVinci management fees and the high watermark. Can you share your expectations on how much the management fee will decrease over the next few quarters and how far you are from returning to a positive profit and loss? Secondly, for Kevin, concerning Ida, what is your current level of certainty regarding your loss? Since the event occurred a month and a half ago, how much of your loss estimate is finalized at this point?

Yeah. The management fees will restart next year. It’s a quick turnaround and they get suspended for the year when they go negative, and then they will restart next year, and that will reset the market as they go for.

I expect that DaVinci will be somewhat larger next year, which should positively impact the fees generated from it. Regarding the uncertainty with Ida, I believe we have a strong process in place and have discussed our bottom-up and top-down approach to loss estimation. It is still early to assess. Factors like COVID, supply chain issues, inflation, and labor shortages contribute to significant uncertainty in any loss estimate in this environment. I think we will particularly see the impact in the need to increase our European flood loss estimates. We have done a good job of reflecting these variables, but to be honest, there is uncertainty in the broader macroeconomic landscape that could influence this loss. We have made our best effort, and I believe our estimate is accurate and I feel confident about it.

Thank you.

The next question will …

Yeah.

The next question will come from Josh Shanker with Bank of America. Please go ahead.

Yeah. Good morning, everybody. I am just a little worried about Lucy and the football a little bit. It feels like we’ve had a year like 2017, yes, property pricing was up, but interest rates were down and the ILS money and the pensions were really happy to participate. I thought it was coming in 2021 as well. Can you talk about your confidence in some ways that one of the stop jets is the wide participation of ILS money isn’t going to be as enthusiastically participating this coming year?

You raised a good point. There has been more persistence in some of the ILS money than we originally anticipated. We have strong relationships and a unique platform compared to others. If you look back, several large ILS managers are not moving forward as they were in 2020, which is significant. The retro market will play a role here. If managed correctly, retro funds will see 70% to 80% trapped or lost, making it challenging to explain to investors. Therefore, I believe we will reduce our Upsilon portfolio. The positive aspect is that we have taken the time to restructure those deals to fit more comfortably within RenRe Limited and DV, allowing us to manage them on our platform. This year's heightened volatility presents another challenge to the ILS market, with much shifting to the retro market. The burn is even higher now; I estimate that 75% of the burn loss will impact reinsurance, affecting retros too. I don’t feel restricted in our ability to access capital, thanks to our track record and unique structures. What I'm describing is more of an industry-wide trend rather than a specific issue for RenRe. We could be mistaken, and there may be a surge of capital coming in, but we haven't observed that so far. There are some capital raises occurring in the industry, which provide some clarity, and we expect to potentially increase the capital managed under the DaVinci platform.

Thank you for the clarity. Kevin, you mentioned that the loss ratio in the Casualty business improved by 300 basis points. Can you share the timeframes you are using to measure this improvement and when you determined it was appropriate to lower the loss pick?

So that will be on an earned basis, and it’s the current year accident expected ultimate that I am talking about. We haven’t looked …

For full year 2020 for full year 2021?

No. From this quarter forward…

This quarter forward. Okay.

…on loss, so it’s more of a 2022 issue earned, partially in 2022 and 2023.

Okay. What event occurred that made us feel in 3Q 2021 that we had enough information to make a slight adjustment?

It’s actually not an event. It was our normal process to go through the curves, and it’s the fact that we are beginning to have enough maturity in certain years to begin to reflect the trend that we were already observing but haven’t reacted to. So I’ve talked in previous calls that there’s been a gap in what our underwriters believe the profitability of the portfolio is and the conservative nature of the actuarial process to reflect positive trend more slowly. That’s all it is. It’s the normal delay in recognition of Casualty profitability in an improving market.

Okay. Then that’s perfectly complete. Thank you.

Yeah.

The final question is from Jimmy Bhullar with JP Morgan. Please go ahead.

Hi. Good morning. I have a question about buybacks. You've been quite active since you raised equity, starting a bit thereafter. How much of that activity is due to having extra capital that you want to deploy for your desired returns, versus taking advantage of a depressed stock price?

We began our buyback program in the first quarter, slowly purchasing about $175 million, specifically $172 million, after noticing some mark-to-market gains that strengthened our capital base. Regarding the opportunities in 2022, which we are focused on, we anticipate having excess capital available for profitable business investments throughout the year. We expect to generate earnings in the fourth quarter, which will carry into the first quarter, providing a baseline for potential returns as opportunities arise.

Bob is absolutely right, and I think you presented it as an either or. We’ve actually done both. We’ve grown our portfolio, increased the efficiency of the portfolios that we are managing, and have continued to buy shares back. So I feel great about that.

Okay. And then on inflation, to what extent are you assuming sort of continuation of the uptick in inflation we’ve seen in your pricing versus maybe viewing it as somewhat transitory?

We have always experienced inflation, which in the past we've referred to as demand surge. After an event, we notice increased competition for labor and resources. This trend has escalated. The positive aspect is that we can make adjustments in real-time when an event occurs. Going into 2022, we expect demand surge to continue. We are still witnessing the impacts of social inflation. One challenge is figuring out whether 2020 was merely a pause or a significant behavioral shift; we believe it was likely just a pause due to the slowdown in the courts. We anticipate that inflation and the competition for labor will influence the situation. Therefore, we approach the economic landscape with a cautious perspective regarding how losses will be resolved, and this will factor into our models and considerations for pricing transactions in 2022.

Okay. Lastly, you shared several reasons for your optimism about pricing in your opening remarks. Many of those reasons were present last year and this year as well, yet despite the increase in prices, they did not rise as much as anticipated at the beginning of the year. What gives you more confidence now, or what differences do you see in the market compared to a year ago?

It's a valid point. The main issue seems to be persistence. This has been another challenging year for ILS capital and retro. There appears to be a shift in how primary companies view volatility and the effects of rising prices in their housing stock and the TSI values they insure. It's not just one factor; rather, it's like the final straw that has led to a consensus that prices need to increase. We've noticed positive rate changes in nearly every line except for property catastrophes, and we've mentioned that this is driven by insurance-led pricing hardening. I believe reinsurers are starting to have more pricing power and better control over terms and conditions, which contrasts with the trends we've observed in recent years. While I'm hesitant to assign a specific confidence level, discussions with brokers and clients indicate that there is an expectation for higher payments.

Okay. Thank you.

Sure.

And at this time, there are no further questions. I would like to turn the conference back over to Kevin for any closing comments.

Thank you, everybody, for your time. Our focus, as I mentioned, is squarely looking forward. I am enormously optimistic about what our prospects are at January 1 in 2022 overall. I’ve got confidence in our model, confidence in our team. We’ve got great relationships, and I think that the wind is at our back, and our sails are out full, and we are looking forward to executing for you in 2022. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference call. You may now disconnect.