kevin-o-donnell_renre_resized
Kevin O’Donnell, RenRe CEO
1 June 2023Insurance

RenRe lines up next $750m towards Validus buy; could wield $4.65bn

Global reinsurer  RenaissanceRe has lined up $750 million from bond investors as it continues to line up financing for  its agreed-to deal to purchase Validus Re from AIG.

RenRe struck terms for the $750 million issue of 10-year senior unsecured notes with a fixed-rate 5.75% coupon, management said of an ongoing process.

It's the latest step towards the nearly $3 billion purchase of AIG's reinsurance operations which has already seen the firm raise a net $1.352 billion from a neighbourhood 15% capital increase.

RenRe is slated to pay AIG $2.74 billion in cash and $250 million in new equity for the array of reinsurance operations, chiefly Validus Re, exclusive of 95% of reserve development, plus the ILS manager AlphaCat and renewal rights to the treaty reinsurance book at Talbots.

The new debt will be pari passu to all other existing unsubordinated debt, but would be forced to early redemption should the Validus Re deal fall through.

For the debt deal underway, Morgan Stanley, Barclays, HSBC, Wells Fargo Securities, and BofA Securities served as joint book-running managers.

RenRe had additionally put $1.55 billion on stand-by bridge financing at Morgan Stanley.

The total accumulated cash pile (treating new equity as pure liquidity), could now extend to $4.65 billion.

RenRe has indicated it hopes to remain both heavily capitalised and highly liquid through the lead-up to the Q4 transaction. Company officials have suggested that organic growth plans remain full steam ahead for this year.

Indirectly, AIG will also help finance the deal. As part of the sales agreement, AIG has agreed to put up to $500 million into the RenRe third-party capital vehicles that RenRe will be using to back reinsurance liabilities from Validus.

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31 May 2023   The group is fresh from a $1.352bn net take from recent SPO on way to $2.735bn Q4 payment.
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24 May 2023   New shares, at 15% of current equity, provide ca. half of the Q4 payment.
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20 July 2023   Ian Branagan will transition to senior advisor to the company.