Kevin O’Donnell: Yes, I think — maybe I’ll start, but I’ll let Dave do most of the talking on this. The bridge loss, the reason we wanted to highlight it is it happened in the quarter, it got a lot of press, and it’s across two segments. So, I wanted to give you a little bit of transparency. We think recognizing it early makes a lot of sense. We also think it’s the largest marine loss that’s ever happened. So, I think that also fed into our thinking. We don’t think we’re oversized with the loss, but I’ll turn it over to Dave to talk a little bit more about the coverages.
David Marra: Yes. The two coverages that are most in play are marine liability and then property, and that’s why we booked it in the two separate segments. And marine liability, you asked about where that gets reinsured, whether it’s retro. We assume that through traditional excess loss in the marine and energy space, which covers marine and energy often in a combined way. And then we also do write some assumed retro. We also buy some retro to limit our exposure on that overall account. That’s where the specialty piece is being assumed, and then the property piece is in our other property risk and quota share portfolio.
Kevin O’Donnell: And with regard to the verticality that you mentioned, I think the property is a little bit easier to get your hands around. We think there is some scope for more people to be pulled into the casualty and we contemplated that in the reserve. But we don’t think this is a runaway where there’s significant expansion beyond the coverage issues that are already sort of known.
Ryan Tunis: Thanks. That’s helpful. And then I guess one just for Bob, not asking for — we’re not asking for specific expense savings guidance or anything like that. Just curious on things like real estate, whatever, like I’m sure that there are saves that have been identified. Is it safe to assume that those are — that’s — any of that kind of minor stuff or whatever’s in these 1Q numbers or some of the easy stuff you’ve identified, storm that come for the rest of 2024?
Robert Qutub: Yes. Thanks, Ryan. We got some of those in the fourth quarter in the first two months of owning. So we got some of the easier ones upfront. You’re going to see a lot of these are transition costs that will carry in through first quarter as we do the integration. As I said, it’s going to taper off over the next three quarters, down to a nominal amount by Q4 and gone by 2025. So, expected to see a decline. It’s $20 million this quarter, probably be $5 million, $6 million last — next quarter.
Ryan Tunis: And, sorry, just to clarify, not the one-timers, I’m talking about core costs, like maybe — like real estate or something like that. So —
Robert Qutub: The real estate — okay, so let me rephrase. The real estate and cost like that, we’ve taken the charges on the unused space that we’re not going to use. So, what you’re going to see now is the recurring use of those spaces is now up in our operating income. What you’re seeing outside of operating income would be the transition integration. A lot of those are people and one-time costs that come through some consultants. That will go away. So, that’s in the corporate expenses. That’s the $20 million that I referred to in my prepared comments.
Ryan Tunis: Thanks.
Operator: Our next question comes from Joshua Shanker with Bank of America. Please go ahead.
Joshua Shanker: Thank you. You mentioned — I’m going to get nowhere with this, but I’ll ask anyway. Is there a way to frame what the organic growth was at RenRe proper and the organic growth within the part of the Validus book that you wanted to renew?
Kevin O’Donnell: Yes. We’re not looking at it that way. As I — as we mentioned kind of early on, there’s a heavy overlap with the Validus portfolio. I think, what we said is, at the time we announced the acquisition, about as close to a 30% quota share as we could get with the portfolio. So, we are very happy with the quality of the underwriting. We’re very happy with the quality of the underwriters and the people from Validus. We have grown on accounts beyond the one plus one equals two. We have shrunk on some of the accounts, one plus one equals two. The area that we’ve probably grown the most on a combined basis is within specialty, and we’ve had great success, but we’re not. It’s too difficult for us to think about assigning organic growth between shared accounts.
So, when we’re looking at, we target the amount that we want. Our clients and brokers have been enormously loyal and helpful to us. So, when we look at the growth, we’re proud of the number that we put up, but we’re not breaking it out between organic and combined.
Joshua Shanker: Makes sense. I understand. Kevin, you began your remarks talking about not wanting to pass the risk of hurricane volatility onto your shareholders. The last time the balance sheet was tested against the major loss is probably Hurricane Ian, and people can determine how they feel about RenRe’s performance at that moment. But one thing that’s really not been tested is the $100 billion disaster, or the $150 billion or the $200 billion disaster. Can you talk a little bit about how RenRe’s balance sheet and its partners’ balance sheets are changed in terms of their exposure as the amount of the loss rises to levels not before seen?
Kevin O’Donnell: Yes. So, I actually said we wouldn’t transfer it to clients. The fact that we’re going to hold the risk means RenRe is holding that risk and we’ll manage it appropriately. I think in order to think about how we construct portfolios, we need to make sure that we are resilient to losses. If you think about what that means is, as you move further into the tail, you’re moving from income statement concerns to balance sheet concerns and making sure that we are available for the day after the loss to continue to support our clients. That’s kind of integral in what we do. If you take the two portfolios together, right now, our share of larger losses as a percent of equity is relatively consistent with what RenaissanceRe has done historically.
So, we have not levered up the amount of risk that we’re taking, because we put the Validus portfolio onto our balance sheets. So, when I think about the largest types of events that can happen, we are equally resilient compared to where we’ve historically been. That said, we are in a much stronger environment across each of the areas which generate resilience on our balance sheet. We have much stronger investment income, and we have much stronger specialty income and much stronger fee income. All of that bolsters the impact of any event that can come in from the catastrophe — from the cat book, particularly the cat book in the tail. So, when I look at the portfolio, it’s well constructed against tail risks. Obviously, we would suffer losses in a tail risk event, but there’s nothing back there that would make me feel materially different than how I’ve historically felt about how we built our portfolios.
