RenaissanceRe Holdings (NYSE:RNR) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below.
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Access the full call at https://event.on24.com/wcc/r/5417028/1540961A9C1AA9D31612FF3F6F149254
Summary
RenaissanceRe Holdings reported strong financial performance in Q2 2026 with an operating income of $548 million and an annualized operating return on equity of 20%. Tangible book value per share grew 6% in the quarter and 27% year-over-year.
The company strategically navigated the property catastrophe market, maintaining rate adequacy despite midyear rate decreases in the high teens, and grew property catastrophe limit by $600 million with high-quality clients.
RenaissanceRe repurchased $350 million of shares, emphasizing capital management as a key strategy alongside underwriting to enhance shareholder value.
In casualty and specialty lines, the company reported a combined ratio above 100% due to a shift of losses from the Baltimore Bridge collapse, but maintained confidence in underwriting performance with proactive reserving.
Management highlighted the integration of AI into operations for enhanced decision making and announced leadership transitions with Matt Neuber set to become CFO in 2027.
The outlook for the rest of 2026 remains positive, with a well-constructed portfolio prepared for the hurricane season and ongoing investments in AI and capital management expected to drive long-term growth.
Full Transcript
Tasha, Operator
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 Holdings' second quarter 2026 earnings conference call and webcast. After the remarks, we will open the call for your questions. Instructions will be given at that time. Lastly, if you should need operator assistance, please press STAR zero. Thank you. I will now turn the call over to Keith McHugh, Senior Vice President of Finance and Investor Relations.
Please go ahead.
Keith McHugh, SVP Finance and Investor Relations
Thank you, Tasha. Good morning and welcome to RenaissanceRe Holdings' 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 Mara, 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.
It's 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 O'Donnell, President and Chief Executive Officer
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 three 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, are 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, but 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 a portfolio that remains rate adequate 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 for a 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 cat 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 recognized the opportunity at the time and aggressively grew both organically as well as 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 outwards side. This gives us an informed view of where the best risk actually sits. We exercise risk selection to concentrate on the specific accounts and layers where the economics are strongest and manage line size aggressively.
We then deploy the rest of our toolkit, 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 mix between risk and return that maximizes long-term growth in 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 recognize 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 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 view 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, but report them separately. Underlying casualty and specialty performance was 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 Niño may influence the hurricane season. This is not how we 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 elevate the impact of our people and enable better decisions.
I think about this as a combination of augmentation and automation. Regarding augmentation, 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 into our business, and 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 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 devoting significant resources to this endeavor, and I expect it to 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 upgrades 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 transition. We have previously announced Bob will retire at year end, and Ross Curtis, our Chief Portfolio Officer, will both remain actively involved in our operations until that time and are focused on ensuring a smooth transition in 2027.
Matt Neuber will 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. Matt has been with us 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 in tangible book value per share. We pursue it through underwriting choices that optimize each of our three 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 the underwriting performance.
Bob Qutub, Director
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, high fixed per share 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 three drivers of profit.
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 the stable base of income from fees and investments. And finally, $350 million, which was the amount of capital we returned to shareholders through 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 has been an important lever that we have been employing to grow shareholder value over the last two years. Kevin spoke about 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 three 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 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 three drivers of profit in the quarter, starting with underwriting, where our portfolio continues to perform well with an adjusted combined ratio of 72%, 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 is 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 accident year loss ratio of 53% and adjusted combined ratio of 52%. We have 35 percentage points of favorable development, primarily related to the attritional book. In casualty and specialty, the current accident year loss ratio is 67%, excuse me, 68%, and the adjusted combined ratio was 102%.
We reported 4.4 percentage points of prior year adverse development in the segment, which included 4.1 points related to the Baltimore Bridge collapse. This was a result of a shift in reserves from other property 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 the 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, where it was down 15%. For property catastrophe specifically, lower rates at midyear drove most of the decline. As David will 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 wholly owned balance sheets. This should serve to limit the impact on the top-line decrease on the bottom-line profitability. 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 5 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 timing 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 adjustments, 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. In 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 finance, which I previously just referenced. In casualty and specialty, we have increased our cession rates across the portfolio, particularly in casualty lines, 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 premiums 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 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 had 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, but 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 recorded $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 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 credits 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 non-controlling interests. The tax rate on the income applicable to RenaissanceRe Holdings shareholders is just over 17%, which reflects the 15% Bermuda corporate income tax as well as some tax in 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.
David Marra, Group Chief Underwriting Officer
Thanks, Bob, and good morning, everyone. In the second quarter, our underwriting team led the market at the mid-year 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 into signed 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 core to 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 three 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 two-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 lines. This dynamic means that we can retain full lines where we choose to participate and grow where there are profitable opportunities. Excess capacity in the remainder of the program means that 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 three of our drivers of profitability. Our job is to know when to grow certain lines and when 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 mid-year renewal.
Our leadership position and 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. Rates at the mid-year renewal last year held up better than January 1 because many programs were repricing after the California wildfires.
To put this in perspective, over the last two 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. Property Catastrophe business has a strong level of rate adequacy. At the mid-year renewal, we successfully grew U.S. property cat limit by $600 million. We did this by growing on nationwide accounts of key clients and California programs where rate adequacy is particularly strong and efficient.
We held our share on Florida domestics after three years of successful growth and maintained our private pricing on 65% of this Florida premium. We also reduced on some programs where the 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 reinstatements. 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 three years we rebuilt our position to historical levels as rates improved, tort reform stabilized the market, and the private market expanded.
We have a very attractive book of Florida 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 with ceded reinsurance. 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 and 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 and specialty results this quarter. Specifically, we shifted part of that loss from other property to specialty. This resulted in an underwriting loss and adverse prior-year development for the casualty and specialty segment. Excluding the Baltimore Bridge and purchase accounting adjustments, prior-year development for the 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 reserved this event to a $3 billion industry loss from the start, the overall net negative impact to our bottom line was none. 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 with 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 attacks on shipping and infrastructure in the region. We are aware of assets that have been impacted and believe any impact would 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 use 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 help preserve margin, generate fee income through overrides, and manage underwriting volatility. For the casualty book, most of the cession 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 purchase proportional coverage and we also manage cat-like volatility through ceded excess-of-loss structures. In 2026, we expanded 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 their portfolios across multiple lines.
That forward engagement is central to how we manage these relationships and 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 made us 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.
Kevin O'Donnell, President and Chief Executive Officer
Thanks, David. In closing, this was another strong quarter. We are making the underwriting and capital decisions that compound tangible book value per share. Over the long term, property business remains attractive and we continue to find opportunities to grow the book. 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 three 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. Thanks.
Tasha, Operator
At this time, if you would like to ask a question, please press star one on your telephone keypad. If you wish to remove yourself from the queue, you may do so by pressing star two. We remind you to please unmute your line when introduced and, if possible, pick up your handset for optimal sound quality. In the interest of time, we ask that you please limit yourself to one question and one follow-up. We'll now take our first question from Elise Greenspan with Wells Fargo.
Elise Greenspan, Analyst at Wells Fargo
Building upon that, if we see a 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 from a pretty attractive level until there are losses, or when—Kevin and David—do you think that we get to some kind of flattening in '27, '28? How do you think about the market developing in the absence of any significant losses?
Kevin O'Donnell, President and Chief Executive Officer
Elise, I think we missed the first thing that you said. There was a problem with the communication. Can you just repeat the first part?
Elise Greenspan, Analyst at Wells Fargo
Okay, I mean, I was just trying to ask. I guess you guys are talking about the property market remaining attractive. So building upon that, right? If we see a lack of any 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 declines coming off of this attractive level? And 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?
Kevin O'Donnell, President and Chief Executive Officer
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 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.
Elise Greenspan, Analyst at Wells Fargo
Thanks. And then my second question is on the casualty specialty segment. You guys saw a big reduction in premium there. You guys are still booking the accident year to around 100 or slightly below that, adjusting for the Baltimore bridge this quarter. And you've pointed to conservatism right in your pick. So I guess my question is first, just a little bit more color on why you're seeing such a big decline in premium there. And then secondly, 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 the comfort in the back book and the picks you have there? Because away from the bridge, I think you guys highlighted there really was not any significant movement in reserves.
David Marra, Group Chief Underwriting Officer
Hey, Lise, 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 year to date, was we have made some portfolio shaping decisions, mainly in the general liability space. We're a couple of years into the market fully recognizing that trend was something that needed action.
And, you know, the market's been doing a pretty good job taking action there, but some clients have done better than others. So 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 ceded structures. And cession is something we have used for years in the casualty specialty segment. Also in the property segment, we see more opportunities to cede risk on attractive terms.
It has a positive effect on the portfolio of reducing volatility, turning risk income into fee income through the overrides, and 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 is the right way to manage through in an environment where trend is persistent, and still the rest of the book, and we're doing the right things to manage that.
Tasha, Operator
Thank you. Our next question will come from Josh Shanker with Bank of America. Please go ahead. Your line is open.
Josh Shanker, Analyst at Bank of America
Yeah, I hope this works. I'm on a trainer. I apologize. I want to go 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 client decided to take all that business in-house?
David Marra, Group Chief Underwriting Officer
Hey Josh, this is David. I can comment on that. What we see in the credit book is a lot of the transactions are multi-year 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 multi-year 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 book as essentially flat.
Josh Shanker, Analyst at Bank of America
All right. And then with the higher cessions in the general casualty, because you split these amounts of tracking special placement versus combined ratio when you cede a bunch of business that was formerly retained and there's almost no underwriting process in the book on a calendar or actual basis, what is really the impact of the cessions and how should we think about that?
David Marra, Group Chief Underwriting Officer
Hey Josh, you were breaking up a bit, but I think you were asking about the impact of the cessions on general liability in the casualty specialty business. And so the way it comes to the books, and one thing I'll comment on, is we were buying more cover in 2026. That cover essentially incepts in the beginning of 2026, but covers everything that we'll write during the year. So the amount of 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 get an override, so the override covers our expenses and then some. So that will work to improve the net margin in the book, all other 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 those combined are the two effects on the overall book. The other piece is that we're able to maintain options on the inwards book despite the uncertainty, and we're able to act on that even when the market improves in the future.
Josh Shanker, Analyst at Bank of America
Thank you, and I apologize.
Tasha, Operator
We'll take our next question from Yarong Kinnar with Mizuho. Please go ahead. Your line is open.
Yarong Kinnar, Analyst at Mizuho
Thank you. Good morning. I want to go back to the other property book and understand what the drivers for the 5% growth in gross premiums written on an adjusted basis were. It seems like it's going against the trend we've seen in recent quarters of some declines.
Bob Qutub, Director
Hi, this is Bob. I'll take that. When 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 year over year, it's about flat. It doesn't look like it grew by 5 or 6%. Does that make sense as an EPI adjustment? It's what we've talked about in the past before.
Yarong Kinnar, Analyst at Mizuho
So I thought it was 9% growth and then 5% with the adjustments. Maybe I misunderstood.
Bob Qutub, Director
I didn't call out the adjustment. Actually, largely it's flat. You know, it's not 9%. When you think about the underlying risk in terms of limits, it's flat.
Yarong Kinnar, Analyst at Mizuho
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 where it was a quarter ago. Are you still thinking that 350 is roughly the right run rate for future?
Bob Qutub, Director
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, you know, I think right now, honestly we're around 95 million as of today. So we pretty much exhausted the plan and we're looking into wind season. You know, we have the capacity and capability. As I said in my prepared comments, we didn't give you a number, but we're still focused on buying through the wind season absent any large events that occur.
So nothing really changed in our capital plan.
Yarong Kinnar, Analyst at Mizuho
Thanks so much.
Tasha, Operator
Thank you. We'll take our next question from Meyer Shields with KBW. Please go ahead. Your line is open.
Meyer Shields, Analyst at KBW
Great. Thanks so much for taking my question, Kevin. In the past we've talked about different views between the pricing and reserving actuaries for casualty lines. When you're increasing the cessions, which of those actuarial opinions is driving that?
Kevin O'Donnell, President and Chief Executive Officer
Well, each of the cessions 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. In other times there's been a bigger gap between the two, 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 cedent is. And some of these are more structured as well, so it's a little bit more complicated.
Meyer Shields, Analyst at KBW
Okay, understood. And then I guess I'm sorry for Bob, but if we look at these acquisition expenses in other property, whether we look at it on a year-over-year basis or quarter-over-quarter, is that about 20 million? I was wondering if there's anything unusual in that.
Bob Qutub, Director
You're referring to the operating expenses or the acquisition? Kind of missed the focus on the question that you were looking at.
Meyer Shields, Analyst at KBW
Sorry, acquisition expenses in other property.
Bob Qutub, Director
Right. It's down slightly because this is as a result of a prior-year deal that boosted it up probably about a point that we saw. No, go ahead. I'm sorry.
Meyer Shields, Analyst at KBW
So the current accident year loss rate is about—
Bob Qutub, Director
Right. Okay. The current acquisition rate in this quarter is more in line with what we expect.
Meyer Shields, Analyst at KBW
Okay, perfect. Thanks so much.
Bob Qutub, Director
No, I'm going to change that. I was referring to a different—sorry. The acquisition ratio is up. I apologize. It is up. There was a one-time 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.
Meyer Shields, Analyst at KBW
Okay. It's very helpful. Thank you so much.
Tasha, Operator
Thank you. We'll take our next question from Mike Zaremski with BMO. Please go ahead. Your line is open.
Mike Zaremski, Analyst at BMO Capital Markets
Hey, good morning. Thanks. 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 a 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.
Kevin O'Donnell, President and Chief Executive Officer
Yes. 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. 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 the 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 premium compared to the property changes that we've made. So I wouldn't think about the changes in our top line being directly correlated to the capital deployment. That said, we're in a very strong capital position to continue to grow the book where we find opportunities to and return capital to shareholders through share repurchases.
UNKNOWN, Analyst
Okay, that's helpful. And moving to operating expenses, investments maybe for Bob, you know when you called 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 implies a big bump. Maybe you can remind us just as your views change on the since the Bermuda tax credits are accumulative through 2017, you got another big bombard. Are you all still expecting to spend the vast majority of that and if you are, would those maybe be one-time expenses in '26, '27?
So there's an eventual kind of fall off in some of those technology costs if we're thinking really '28 and beyond.
Bob Qutub, Director
Thanks for the question. You got the tax rate we modestly higher than 15%. The Bermuda tax credit came in through operating expenses, reminding you that only about two-thirds of them come through the operating and the other third 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 expense benefits that came through. So we feel that 5% kind of plus or minus is where we're at. You know I said 5 to 5.5% before. We feel we're coming in at the low end on it now.
UNKNOWN, Analyst
Got it. And no comment about just some of these investments — are some of these maybe one-time that would fall off in outer years or...
Bob Qutub, Director
Yeah, that's fair. That's fair. We're investing in our front office systems. There's going to be a surge in that expense, it'll taper up 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 costs some money up front. 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.
UNKNOWN, Analyst
Thank you.
Tasha, Operator
Thank you. We'll take our next question from Andrew Anderson with Jefferies. Please go ahead. Your line is now open.
Andrew Anderson, Analyst at Jefferies
Hey, good morning. Specialty and credit has become a larger percentage of that portfolio over the last several years within CNS. 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?
David Marra, Group Chief Underwriting Officer
Hey 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 growth opportunities. Credit is one. It's a high margin business we're looking at. If 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, 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. The post validates we have a market leading specialty team as we put two 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 and in specialty.
So we'll be well positioned when the growth opportunities come. But it may not result in top line quarter on quarter, year on year.
Andrew Anderson, Analyst at Jefferies
Thanks. 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.
David Marra, Group Chief Underwriting Officer
Yeah, Upsilon is relatively small anyway, so that was a strategic decision we made for this year. We continue to see interest in our vehicles. We actually have more capital interest for the vehicles than we have opportunity to include them into the structures. The cat bond 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 they're sized now is likely to be where they're sized next year. This year was relatively close to where they were sized last year. Thank you.
Tasha, Operator
Thank you. We'll take our next question from Chris Hartwell with Autonomous Research. Please go ahead. Your line is open.
Chris Hartwell, Analyst at Autonomous Research
Good morning. First question really is just on the background for the renewals and specifically terms and conditions. I've been hearing a lot of chat amongst brokers around the balance of risk sharing between primary insurance and reinsurance. I was wondering if that had any bearing through the midyear renewals and NICCATs. Moreover, I'd be very interested in your thoughts on how brokers or cedents may push on terms and conditions through next year and whether the reinsurers can really defend current levels.
I'm sort of thinking about attachment points, aggregates, that sort of thing. Thank you.
David Marra, Group Chief Underwriting Officer
Hey 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 and conditions which was 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 at the capital level that we are participating there. They're well priced from a personal loss model perspective, from a premium perspective and attaching at the capital structure. So we look at terms and conditions and think that leaves a lot of stability to our ability to continue to take risk in the cat side.
Chris Hartwell, Analyst at Autonomous Research
Wonderful, thank you.
David Marra, Group Chief Underwriting Officer
Thank you very much.
Chris Hartwell, Analyst at Autonomous Research
Actually 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 came through. I don't know whether that's environmental or sort of relating to cedent company activity. I presume the latter but if you could share some thoughts there.
David Marra, Group Chief Underwriting Officer
Yes. So cyber — we grew cyber rapidly in 2021, 2022 and 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 managing cyber. We've also made some ceded approaches decisions on the cyber side. And so we have a smaller and better protected cyber book than we did at the peak of the market.
Tasha, Operator
Thank you. We'll take our next question from Ryan Tunis with Cantor Fitzgerald. Please go ahead. Your line is now open.
Ryan Tunis, Analyst at Cantor Fitzgerald
Hello. Thank you. Good afternoon. First question just on capital planning. So year to date the equity base has grown. I recognize only two quarters in, but just given the changing market environment, I wouldn't think that there would be a goal to continue to grow the equity base. I'm just wondering if I'm thinking about that.
Bob Qutub, Director
Right. Thanks. Yes, thanks for the question. Yes, year to date we've grown through earnings with just over $900 million. We 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 off on buying shares is not, not it.
Ryan Tunis, Analyst at Cantor Fitzgerald
And then just a follow-up on the Florida renewal. Can you just share any general themes, if there were any? When you did walk away from business, what were some of the general themes involved there? Thank you.
David Marra, Group Chief Underwriting Officer
Hey Ryan, this is David. It was mostly just too much pressure on price based on the exposure in that cedent's portfolio and our view of that as we model each individual portfolio from the ground up, each individual peril. 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, successful — those mostly...
Ryan Tunis, Analyst at Cantor Fitzgerald
…rate — you want to ask just on some of the stuff you're seeing on the casualty with rate and claims management.
David Marra, Group Chief Underwriting Officer
Yep. And actually that's a good point. So on the 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 signs 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 in the casualty side.
Tasha, Operator
Thank you. We'll take our next question from Pablo Sinzon with JP Morgan. Please go ahead. Your line is now open.
Pablo Sinzon, Analyst at J.P. Morgan
Hi, good morning. Thanks for the detail you provided on your use of retrocession. I was wondering if you could provide perspective on the relative returns to the business you're writing on a gross versus net basis. It sounds like the returns on these placements are to the faculty on a gross basis. Is that accurate?
David Marra, Group Chief Underwriting Officer
That is accurate. I think we are using retrocessional coverage to position the portfolio for the future. You know, one of the things we do, if you go back to October of last year, we built a pro forma portfolio as to what we wanted our risk to look like and what we thought 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 and 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'll 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 a 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.
Pablo Sinzon, Analyst at J.P. Morgan
And then follow-up. So many primary companies have collect MGAs and the capital standing behind them, whether funds are reinsured. Is this 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. Thanks.
Kevin O'Donnell, President and Chief Executive Officer
Yeah, I think as the market softens and if you look back historically, careful monitoring of MGAs becomes increasingly important. I think that 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 we have are more concentrated with relationships we've had for a long period of time. If you want to comment more specifically, Dave.
David Marra, Group Chief Underwriting Officer
Yeah, I would say on the underwriting side where we deploy capacity through MGAs, the most significant piece is on the other property side where we've written cat-exposed D&F 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, with systems that 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 that capital more efficiently within Property Cat. So this is something we closely monitor and I think we have a good degree of skill in thinking about how to deploy both through the other property and then where we might enhance return to Property Cat.
Tasha, Operator
Thank you. We'll take our next question from Brian Meredith with UBS. Please go ahead. Your line is now open.
Brian Meredith, Analyst at UBS
Yeah, thanks. 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— Is a place with that where something
Kevin O'Donnell, President and Chief Executive Officer
—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 is 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 into the market looking for low beta risk from Property Cat, thinking about how that can enhance their portfolios.
Capital that's coming in now has existing investment strategies and is looking for assets that can fund the investment strategies that they have. Those vehicles, there's been a lot of talk of them. There have been vehicles that have done. They haven't moved the market at this point in time, something we're very close to. We're in all those discussions and continue to monitor how much capital is coming in and what effect it's having. At this point it's been negligible.
Brian Meredith, Analyst at UBS
That's helpful, thanks. And I'm just curious, any kind of meaningful movements in terms and conditions or losing the terms and conditions at mid-year renewals?
David Marra, Group Chief Underwriting Officer
Terms and conditions have stayed very strong really ever since the step-change in 2023. We've seen pressure on rate, but the terms and conditions have remained strong. We're still attaching at the capital level further than the earnings level, which is one of the most important. And coverage has not broadened. So we're happy with that.
Tasha, Operator
Thank you. We'll take our next question from Tracy Van Dege with Wolfe Research.
Tracy Van Dege, Analyst at Wolfe Research
Thank you. Good morning. You mentioned that you're still seeing positive growth in a 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 pricing, and what is the profile of your retrocession partners?
Kevin O'Donnell, President and Chief Executive Officer
We have. So the vocabulary 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 compress because of that competition, we tend to increase our output to the market. And one of the ways we do that is by managing the amount of retained risk we're keeping.
Tracy Van Dege, Analyst at Wolfe Research
Just a quick follow-up on the cyber discussion. Does any of your reduced exposures reflect maybe a lower appetite in the wake of Mythos specifically? And are you seeing the same pullback by cedents?
David Marra, Group Chief Underwriting Officer
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 or their effect on the market so far, but it's the kind of thing 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.
Tracy Van Dege, Analyst at Wolfe Research
Thank you.
Tasha, Operator
Thank you. We'll take our next question from Alex Scott with Barclays. Please go ahead. Your line is now open.
Alex Scott, Analyst at Barclays
Thanks for squeezing me in. I wanted to circle back on the casualty business and particularly the pieces of it that you weren't willing to renew. Could you just talk about what 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 reserved for in light of not wanting to redo that stuff?
David Marra, Group Chief Underwriting Officer
Hey 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 cedents, 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. We're still early stages of what is a long process to fight the social inflation plaintiffs bar.
But it's been clear in the data that some clients were more effective at doing that than others. And the way that shows up is we look at the actual versus expected emergence. We look at how they've evolved their portfolio, the layers they're writing. Are they in that working layer right above the first excess where there's 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 500x500 layer, it's the personal injury awards that might hit a 20. So it's some data-driven but also underwriting judgment in terms of our opinion as to whether Client A 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 court reform, there have been some federal 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.
Alex Scott, Analyst at Barclays
Okay, thanks. Borrowing 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, you know, from wind and that kind of thing. You know, I've heard that's a reason for some of the softening. Is that something that you're giving credit for in your loss trend?
Kevin O'Donnell, President and Chief Executive Officer
Yeah, I think on previous calls 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 what that conservative original assessment anticipated. So we have seen a real benefit from it. You know, when we were going in with a risk-adjusted view for Florida, part of that risk-adjusted view was the reductions taken 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, you know, 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's renewal.
Alex Scott, Analyst at Barclays
Thank you.
Tasha, Operator
We'll take our last question from David Motimadin from Evercore ISI. Please go ahead. Your line is open.
David Motimadin, Analyst at Evercore ISI
Thanks for squeezing me in. So just wanted to 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 the big renewal this year. If we see similar rate declines next year, just wondering how you are thinking about just rate adequacy in the market.
Kevin O'Donnell, President and Chief Executive Officer
Yeah, I'll start, then I'll turn it over to Dave. So there's two assessments that need to be done when thinking about Property Cat because of the capital consumption and the correlations. One is, what is the standalone 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 portfolio.
So marginally, so increasing the marginal returns through the risk-sharing 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 portfolio that we really like.
David Motimadin, Analyst at Evercore ISI
Got it. Thanks. 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?
Kevin O'Donnell, President and Chief Executive Officer
On the demand side we've had increasing demand but at a slower rate over the last few years. Two years ago we counted $20 billion of demand in the U.S. Cat side; last year at 15. This year it's just over 10. We think the long-term dynamics are very strong. The more Florida private market participation, lower public market growth in TIBs. Clients are all over this and they're buying more limit. 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.
Tasha, Operator
Thank you. I'll turn the floor back to Kevin O'Donnell for any additional or closing remarks.
Kevin O'Donnell, President and Chief Executive Officer
Thank you for joining today's call. We feel like we're in a great position, having built the portfolio that we targeted as we go into wind season, and look forward to talking to you in a couple months about the third quarter. Thanks very much for joining today's call.
Tasha, Operator
This concludes the RenaissanceRe second quarter 2026 earnings call and webcast. Please disconnect your line at this time and have a wonderful day.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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