| Item 1.01. | Entry into a Material Definitive Agreement. |
Credit Agreement
Effective as of November 9, 2018, RenaissanceRe Holdings Ltd. (the “Company”), Renaissance Reinsurance Ltd., RenaissanceRe Specialty U.S. Ltd. and Renaissance Reinsurance U.S. Inc. (collectively with the Company, the “Account Parties”) entered into a Second Amended and Restated Credit Agreement with various banks and financial institutions parties thereto (collectively, the “Lenders”), Wells Fargo Bank, National Association (“Wells Fargo”), as Fronting Bank, LC Administrator and Administrative Agent for the Lenders, Citibank, N.A. (“Citibank”), as Syndication Agent, and Wells Fargo Securities, LLC and Citibank, as Joint Lead Arrangers and Joint Lead Bookrunners (the “Credit Agreement”). The Credit Agreement amends and restates in its entirety the Amended and Restated Credit Agreement, dated as of May 15, 2015.
The Credit Agreement provides for a revolving commitment to the Company of $500 million (the “Facility”). The Company has the right, subject to satisfying certain conditions, to increase the size of the facility to $700 million. Amounts borrowed under the Credit Agreement bear interest at a rate selected by the Company equal to the Base Rate or LIBOR (each as defined in the Credit Agreement) plus a margin, all as more fully set forth in the Credit Agreement.
In addition to revolving loans, the Credit Agreement provides that the entire Facility will also be available for the issuance of standby letters of credit (each, a “Letter of Credit”), subject to the terms and conditions set forth therein. Swingline Loans (as defined in the Credit Agreement) are capped at $50 million for each of the Swingline Lenders (as defined in the Credit Agreement). Letters of Credit will be denominated in U.S. Dollars and will be available in the form of either, at the Account Party’s option, (i) syndicated letters of credit issued by the Lenders (acting through Wells Fargo) on a several basis in accordance with their pro rata commitments to the Facility, or (ii) fronted letters of credit issued directly by Wells Fargo, with each Lender purchasing an irrevocable and unconditional participation in accordance with their respective pro rata commitments to the Facility.
The Credit Agreement contains representations, warranties and covenants customary for bank loan facilities of this type. In addition to customary covenants which limit the Company’s ability to merge, consolidate, sell a substantial amount of assets, incur liens and declare or pay dividends under certain circumstances, the Credit Agreement also contains certain financial covenants. These financial covenants generally provide that consolidated debt to capital shall not exceed the ratio of 0.35:1 and that the consolidated net worth of the Company shall equal or exceed approximately $2.9 billion (the “Net Worth Requirement”). The Net Worth Requirement is recalculated effective as of the end of each fiscal year, all as more fully set forth in the Credit Agreement. The scheduled commitment maturity date of the Credit Agreement is November 9, 2023.
In the event of the occurrence and continuation of certain events of default, the administrative agent shall, at the request of the Required Lenders (as defined in the Credit Agreement), or may, with the consent of the Required Lenders, among other things, terminate the Lenders’ obligations to make loans and accelerate the outstanding obligations of the Company under the Credit Agreement.
In connection with the Credit Agreement, effective as of November 9, 2018, RenRe North America Holdings Inc. and RenaissanceRe Finance Inc. (collectively, the “Initial Guarantors”) entered into a Guaranty Agreement for the benefit of Wells Fargo and the Lenders, pursuant to which the Initial Guarantors have agreed to provide, on a joint and several basis, a guarantee in respect of the Company’s obligations under the Credit Agreement (the “Guaranty Agreement”). Subject to certain exceptions, additional subsidiaries (the “Additional Guarantors” and, together with the Initial Guarantors, the “Guarantors”) of the Company are required to become a party to the Guaranty Agreement and become obligated thereunder on a joint and several basis with the Initial Guarantors in the event that such subsidiaries issue or incur certain types of indebtedness, as more fully set forth in the Credit Agreement. The Guarantors may be released from their obligations under the Guaranty Agreement under certain circumstances, as more fully set forth in the Credit Agreement.
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