Onex (TSE:ONEX) said it remains on track to reach its year-end target for fee-related earnings after the first close of its latest private equity fund, while its Convex insurance business reported higher premiums and improved underwriting results.
Onex Partners VI raised more than $2 billion in aggregate commitments at its first close, including an Onex commitment of up to $300 million, CEO Bobby Le Blanc said on the company’s third-quarter 2026 earnings call. The fundraising milestone supports the company’s goal of reaching a $35 million exit run rate for fee-related earnings, or FRE, by the end of 2026.
Onex is also selling private equity interests and using some proceeds to repurchase shares as it shifts more of its capital toward Convex and potentially other direct investments. Unless otherwise stated, dollar amounts discussed on the call were in U.S. dollars.
Convex Grows Premiums as Pricing Remains Mixed
Convex generated $1.4 billion in gross premiums written in the third quarter, up 20% from a year earlier. Net premiums earned rose 8%, with growth across insurance and reinsurance, Le Blanc said.
For the trailing 12 months, gross premiums written increased 8% to $6.4 billion, while adjusted net income rose 13% to $659 million. The combined ratio improved to 87% from 89.9%, and adjusted return on equity rose to 18.5% from 18%.
Le Blanc said year-to-date rate changes improved modestly to negative 4%, from negative 5% as of the prior quarter. Increases in some classes affected by the Middle East conflict and certain casualty lines partly offset lower pricing in shorter-tail classes, including property.
Convex CEO Paul Brand told analysts that highly priced marine war policies helped third-quarter growth, as did the later booking of some large contracts and improved terms in U.S. casualty. He said underlying growth was closer to the trailing 12-month rate of 8% and suggested full-year growth could land between 8% and 10%.
For 2027, Brand said he expected growth in the high single digits, potentially reaching 10%, although the outcome would depend on rates and available opportunities. He cautioned that war-related premiums might not remain at the same magnitude.
Brand also said Convex has reduced its relative exposure to U.S. property catastrophe business since 2023 and increased reinsurance spending to moderate potential volatility. Le Blanc said management places more emphasis on trailing 12-month combined ratios than on individual quarters, which can be affected by noise.
Fundraising Supports Earnings Target
Le Blanc said the first close of Onex Partners VI exceeded expectations in both its dollar amount and the breadth of its investor base. Institutional investors in the Onex Partners Opportunities Fund all recommitted, he said, and the first close included more institutional investors than any previous Onex Partners first close.
AIG and Convex were meaningful investors, Le Blanc said, while a majority of the commitments came from investors other than Onex-related parties. Onex did not disclose individual commitments or a target size for the fund.
CFO Meg McClellan said the $35 million year-end FRE target is an exit run rate, rather than a forecast for full-year earnings. She said Onex would be doubling its 2025 exit run rate, with a largely established expense base providing operating leverage as revenue grows.
Fee-generating assets under management totaled $43.7 billion at quarter-end, up 4% over the preceding 12 months. Credit accounted for $31.5 billion, up 13%, while private equity accounted for $12.1 billion. Total asset management run rate management fees were $213 million, up 5% year over year, McClellan said.
Asset Sales and Buybacks
Onex agreed in early fourth-quarter transactions to sell portions of its interests in certain Onex Partners funds. The sales are expected to generate $334 million in proceeds, equal to 92% of their June 30 carrying value, with additional proceeds possible from further syndication. Onex expects to receive all proceeds by the end of the first quarter of 2027.
Le Blanc said the secondary sales also brought new commitments to Onex Partners funds, although the commitments were not contractually tied to the sales. He said the resulting fees and potential carried interest made the transactions attractive when considered alongside the sale price. Onex would consider further sales if terms were suitable, he said.
Separately, ONCAP IV agreed to sell Walter Surface Technologies to an ONCAP-managed continuation fund. Onex’s current share of the realization is approximately $50 million, with additional proceeds expected. The transaction is expected to close later in 2026.
Onex repurchased more than 800,000 shares in the third quarter. McClellan said private equity realizations have also helped reduce the principal balance of the company’s net asset value loan to $220 million, from the $700 million initially drawn to fund the Convex acquisition.
At quarter-end, Onex held $161 million in cash and near cash and had $600 million of undrawn revolving credit capacity. Its Convex investment was valued at $4.1 billion, essentially unchanged from the prior quarter, as unrealized fixed-income losses offset the effect of quarterly net income on tangible book value.
About Onex (TSE:ONEX)
Onex Corporation is a private equity investor and asset management firm. The company operates in two main segments: investing, which includes private equity, private credit, and direct investments; and asset and wealth management, which manages pension plans, sovereign wealth funds, insurance companies, and family offices. Investing revenue primarily comes from net gains on corporate investments and CLOs (collateralized loan investments). Asset and wealth management revenue comes primarily from management and performance fees.
