Q2 2026 Onex Corp Earnings Call Transcript
Key Points
- Onex Corp (ONEXF) delivered a strong second quarter with Convex performing well, private equity funds returning meaningful capital, and credit platform posting its strongest quarter for structured credit earnings.
- Convex generated net income of $169 million in Q2 with an 85% combined ratio, and last 12-month adjusted net income increased 38% to $719 million with return on average tangible equity up 350 basis points to 20.3%.
- Onex Corp (ONEXF) reduced private equity's share of investing capital from 65% to 46% in six months, with Convex now representing 44%, and rapidly paid down the NAV loan to $220 million, achieving a net neutral cash position.
- The company expects to resume share repurchases immediately, citing ample liquidity and shares trading at a significant discount to management's view of intrinsic value.
- Credit fee-generating AUM grew 13% over the last 12 months, with Onex Corp (ONEXF) ranked 11th largest broadly syndicated CLO manager globally, and structured credit delivered its best FRE quarter-to-date at $19 million.
- Onex Corp (ONEXF) remains on track to achieve $35 million of exit run-rate FRE by end of 2026, with a successful first close for Onex Partners VI expected in Q4, and AIG's $2 billion commitment is already being deployed.
- Convex's premium growth of 8% was achieved despite negative price pressure, with year-to-date rate changes at negative 5%, particularly in short-tail classes like property.
- Convex's net investment returns were $45 million lower than the prior year period due to mark-to-market losses on the investment portfolio, and year-to-date adjusted net income was negatively impacted by $62 million of mark-to-market losses.
- Onex Corp (ONEXF)'s private equity investing capital generated a flat return during the quarter, with a couple of portfolio companies requiring markdowns based on public comps, leading to a soft quarter.
- Onex credit investing capital generated a 2% loss over the last 12 months and a loss of less than 1% during the quarter, primarily due to credit market volatility and unrealized mark-to-market declines in European CLO investments.
- In-year fee-related earnings were only $4 million in Q2, which can be affected by market volatility, timing of fundraising, and realizations, indicating current earnings are below the run-rate target.
- The company's strategy includes deploying capital into one or two additional direct investments, but past investments like Falcon and Gluskin did not work out, highlighting execution risks.
Welcome to Onex's second quarter 2026 conference call and webcast. (Operator Instructions) As a reminder, this conference call is being recorded.
And now I'll hand the conference over to Zev Korman, Vice President, Shareholder Relations and Communications at Onex. Please go ahead, sir.
Thank you. Good morning, everyone. Thanks for joining us. We're broadcasting this call on our website.
Hosting the call today are Bobby Le Blanc, Onex's Chief Executive Officer; and Meg McClellan, our Chief Financial Officer. Also joining today's Q&A session is Paul Brand, Chief Executive Officer of Convex.
Earlier this morning, we issued our second quarter 2026 press release, MD&A, and consolidated financial statements, which are available on the shareholder section of our website and have also been filed on SEDAR. Our supplemental information package is also available on our website.
As a reminder, all references to dollar amounts on this call
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