Onex Q1 Earnings Call Highlights

Key Points

• Convex was the standout driver in Onex’s Q1 2026 results, with improved underwriting, profitability, and return on equity. Excluding one-time accounting volatility, Convex’s adjusted net income was significantly stronger, and Onex said it expects the insurance platform to be its biggest near-term contributor to shareholder value.
• Private equity realizations remained strong, including a $1.6 billion continuation fund and the full realization of Emerald. Onex said these exits are helping raise distributions to paid-in capital and support momentum ahead of the next Onex Partners fund close later this year.
• The credit platform kept growing despite volatile markets, with fee-generating assets under management rising and multiple CLOs raised or extended. Onex also highlighted its disciplined approach to credit risk, including minimal direct lending and limited exposure to more aggressive loan structures.

Onex TSE: ONEX said its first-quarter 2026 results reflected solid performance at its recently acquired insurance platform Convex, continued private equity realizations and growth in its credit business, even as market volatility weighed on some reported measures.

Chief Executive Officer Bobby Le Blanc said on the company’s earnings call that Onex “delivered a solid first quarter despite a challenging market backdrop” and remains focused on long-term value creation and earnings growth. He said Convex is expected to be the largest near-term contributor to shareholder value.

The company also highlighted its strategic partnership with AIG, which purchased 7.5 million Onex shares for a 9.9% ownership stake and committed to invest CAD 2 billion in Onex asset management strategies. Le Blanc said Onex is working with AIG on allocating that capital across private equity and credit products, including Onex Partners VI and OSCO II.

Convex Drives Early Value Creation

Convex delivered improved underwriting performance, profitability and return on equity compared with the prior-year period, management said. Gross premiums written increased 5% year over year, but Le Blanc said that comparison was affected by unusually high reinstatement premiums in the first quarter of 2025 following the California wildfires. Excluding those one-time premiums, gross premiums written rose 8%.

Convex CEO Paul Brand said during the question-and-answer portion of the call that insurance pricing was down about 4% year over year, but that Convex still sees “reasonable margin in the business.” He said the company can shift its portfolio away from lines seeing the largest rate cuts and toward areas with stronger pricing environments.

Convex generated adjusted net income of $106 million in the quarter, including a $50 million unrealized mark-to-market loss on its fixed income portfolio as interest rates rose amid macroeconomic volatility. Excluding that non-operational accounting loss, adjusted net income was $156 million. Le Blanc said Convex plans to transition its fixed income portfolio to an available-for-sale classification in the second quarter, which he said is in line with peers and should reduce income statement volatility.

The insurance platform reported an 87% combined ratio in the quarter. Le Blanc said underwriting earnings growth was driven largely by a lower loss ratio, as the prior-year quarter was negatively affected by California wildfire losses. Convex recorded estimated net losses of $23 million related to the Middle East conflict in the first quarter.

On a last-12-month basis, Convex adjusted net income was $827 million, up from $401 million in the comparable prior-year period and from $711 million for full-year 2025. Its last-12-month combined ratio improved to 83%, and return on equity rose to 24%.

Onex valued its investment in Convex at $4 billion at quarter-end, up 4% since the acquisition closed earlier in the year. Chief Financial Officer Megan McClellan said the valuation was based on a 2.0 times price-to-tangible-book-value multiple and was supported by Convex’s return on equity, earnings growth and market share gains. She said the valuation equates to 8.1 times last-12-month adjusted net income and 10 times 2025 net income.

Private Equity Realizations Continue

Le Blanc said Onex’s private equity teams returned more than CAD 8 billion to limited partners last year, with momentum continuing into 2026. Onex Partners recently closed a $1.6 billion multi-asset continuation fund, raising capital from institutional and sovereign investors, including several new to Onex.

The company also announced a full realization of Emerald, with expected net proceeds to Onex of $230 million. Le Blanc said these efforts will bring Onex Partners V’s DPI, or distributions to paid-in capital, to 1.0, making it a positive outlier relative to other funds of its vintage.

McClellan said private equity generated an 8% return on Onex investing capital over the last 12 months and a 1% return in the quarter. She said the multi-asset continuation vehicle generated $317 million of proceeds to Onex, with approximately half received during the quarter and the balance expected in the first quarter of 2027.

Le Blanc said Onex Partners has visibility into additional realizations and expects DPI to increase before Onex Partners VI holds its first close, which is expected later this year.

Credit Platform Grows Despite Volatile Markets

Onex said its credit platform continued to scale while maintaining investment discipline. Le Blanc said the platform has been underweight software and AI-exposed credits, avoided aggressive payment-in-kind loans that have come to market over the past two years and has “almost no direct lending retail exposure.”

During the first four months of the year, Onex raised or extended eight collateralized loan obligations, including three new issuances. Le Blanc said the team recently priced its 50th U.S. CLO, compared with its 25th U.S. CLO just over three years ago.

Structured credit, including CLOs, OSCO and ONCAP, generated $15 million in fee-related earnings in the first quarter. McClellan said credit fee-generating assets under management were $30.2 billion at quarter-end, up 1% from year-end, driven by net new CLO fee-generating AUM despite market headwinds.

McClellan said credit generated a 2.1% return on Onex investing capital over the last 12 months but declined 3% in the quarter due primarily to unrealized mark-to-market losses in structured credit, particularly CLO equity. She also reiterated that direct lending exposure was minimal, with Onex investing capital in that strategy totaling $16 million at quarter-end.

Investing Capital and Asset Management Metrics

Onex ended the quarter with $9.4 billion of investing capital, equal to $122.45 per share, or about CAD 170. McClellan said the 2% quarterly decline from year-end 2025 was primarily due to dilution from shares issued to AIG in connection with the Convex acquisition. Excluding that impact, investing capital per share would have increased 1% in the quarter and 8% over the last 12 months.

Convex accounted for 42% of Onex’s investing capital at quarter-end. The remainder, which includes private equity and credit investing capital, cash, near cash and debt, totaled $5.4 billion, or $70.58 per share.

Fee-generating AUM for asset management was $42.8 billion at quarter-end. Private equity fee-generating AUM was $12.6 billion, down 10% due to the Onex Partners V realization of Convex. Excluding that impact, McClellan said private equity fee-generating AUM would have increased 3%, driven largely by the Onex Partners multi-asset continuation fund.

Run-rate management fees for asset management were $210 million. Asset management fee-related earnings were $5 million in the quarter, while overall FRE was a loss of $3 million. McClellan said the path to higher fee-related earnings “will not be linear,” with several revenue drivers expected to have a greater impact in the second half of the year.

Liquidity, NAV Loan and Buybacks

Onex ended the quarter with $398 million of cash and near cash. The company drew $700 million on its NAV loan to support the Convex acquisition and repaid $200 million in April, reducing the balance to $500 million. McClellan said Onex retained approximately $200 million of cash and near cash after the repayment, along with $600 million available on its revolving credit facility.

Le Blanc said realized proceeds from legacy investments are expected to be redirected into one or two direct balance sheet investments that have strategic fit with Convex or Onex’s asset management business. He said those investments would use lower leverage and target attractive risk-adjusted returns.

Asked about share repurchases, Le Blanc said buybacks will again be considered as Onex gets closer to fully repaying the NAV loan. “We’re getting much closer, much quicker about having that back in the conversation than I would’ve guessed even three months ago,” he said.

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.

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