ONEX Earnings Call: Convex Deal Reshapes Growth Path

ONEX Corporation ((TSE:ONEX)) has held its Q4 earnings call. Read on for the main highlights of the call.

ONEX Corporation’s latest earnings call projected a confident tone as management highlighted strong operational gains and transformative strategic moves, headlined by the acquisition of Convex. While near‑term earnings face pressure from fee timing, CLO marks and platform costs, executives argued that durable growth in AUM, robust realizations and Convex’s performance position the firm for higher, more stable profitability.

Convex Deal Cements a High-Conviction Insurance Platform

ONEX closed its $7.0 billion acquisition of specialty insurer Convex, emerging with roughly 63% ownership alongside AIG’s 35% stake. Convex management rolled about $500 million of equity and accrued incentives into the deal, a sizable reinvestment that underscores long‑term alignment and internal confidence in the franchise.

Convex’s 2025 Earnings Power Surges

Convex generated $711 million of net income in 2025, with ONEX’s adjusted share estimated at about $423 million after pro‑forma interest. That result marks a 25% increase versus the $566 million Q3 LTM figure used at announcement and a striking 40% jump from the insurer’s 2024 net income base.

Underwriting Discipline Drives Convex Value Creation

The insurer wrote $5.9 billion of gross premiums in 2025, up 14% year over year, while delivering an 89% combined ratio for the third straight year below 90%. Tangible book value climbed to $3.8 billion, effectively reducing ONEX’s acquisition multiple to roughly 1.8 times tangible book and about 10 times 2025 net income.

Investing Capital Per Share Shows Steady Compounding

Investing capital per share ended the year at $124.70, rising 3% in the fourth quarter and 10% for the full year. Over the last five years, that metric has compounded at about 11% annually, signaling persistent value build within ONEX’s balance‑sheet investment portfolio.

Private Equity Realizations Unlock Significant Cash

ONEX’s platforms delivered $8.0 billion of realizations in 2025, sending more than $800 million back to the parent company. Onex Partners alone generated $7.7 billion of distributions, including $4.3 billion to co‑investors, and has returned $10 billion since 2024 across eight exits.

Fee-Generating AUM Expands at a Double-Digit Clip

Fee‑generating assets under management closed the year at nearly $44 billion, representing 24% growth over the prior year. The increase was driven by fresh CLO issuance, new fund commitments and portfolio write‑ups, laying a larger base for future management and performance fees.

Credit Platform Scales as CLO Engine Outperforms

Structured credit priced 28 CLOs across the U.S. and Europe, raising more than $6 billion of new fee‑generating AUM while extending another $6 billion of existing structures. The credit business exited 2025 with run‑rate fee‑related earnings of $60 million, already ahead of targets discussed at Investor Day.

Ryan Specialty Exit Highlights PE Track Record

ONEX completed its final realization in Ryan Specialty, generating just over $200 million on the last tranche. In total, the roughly eight‑year investment produced about $1.2 billion of proceeds, translating into a 3.8 times multiple of invested capital and an internal rate of return of roughly 49%.

Post-Convex Liquidity and Leverage Stay Measured

Following the Convex closing, ONEX held around $400 million of cash and near‑cash and kept $500 million available on its undrawn NAV revolver, for about $900 million in total liquidity. The firm drew $700 million on a NAV facility, notably below the originally contemplated $1.0 billion, leaving management comfortable with leverage and flexibility.

Near-Term FRE Losses Reflect Platform Investment

Despite strong asset management earnings of $49 million in the fourth quarter, fee‑related earnings from private equity and credit totaled only $2 million, leaving the firm with a $4 million FRE loss in Q4 and a $3 million loss for the full year. Management emphasized that fee income has not yet fully caught up with the cost base of its expanded platform.

CLO Mark-to-Market Volatility Clouds Credit Returns

Credit investment performance was essentially flat in the fourth quarter as CLO equity positions faced mark‑to‑market pressure from loan spread compression. Executives expect this valuation mismatch to normalize as CLO liabilities are refinanced over the next one to two years, which should better align asset and liability spreads.

NAV Loan Draw Tightens but Does Not Strain Liquidity

The Convex financing required a $700 million NAV loan draw, less than the earlier $1.0 billion assumption but still a meaningful new leverage layer. Combined with roughly $400 million of cash and $500 million of revolver availability, ONEX argued that it retains adequate liquidity, though the cushion is modestly thinner than initially planned.

Insurer Faces Softer P&C Pricing Cycle

Management signaled that the broader property and casualty market could see rate declines of around 4% in 2026, posing a modest headwind to Convex’s pricing power. To offset this, Convex is expected to lean on operating leverage, investment income and market share gains rather than relying solely on higher premium rates.

FRE Uplift from Continuation Vehicle Will Be Gradual

The multi‑asset continuation vehicle is expected to enhance fee‑related earnings, but the benefits will not start accruing until the transaction formally closes later this quarter. As a result, ONEX does not expect quarterly FRE to fully reflect the projected run‑rate improvement until roughly mid‑2026, with year‑end figures based on annualized assumptions.

Fundraising Cadence Leaves Some Short-Term Questions

The firm confirmed that Onex Partners VI is expected to have a first close in 2026 but withheld specifics on size and timing, leaving investors guessing on the pace of incremental fees. ONCAP is not expected to be in market during 2026, creating some short‑term uncertainty around fundraising-driven AUM growth and associated FRE.

Guidance Points to FRE Inflection and Convex as Earnings Engine

Management guided 2026 firm‑wide fee‑related earnings to the low‑to‑mid $20 million range, with expectations to exit the year at a run‑rate above $34 million, roughly double the $17 million level at the start of 2026. This outlook assumes only partial funding of AIG’s commitment and no Convex‑related allocations, underscoring the role of Convex’s $711 million 2025 net income and 20% ROE as a separate, powerful earnings driver alongside a growing $44 billion fee‑generating AUM base.

ONEX’s call painted a picture of a company in transition from episodic realization-driven gains to a more annuity‑like earnings mix anchored by Convex and a scaled credit platform. While short‑term FRE weakness, CLO volatility and fundraising timing present risks, the combination of strong underwriting performance, rising investing capital per share and robust realization history suggests that long‑term value creation remains firmly intact.