Yahoo Finance RenaissanceRe (RNR) Up 2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for RenaissanceRe (RNR). Shares have added about 2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is RenaissanceRe due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
RenaissanceRe Q1 Earnings Beat on Solid Property Segment
RenaissanceRe reported first-quarter 2024 operating income of $12.18 per share, which beat the Zacks Consensus Estimate by 23.5%. The bottom line increased 49.3% year over year.
Total operating revenues increased 46.8% year over year to $2.83 billion in the first quarter. The top line outpaced the consensus mark by 6%.
Strong quarterly results were supported by improved underwriting, improved net investment income and solid contributions from the property segment, providing an impetus to its quarterly performance. An elevated expense level might have acted as a partial offset to its first-quarter results.
Quarterly Operational Update
Gross premiums written of $4 billion increased 43% year over year in the first quarter. However, the metric lagged our estimate by 11.3%.
Net premiums earned improved 45.4% year over year to $2.4 billion. The figure surpassed our estimate by 18.8%.
The net investment income of RenaissanceRe amounted to $390.8 million, which increased 53.6% year over year in the quarter under review, mainly on the back of higher average invested assets due to the Validus acquisition and improved yields from its fixed maturity and short-term portfolios.
Total expenses increased 47.1% year over year to $2 billion due to increased acquisition and operational expenses.
RenaissanceRe reported an underwriting income of $541 million, which surged 46.3% year over year. The combined ratio improved 10 points (bps) year over year to 77.9% in the first quarter.
Book value per share came in at $170.92 as of Mar 31, 2024, which increased 46.8% year over year. Annualized operating return on average common equity of 28.7% deteriorated 130 bps year over year.
Segmental Update
Property Segment
The segment’s gross premiums written amounted to $1.9 billion, which rose 44.9% year over year in the first quarter due to an increase in other property and catastrophe, reflecting business renewal. Net premiums earned improved 36.2% year over year to $936.1 million, higher than our estimate of $807.6 million.
Underwriting income of $534.4 million improved 78.9% year over year. The combined ratio improved 1370 bps year over year to 42.9%.
Casualty and Specialty Segment
Gross premiums written of $2.1 billion improved 41.4% year over year in the quarter under review. The metric was supported by renewals of business gained from the Validus acquisition and growing other specialty class of business. Net premiums earned increased 51.8% year over year to $1.5 billion.
The segment recorded an underwriting income of $6.3 million, which deteriorated by a huge margin from $70.9 million recorded a year ago. The combined ratio of 99.6% deteriorated 670 bps year over year.
Financial Position (as of Mar 31, 2024)
RenaissanceRe exited the first quarter with cash and cash equivalents of $1.6 billion lower than $1.9 billion at 2023-end. Total assets increased to $50.9 billion from $49 billion at 2023-end.
Debt amounted to $1.9 billion, which decreased from $2 billion at 2023-end.
Total shareholders’ equity of $9.8 billion rose from $9.5 billion in 2023-end.
Dividend Hiked
The board of directors hiked the quarterly dividend by 2.6% to 39 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, RenaissanceRe has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, RenaissanceRe has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
RenaissanceRe is part of the Zacks Insurance - Property and Casualty industry. Over the past month, First American Financial (FAF), a stock from the same industry, has gained 1.6%. The company reported its results for the quarter ended March 2024 more than a month ago.
First American Financial reported revenues of $1.42 billion in the last reported quarter, representing a year-over-year change of -1.5%. EPS of $0.45 for the same period compares with $0.49 a year ago.
First American Financial is expected to post earnings of $1.17 per share for the current quarter, representing a year-over-year change of -13.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -2%.
First American Financial has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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RenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis Report
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