Earnings Beat for RNR, Rev Lags YoY - Analyst Blog

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RenaissanceRe Holdings Ltd. ( RNR ) reported first-quarter 2013 operating earnings per share of $3.92, surpassing the Zacks Consensus Estimate of $2.92. The results also surpassed $2.98 per share earned in the year-ago quarter.

Operating earnings for the quarter came in at $176.6 million compared with $155.5 million in the year-ago quarter.

Including net realized and unrealized gains on investments of $13.9 million or 31 cents per share in the reported quarter, net income was $190.5 million or $4.23 per share compared with $201.4 million or $3.88 per share in the prior-year quarter. The year-ago quarter included net realized and unrealized gains on investments of $46.1 million or 90 cents per share and net other-than-temporary impairments from continuing operations of $0.13 million.

RenaissanceRe posted total revenue of $343.3 million, down 3.7% year over year from $356.5 million in the first quarter of 2012. Total revenue surpassed the Zacks Consensus Estimate of $328 million.

In addition, gross premiums declined 4.3% year over year to $635.4 million. Meanwhile, underwriting income declined to $173.0 million from $196.6 million in the year-ago quarter. In the reported quarter, combined ratio also deteriorated to 36.2% from 29.4% in the first quarter of 2012.

RenaissanceRe reported total investment income (sum of net investment income, net realized and unrealized gains on investments and net other-than-temporary impairments) of $51.4 million in the quarter under review, against $113.7 million in the year-ago quarter. The decline was primarily attributable to lower returns in the fixed maturity investment portfolio as well as the portfolio of other investments.

Moreover, total expenses of RenaissanceRe surged 16.5% to $107.8 million from $92.6 million in the prior-year quarter.

Segment Results

Reinsurance segment reported gross premiums written of $561.1 million, down 8% from the prior-year quarter. Underwriting income came in at $168.3 million compared with $194.1 million in the first quarter of 2012, while combined ratio deteriorated to 27.9% from 23.5%, primarily due to higher net claims and claims expenses, lower net premiums earned, higher ceded premiums written and the external cession of business in Upsilon Reinsurance II Ltd.

Lloyd's segment's gross premium written came in at $74.3 million, expanding 35.5% from the year-ago quarter due to organic growth. Underwriting income widened to $4.2 million from $1.1 million in the year-ago quarter. Combined ratio improved to 89.0% from 95.6% in the prior-year quarter.

Financial Position

RenaissanceRe exited the reported quarter with total assets of $8.1 billion, up from $7.9 billion as of Dec 31, 2012. Long-term debt totaled $254.3 million, down from $351.8 million at the end of 2012.

Meanwhile, cash and cash equivalents stood at $335.6 million, up from $325.4 million as of Dec 31, 2012. Shareholder equity totaled $3.56 billion compared with $3.50 billion at the end of 2012.

As of Mar 31, 2013, RenaissanceRe's annualized return on average common equity (ROCE) was 24.3%, declining from 25.6% in the first quarter of 2012.

Stock Update

During the reported quarter, RenaissanceRe repurchased 1.4 million equity shares at an average price of $81.29, totaling $111.3 million.

In Jan 2013, RenaissanceRe redeemed some shares of DaVinciRe, while some additional shares were issued. The net effect of these transactions was redemption of shares worth $150 million. As of Mar 31, 2013, RenaissanceRe holds 32.9% stake in DaVinciRe.

Debt Update

In Feb 2013, RenaissanceRe repaid $100 million worth of 5.875% senior notes that matured. The company used its available cash and investments for the repayment.

Zacks Rank

Currently, RenaissanceRe carries a Zacks Rank #2 (Buy). Other property & casualty insurers worth considering are Navigators Group Inc. ( NAVG ), Hilltop Holdings Inc. ( HTH ) and Montpelier Re Holdings Ltd. ( MRH ). All these companies carry a Zacks Rank #1 (Strong Buy).



HILLTOP HLDGS (HTH): Free Stock Analysis Report

MONTPELIER RE (MRH): Free Stock Analysis Report

NAVIGATORS GRP (NAVG): Free Stock Analysis Report

RENAISSANCERE (RNR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: HTH , MRH , NAVG , RNR

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