RenaissanceRe Holdings Ltd.
) reported first-quarter 2014 operating earnings per share of
$3.20, breezing past the Zacks Consensus Estimate of $2.86.
However, earnings per share reflected a decline from the year-ago
quarter's earnings of $3.91 per share.
The downside was caused by pricing pressures triggered by an
excess supply from many forms of capital that outweighed demand.
Including net realized and unrealized gains on investments in the
reported quarter, net income of RenaissanceRe stood at $3.56 per
share, down from $4.23 per share in the prior-year quarter.
RenaissanceRe posted total revenue of $343.6 million, up 3% year
over year. The figure also surpassed the Zacks Consensus Estimate
of $334 million. Growth in premiums mainly drove the upside.
Higher premiums in RenaissanceRe's Specialty Reinsurance and
Lloyd segments drove overall gross premiums written in the first
quarter by 11% year over year to $705.3 million. Meanwhile,
underwriting income decreased to $151.3 million from $173 million
in the year-ago quarter. In the reported quarter, combined ratio
also deteriorated to 47.2% from 36.2% in the first quarter of
2013. This deterioration resulted from a decline in favorable
development on prior accident years net claims and claims
RenaissanceRe reported total investment result (sum of net
investment income, net realized and unrealized gains or losses on
investments and change in net unrealized gains on fixed maturity
investments available for sale) of $53.7 million in the reported
quarter, against $51.4 million in the year-ago quarter.
During the quarter, RenaissanceRe witnessed a surge in total
expenses on account of higher corporate, acquisition and net
claims and claim expenses. Total expenses rose 33.7% year over
year to $144.1 million.
Effective from the fourth quarter of 2013, RenaissanceRe operates
in three reportable segments, namely, Catastrophe Reinsurance,
Specialty Reinsurance and Lloyd. The Catastrophe Reinsurance and
Specialty Reinsurance segments were previously under the
This segment consists of catastrophe reinsurance and some
property catastrophe joint ventures.
The segment reported gross premiums written of $467.7 million,
comparing unfavorably with $478.8 million in the year-ago period.
Reduced risk-adjusted pricing for the renewals in the quarter led
to the decline. Underwriting income came in at $130.6 million
compared with $148.2 million in the first quarter of 2013, while
combined ratio deteriorated to 20.7% from 20.6% in the year-ago
period. The deterioration can be attributed to lower gross
premiums written as well as a reduction in favorable development
on prior accident years net claims and claims expenses. However,
this was partially mitigated by lower catastrophe losses during
the quarter under review.
This segment includes specialty reinsurance and some specialty
The segment reported gross premiums written of $154.3 million, up
87.4% from the prior-year quarter. The improvement mainly
reflects growth across certain financial liability related lines
of businesses. Underwriting income came in at $16.9 million, down
from $20.1 million, while combined ratio deteriorated to 75.7%
from 57% in the first quarter of 2013. The deterioration was led
by higher net claims and claims expenses, and underwriting
expenses, partly offset by growth in net premiums.
This segment consists of the insurance and reinsurance businesses
that are written through RenaissanceRe Syndicate 1458.
The segment's gross premium written stood at $83.3 million, up
12.1% from the year-ago quarter on organic growth. Higher net
claims and claims expenses led to a decline in underwriting
income to $3.4 million from $4.2 million in the year-ago quarter.
As a result, combined ratio deteriorated to 93.5% from 89.0% in
the prior-year quarter.
As of March 31, 2014, total assets of RenaissanceRe were $8.2
billion, almost in line with that at year-end 2013. Debt burden
of the company totaled $249.5 million as of March 31, 2014,
highlighting a marginal rise from $249.4 million as of Dec 31,
Meanwhile, cash and cash equivalents stood at $327.2 million as
of March 31, 2014, down from $408 million as of Dec 31, 2013.
Shareholder equity totaled $3.8 billion, down from $3.9 billion
at the end of 2013.
At the end of the first quarter of 2014, RenaissanceRe's
annualized return on average common equity (ROCE) stood at 17.6%,
representing a decrease from 24.3% in the year-ago period.
During the reported quarter, RenaissanceRe repurchased 3 million
shares for $277.1 million. Additionally, since March 31, 2014
through April 25, 2014, the company repurchased 0.33 million
shares for $31.9 million.
Performance of Other Insurers
) first-quarter 2014 operating earnings per share of $3.36
remarkably outpaced the Zacks Consensus Estimate of $2.45.
Hartford Financial Services Group Inc.
) reported first-quarter 2014 operating earnings of $1.18 per
share, beating the Zacks Consensus Estimate by 27%.
RenaissanceRe carries a Zacks Rank #2 (Buy). Other
well-performing stocks in the same sector include PartnerRe and
Allied World Assurance Company Holdings, AG
). While Allied World sports a Zacks Rank #1 (Strong Buy),
PartnerRe has the same Zacks Rank as RenaissanceRe.
ALLIED WORLD AS (AWH): Free Stock Analysis
HARTFORD FIN SV (HIG): Free Stock Analysis
PARTNERRE LTD (PRE): Free Stock Analysis
RENAISSANCERE (RNR): Free Stock Analysis
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