RenaissanceRe Holdings Ltd.
) reported third-quarter 2013 operating earnings per share of
$3.36, surpassing the Zacks Consensus Estimate of $2.32 by a wide
margin. Results also improved from the year-ago period when the
company posted earnings of $2.07 per share.
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Growth in premiums coupled with lower catastrophes mainly led to
Including net realized and unrealized gains on investments in the
reported quarter, net income was $179.7 million or $4.01 per
share compared with $180.7 million or $3.62 per share in the
RenaissanceRe posted total revenues of $391.6 million, up 0.3%
year over year. Total revenues also surpassed the Zacks Consensus
Estimate of $333 million. The improvement was mainly driven by an
increase in premiums and investment income.
Higher premiums in RenaissanceRe's specialty unit and the Lloyd's
segment drove overall gross premiums written in the third quarter
by 33.9% year over year to $182.6 million. Meanwhile,
underwriting income improved to $151.4 million from $122.6
million in the year-ago quarter. In the reported quarter,
combined ratio also improved to 48.6% from 53.3% in the third
quarter of 2012.
RenaissanceRe reported total investment gains (sum of net
investment income, net realized and unrealized gains or losses on
investments and net other-than-temporary impairments) of $88.2
million in the reported quarter, against total investment gains
of $122.8 million in the year-ago quarter. The decline was
primarily attributable to credit spread tightening during the
third quarter of 2012.
During the quarter, RenaissanceRe incurred an increase in total
expenses on account of higher operational costs and corporate
expenses. Total expenses increased 1.5% year over year to $151.9
segment reported gross premiums written of $142.7 million, up
32.6% from the prior-year quarter, reflecting higher quota share
premiums in RenaissanceRe Specialty Risks Ltd. and growth in the
catastrophe unit of RenaissanceRe. Underwriting income came in at
$152.4 million compared with $134.2 million in the third quarter
of 2012 while combined ratio improved to 38.4% from 41.8%. The
improvement was driven by higher net premiums earned and low
catastrophe losses during the quarter, partially offset by lower
favorable development on prior year accident years net claims and
segment's gross premium written came in at $40 million,
escalating 39.1% from the year-ago quarter due to organic growth.
Growth in premiums led to the narrowing of underwriting loss to
$2.5 million from $11.5 million in the year-ago quarter. As a
result, combined ratio improved to 105.3% from 135.6% in the
RenaissanceRe exited the reported quarter with total assets of
$8.4 billion, up from $7.9 billion as of Dec 31, 2012. Debt
burden of the company totaled $249.4 million, down from $349.3
million at the end of 2012.
Meanwhile, cash and cash equivalents stood at $266.4 million,
down from $304.1 million as of Dec 31, 2012. Shareholder equity
totaled $3.7 billion compared with $3.5 billion at the end of
As of Sep 30, 2013, RenaissanceRe's annualized return on average
common equity (ROCE) was 18.7%, declining from 22% in the third
quarter of 2012. Although ROCE declined year over year, it
improved 1530 basis points sequentially due to strong
underwriting performance, lower catastrophes and solid
During the reported quarter, RenaissanceRe repurchased 0.22
million shares for $18.9 million under its $500 million buyback
authorization, approved in Feb 2013. Currently, the company is
left with $470.4 million under this program.
RenaissanceRe's third quarter results were impressive after a
disappointing second quarter. Both earnings and revenues fared
well, beating the Zacks Consensus Estimate and improving from the
With the renewal season approaching, the company's flexible
capital structure and platform expansions position RenaissanceRe
to serve its clients better thereby gaining on retentions and
During the quarter, RenaissanceRe launched its U.S. based
specialty reinsurance platform named RenaissanceRe Underwriting
Managers U.S. LLC, which is in line with the company's consistent
global reinsurance operation expansion objectives. Further, the
divestiture of its U.S.-based weather and weather-related energy
risk management unit, RenRe Energy Advisors Ltd. (REAL) in Oct
2013, also looks promising on account of enhancing its core
operations that include property catastrophe reinsurance and
insurance business written through Syndicate 1458. We expect all
the above endeavors to fetch better revenues and help the company
come up with better numbers going forward.
Montpelier Re Holdings Ltd.
) reported third-quarter 2013 operating net income of $1.38 per
share, beating the Zacks Consensus Estimate by 86%.
) reported third-quarter 2013 operating earnings of $1.40 per
share, surpassing the Zacks Consensus Estimate by 47% as well as
the year-ago earnings by 37.2%.
The Travelers Companies Inc.
) reported operating net earnings of $2.35 per share in the third
quarter of 2013, beating the Zacks Consensus Estimate of $1.99
Currently, RenaissanceRe carries a Zacks Rank #2 (Buy). Both
Montpelier and RLI carry a favorable Zacks Rank #1 (Strong Buy)
while The Travelers shares the same Zacks Rank as RenaissanceRe.