In order to enhance its reinsurance capacity,
RenaissanceRe Holdings Ltd.
) announced the creation of a new reinsurance subsidiary named
Timicuan Reinsurance III Limited. The newly formed subsidiary will
be based in Bermuda, which is the headquarter of the holding
Timicuan Reinsurance will be initiated with equity share capital
of $55 million, contributed by various investors including
RenaissanceRe. Renaissance Underwriting Managers Ltd will manage
the new company, which will take over a portion of the property
catastrophe reinsurance portfolio of RenaissanceRe's subsidiaries
-- Renaissance Reinsurance Ltd. and DaVinci Reinsurance Ltd.
The two subsidiaries have entered into a fully-collateralized
reinsurance agreement with Timicuan Reinsurance for the same. The
portfolio to be taken over by the new unit mainly deals with
providing reinsurance to Florida insurers to cover their hurricane
risks for the 2012 hurricane season.
Apart from boosting RenaissanceRe's capacity to provide
reinsurance in the Florida homeowners market, the formation of
Timicuan Reinsurance is also expected to increase the earnings of
the Reinsurance segment of the umbrella company, which accounts for
majority of the company's business.
The Reinsurance segment contributed 92.2% and 91.8% of
RenaissanceRe's gross premiums written in 2011 and the first
quarter of 2012, respectively.
The Zacks Consensus Estimate for RenaissanceRe's second-quarter
2012 earnings is currently $2.44 per share, increasing
significantly year over year. For full year 2012, the Zacks
Consensus Estimate stands at $9.27 per share, up substantially
RenaissanceRe carries a Zacks #2 Rank, which translates into a
short-term Buy rating. Considering the fundamentals, we maintain a
long-term Neutral recommendation on the shares. RenaissanceRe
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