We are upgrading our recommendation on
RenaissanceRe Holdings, Ltd.
) to Outperform on the heels of the positive trend in premiums
growth, increase in reinsurance capacity through the formation of
Timicuan, stable ratings and regular dividend hikes.
RenaissanceRe's first quarter earnings surpassed the Zacks
Consensus Estimate owing to higher underwriting income arising from
lack of catastrophic events in the quarter.
While premiums and investment income exhibited growth, expenses
also declined substantially, thereby boosting the bottom line.
Moreover, improved financial leverage, cash balance and ROCE
boosted the financial position. Additionally, enhanced operating
leverage due to strategic divestitures along with efficient capital
deployment are the other positives.
Our six-month target price of $91.00 per share equates to about
9.8x our earnings estimate for 2012. Combined with the $1.08 per
share annual dividend, this target price implies an expected total
return of 20.8% over that period. This is consistent with our
RENAISSANCERE (RNR): Free Stock Analysis Report
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