RenaissanceRe Holdings Ltd. ( RNR )
reported third-quarter 2012 operating earnings per share of $2.07,
way behind the Zacks Consensus Estimate of $2.48. However, the
results improved substantially from 62 cents per share earned in
the year-ago quarter.
Operating earnings for the quarter came in at $104.4 million
compared with $32.7 million in the year-ago quarter.
Including net realized and unrealized gains on investments of
$76.26 million or $1.55 per share in the reported quarter, net
income surged drastically to $180.7 million or $3.62 per share from
$49.3 million or 95 cents per share in the prior-year quarter. The
year-ago quarter includes net realized and unrealized gains on
investments of $16.98 million or 34 cents per share and net
other-than-temporary impairments of continuing operations of $0.45
million or 1 cent per share.
The improved results were primarily aided by sturdy investment
and underwriting results. The decline in total expenses also
contributed to the upside.
RenaissanceRe posted total revenue of $390.48 million, up 79%
year over year from $217.95 million in the third quarter of 2011.
However, total revenue lagged the Zacks Consensus Estimate of $312
In addition, gross premiums decreased 2.6% year over year to
$136.4 million, mainly due to substantial reinstatement premiums
written during the prior-year quarter, which managed to offset the
premium growth in the special and Lloyd's segments.
Meanwhile, underwriting income jumped to $122.6 million from
$83.2 million in the year-ago quarter. Combined ratio also improved
to 53.3% from 63.7% in the third quarter of 2011. The improvement
in underwriting income and combined ratio was due to lower net
claims and claim expenses in the reported quarter along with
improved net premiums written, excluding reinstatement premiums in
the first nine months of 2012, compared to the prior-year
RenaissanceRe reported total investment income (sum of net
investment income, net realized and unrealized gains on investments
and net other-than-temporary impairments) of $122.7 million in the
quarter under review, against total investment loss of $18.6
million in the year-ago quarter. The improvement was primarily
attributable to higher returns in the fixed maturity investment
Moreover, total expenses of RenaissanceRe marginally dipped 3.6%
to $149.78 million from $155.36 million in the prior-year quarter.
Additionally, income tax expense came in at $0.14 million against
income tax benefit of $1.44 million in the year-ago quarter.
Reinsurance segment reported gross
premiums written of $107.6 million, down 12.4% from $122.8 million
in the prior-year quarter. Underwriting income came in at $134.2
million compared with $95.1 million in the third quarter of 2011,
while the combined ratio improved to 41.8% from 54.3%.
Lloyd's segment's gross premium
written came in at $28.7 million, expanding 67.7% from $17.1
million in the year-ago quarter. Underwriting loss was recorded at
$11.5 million, compared with $6.9 million in the year-ago quarter.
Combined ratio inched up to 135.6% from 133.3% in the prior-year
Insurance segment's underwriting loss
was $0.46 million compared with $5.0 million in the year-ago
RenaissanceRe exited the reported quarter with total assets of
$8.79 billion, up from $7.74 billion as of December 31, 2011.
Long-term debt totaled $358.6 million, up from $353.6 million at
the end of 2011.
Meanwhile, cash and cash equivalents stood at $249.1 million, up
from $217.0 million as of December 31, 2011. Shareholders' equity
totaled $3.84 billion compared with $3.61 billion at the end of
As of September 30, 2012, RenaissanceRe's annualized return on
average common equity (ROCE) was 22.0%, improving substantially
from 6.6% as of September 30, 2011.
Stock Repurchase Update
During the reported quarter, RenaissanceRe repurchased 2.4
million shares at an average price of $75.41, totaling $180.3
million. Further, from October 1 to October 31, the company
repurchased 111,000 shares at an average price of $77.01,
aggregating $8.5 million.
RenaissanceRe's operating results for the reported quarter
improved significantly over the prior-year quarter, owing to higher
underwriting income arising from lack of any major catastrophic
events in the quarter. The company generally faces significant
challenges due to weather-related events as well as high
competitionin the catastrophe insurance and reinsurance
While premiums exhibited growth in the special and Lloyd's
segments, total expenses declined. This, coupled with lower share
count, buoyed the bottom line. Moreover, the company's financial
position strengthened with improved cash balance and increased
One of RenaissanceRe's competitors, PartnerRe
Ltd. ( PRE ) reported third-quarter 2012 operating
earnings per share of $3.90, which significantly surpassed the
Zacks Consensus Estimate of $2.06 and the year-ago earnings of
$2.41. As a result, operating net income soared to $244.4 million
from $164.5 million in the prior-year quarter.
Another peer, XL Group plc ( XL ),
will report its third-quarter 2012 financial results on November 5,
2012, after the market closes.
Currently, RenaissanceRe carries a Zacks #2 Rank, which
translates into a short-term Buy rating. However, we maintain our
long-term Neutral recommendation on the shares.PARTNERRE LTD (PRE): Free Stock Analysis ReportRENAISSANCERE (RNR): Free Stock Analysis ReportXL GROUP PLC (XL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment