RenaissanceRe Holdings Ltd.
) reported fourth-quarter 2012 operating earnings per share of 65
cents, surpassing the Zacks Consensus Estimate of 37 cents.
However, the results lagged $1.11 per share earned in the
Operating earnings for the quarter came in at $31.0 million
compared with $58.0 million in the year-ago quarter.
Including net realized and unrealized gains on investments of
$10.6 million or 22 cents per share in the reported quarter, net
income declined to $41.7 million or 87 cents per share from $81.8
million or $1.58 per share in the prior-year quarter. The
year-ago quarter includes net realized and unrealized gains on
investments of $23.9 million or 47 cents per share and net
other-than-temporary impairments from continuing operations of
Improved premiums aided the bottom line. However, these were
offset by an increase in total expenses and decline in
underwriting income and investment results.
RenaissanceRe posted total revenue of $348.4 million, up 67%
year over year from $208.5 million in the fourth quarter of 2011.
Total revenue also surpassed the Zacks Consensus Estimate of $307
In addition, gross premiums increased 95% year over year to
$83.7 million. Meanwhile, underwriting income declined to $4.3
million from $127.1 million in the year-ago quarter. Combined
ratio also deteriorated to 98.5% from 36.2% in the fourth quarter
of 2011. The deterioration in underwriting income and combined
ratio was due to the negative impact of Hurricane Sandy.
RenaissanceRe reported total investment income (sum of net
investment income, net realized and unrealized gains on
investments and net other-than-temporary impairments) of $50.3
million in the quarter under review, against $76.8 million in the
year-ago quarter. The decline was primarily attributable to lower
returns in the fixed maturity investment portfolio as well as the
portfolio of other investments.
Moreover, total expenses of RenaissanceRe surged 235% to
$289.1 million from $86.3 million in the prior-year quarter.
segment reported gross premiums written of $57.7 million, up
$38.4 million from the prior-year quarter. Underwriting income
came in at $24.4 million compared with $135.3 million in the
fourth quarter of 2011, while combined ratio deteriorated to
90.2% from 23.2%, primarily due to higher net claims and claims
expenses due to Hurricane Sandy, partially offset by improved net
segment's gross premium written came in at $26.2 million,
expanding 10.3% from the year-ago quarter due to organic growth.
Underwriting loss widened to $14.5 million from $11.1 million in
the year-ago quarter. Combined ratio nevertheless improved 140.9%
from 149.0% in the prior-year quarter.
Full-Year 2012 Highlights
For full year 2012, RenaissanceRe reported operating income of
$402.4 million or $7.93 per share, rebounding from operating loss
of $162.4 million or $3.22 per share in 2011. Operating income
exceeded the Zacks Consensus Estimate of $7.63 per share.
Net income came in at $566.0 million or $11.23 per share
versus net loss of $92.2 million or $1.84 per share in 2011.
Total revenue was $1.41 billion, increasing from $1.10 billion
in 2011, while total expenses decreased to $657.8 million from
RenaissanceRe exited 2012 with total assets of $7.93 billion,
up from $7.74 billion as of Dec 31, 2011. Long-term debt totaled
$351.8 million, down from $353.6 million at the end of 2011.
Meanwhile, cash and cash equivalents stood at $325.4 million,
up from $217.0 million as of Dec 31, 2011. Shareholders' equity
totaled $3.51 billion compared with $3.61 billion at the end of
As of Dec 31, 2012, RenaissanceRe's annualized return on
average common equity (ROCE) was 5.2%, declining from 10.8% in
the fourth quarter of 2011.
During the reported quarter, RenaissanceRe repurchased 2.8
million equity shares at an average price of $80.03, totaling
$222.5 million. In 2012, the company repurchased 6.4 million
shares at an average price of $77.26, totaling 494.4 million.
Further, from Jan 1, 2013 through Feb 5, 2013 the company
repurchased 1.4 million shares at an average price of $81.29,
aggregating $111.3 million.
On Dec 27, 2012, RenaissanceRe redeemed 6 million Series D
Preference Shares at an average price of $25 per share along with
accrued and unpaid dividend.
RenaissanceRe's operating income for the reported quarter
declined year-over year due to high expenses and decline in
underwriting results. High losses from Sandy contributed
significantly to the weak results. The company generally faces
significant challenges due to weather-related events as well as
While premiums exhibited growth in both operating segments,
underwriting results deteriorated. Investment income was also
affected by weak result from the fixed maturity and private
equity investments. Overall, the financial results were mixed due
to significant catastrophe losses and weak investment
Currently, RenaissanceRe carries a Zacks Rank #3 (Hold). Other
property & casualty insurers worth considering are
Fidelity National Financial, Inc.
First American Financial Corporation
HCC Insurance Holdings Inc.
). All these companies carry a Zacks Rank #1 (Strong Buy).
FIRST AMER FINL (FAF): Free Stock Analysis
FIDELITY NAT FI (FNF): Free Stock Analysis
HCC INS HLDGS (HCC): Free Stock Analysis
RENAISSANCERE (RNR): Free Stock Analysis
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