On Mar 15, 2013, shares of
RenaissanceRe Holdings Ltd
) hit a 52-week high of $91.10. After dismal performances in the
last two quarters, the company had managed to post solid
fourth-quarter 2012 results with an earnings surprise of 70.3%.
This property & casualty insurer witnessed positive earnings
surprises in 2 of 4 quarters of 2012, with an average beat of
ARCH CAP GP LTD (ACGL): Free Stock Analysis
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On Feb 20, 2013, the board of directors of RenaissanceRe approved
a 3.7% increase in the quarterly dividend to 28 cents per share
from 27 cents paid earlier. This marks the 18th consecutive year
of dividend increase. In addition, the board of directors
approved an increase in RenaissanceRe's stock repurchase program,
bringing the total current authorization to $500 million.
In addition, RenaissanceRe created a new special purpose
insurance vehicle - Upsilon Reinsurance II Ltd., thereby
increasing its reinsurance capacity to cater to the global
retrocessional reinsurance market.
On Feb 6, RenaissanceRe reported fourth-quarter 2012 operating
income of 65 cents per share, up 28 cents from the Zacks
Consensus Estimate. Improved premiums aided the bottom line.
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
Valuation for RenaissanceRe looks attractive. The shares are
trading at a 17.7% discount to the peer group average on a
forward price-to-earnings basis and at only 1.9% premium to the
peer group on a price-to-book basis. Return on equity is 129.5%
above the peer group average. The one-year return for the stock
came in at 22.4%, much above S&P 500's return of
Over the long-term, the company faces headwinds such as declining
investment income, high competition and weather-related risks in
the catastrophe insurance and reinsurance business. Nevertheless,
strategic divestitures, efficient capital deployment via
repurchase and dividend hikes and continued focus to enhance its
operation should help RenaissanceRe deliver solid numbers going
forward. The long-term expected earnings growth rate for this
stock is 9.5%.
RenaissanceRe presently carries a Zacks Rank #3 (Hold). Property
and casualty insurers like
XL Group plc
Cincinnati Financial Corp
Arch Capital Group Ltd
), among others, carry a favorable Zacks Rank #1 (Strong Buy).