We have retained our Neutral recommendation on
ReneissanceRe Holdings Ltd.
) as declining investment income, high competition and losses
from Super Storm Sandy will likely weigh on the positives. The
insurance and reinsurance provider currently carries a Zacks Rank
Over the last 30 days two of 14 estimates moved downwards,
keeping the Zacks Consensus Estimate for the fourth quarter at 37
cents, translating into a year-over-year decline of nearly 66.4%.
The investment portfolio of RenaissanceRe is exposed to the weak
credit and capital markets. While the company's portfolio is
strong, it is nevertheless vulnerable to the present volatile
interest rate environment. Moreover, although the company
experienced decline in natural disasters through the first nine
months of 2012, the occurrence of Hurricane Sandy in Oct 2012 is
estimated to invite losses worth $130 million in the fourth
quarter of 2012 and thus weigh on underwriting margins.
Counting on the positives, ReneissanceRe's declining total
expenses, sturdy investment results and lack of any major
catastrophe events in the third quarter helped it to post
improved operating earnings. Premiums also grew at its Special
and Lloyd's unit along with additional premiums from its new
reinsurance subsidiary - Timicuan Reinsurance III Limited. This,
coupled with lower share count, buoyed the bottom line.
ReneissanceRe continues to increase shareholders' value. The
Board in Nov 2012 increased its share buyback program to $500
million. It repurchased 3.6 million shares for $271.9 million in
the first nine months of 2012, with $459.6 million remaining
under its authorization. The company also strongly scores with
the credit rating agencies.
ReneissanceRe is scheduled to release its fourth quarter and full
year 2012 on Feb 6, after the closing bell.
Other Stocks to Consider
Among others from the industry,
Cincinnati Financial Corporation
First American Financial Corporation
) carry Zacks Rank #1 (Strong Buy) and are worth considering.
CINCINNATI FINL (CINF): Free Stock Analysis
FIRST AMER FINL (FAF): Free Stock Analysis
RLI CORP (RLI): Free Stock Analysis Report
RENAISSANCERE (RNR): Free Stock Analysis
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