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RenaissanceRe Downgraded to Strong Sell on Q2 Earnings Miss - Analyst Blog

On Aug 13, Zacks Investment Research downgraded RenaissanceRe Holdings Ltd . ( RNR ) to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

RenaissanceRe Holdings has witnessed sharp downward estimate revisions after missing second-quarter 2014 expectation. Given its expected negative earnings growth rates for the upcoming quarters, it has more downside left.

On Jul 29, RenaissanceRe Holdings reported second-quarter earnings per share of 29 cents, missing the Zacks Consensus Estimate by 54% despite improving year over year.

RenaissanceRe's Catastrophe Reinsurance segment was a drag in terms of premiums that led to a 27.3% overall decline in gross premiums written to $511.5 million. Moreover, underwriting income decreased 12.1% to $99.7 million due to a fall in net premiums earned. Combined ratio also deteriorated 50 basis points year over year to 61.7% in the quarter.

Though marginal, debt burden of RenaissanceRe Holdings increased at quarter end with a decrease in cash and cash equivalents. Return on equity also declined to 11% from 12.2% in the year-ago period.

The Zacks Consensus Estimate for 2014 decreased 7.2% to $9.19 per share over the last 30 days as all the eight estimates moved south. For 2015, most of the estimates were revised downward over the last 30 days, lowering the Zacks Consensus Estimate by 7.8% to $2.14 per share.

Other Stocks to Consider

While we prefer to avoid RenaissanceRe Holdings currently, better-ranked property and casualty insurers worth reckoning include Endurance Specialty Holdings Ltd. ( ENH ), Global Indemnity plc ( GBLI ) and Greenlight Capital Re, Ltd. ( GLRE ). All these sport a Zacks Rank #1 (Strong Buy).

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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