It has been about a month since the last earnings report for RenaissanceRe Holdings Ltd.RNR . Shares have lost about 8.5% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is RNR due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
RenaissanceRe's (RNR) Q1 Earnings Beat on Higher Premiums
RenaissanceRe Holdings Ltd.'s first-quarter 2018 operating earnings per share of $3.40 beat the Zacks Consensus Estimate of $2.71 by 25.5%. However, the bottom line skyrocketed 161.5% year over year.
The quarter under review witnessed low level of catastrophes, sturdy premium growth, prior-year favorable development and an improved operating efficiency.
Including adjusted loss on investments and income tax benefits, the company incurred net income of $1.42 per share in the first quarter compared with the same of $2.25 in the year-ago quarter.
Quarterly Operational Update
RenaissanceRe's first-quarter operating revenues of $415 million missed the Zacks Consensus Estimate of $445 million and declined 1.66% year over year.
Gross premiums written increased 25.8% year over year to $1.2 billion, driven by higher premiums from the Property as well as Casualty and Specialty segments.
Net investment income is $56.5 million for the reported quarter, improved by nearly 4% year-over-year.
RenaissanceRe's total expenses were $329.2 million, down 3% year over year.
Underwriting income of $129.6 million increased 205.7% from the year-ago quarter.
Combined ratio of 70.6% improved 1780 basis points (bps) from the year-ago quarter.
Quarterly Segment Update
Gross premiums written were $707 million, up 35.8% year over year. This improvement is attributable to higher written premiums in the catastrophe class of business as well as an increase in ceded premiums.
Underwriting income of $127.2 million improved 39.2% from the prior-year quarter.
Combined ratio of 43.5% improved 760 bps from 51.1% in the year-ago quarter.
Casualty and Specialty Segment
Gross premiums written were $452.7 million, up 12.7% from the prior-year quarter of $401.6 million, driven by selective growth from new and existing business wherein the company found attractive risk-return attributes.
Underwriting income of $2.6 million rebounded from the year-ago quarter underwriting loss of $49.3 million.
Combined ratio of 98.8% improved 2870 bps from the year-ago quarter. This upside was particularly driven by a 20.8 percentage point decrease in the Casualty and Specialty segment net claims and claim expenses ratio.
As of Mar 31, 2018, total assets of RenaissanceRe were $15.9 billion, up 4.6% from 2017-end level.
The company had total debt of $989.9 million as of Mar 31 2018, almost flat with 2017-end level.
Cash and cash equivalents were $0.6 billion, down 52.4% from $1.4 billion as of Dec 31, 2017.
Book value per share is $100.29 improved 0.6% year-over-year.
Return on equity expanded 870 basis points to 13.5% from the 2017-end level of 4.8%.
How Have Estimates Been Moving Since Then?
In the past month , investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter.
RenaissanceRe Holdings Ltd. Price and Consensus
At this time, RNR has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. Interestingly, RNR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.