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RenaissanceRe (RNR) Beats Q3 Earnings on High Premiums

RenaissanceRe Holdings Ltd.RNR reported third-quarter 2015 operating earnings per share of $2.58 that beat the Zacks Consensus Estimate of $1.94. The figure also increased over the year-ago quarter earnings of $2.49 per share on increased premiums and favorable reserve development.

Renaissancere Holdings Ltd. (RNR) - Earnings Surprise | FindTheCompany

Including extraordinary items, net income of RenaissanceRe was $1.66 per share, down from $1.70 in the prior-year quarter.

RenaissanceRe posted total revenue of $358.2 million, up 34.4% year over year. Higher premiums earned and an increase in net investment income mainly contributed to the year-over-year upside. The top line, however, missed the Zacks Consensus Estimate of $398 million.

Underwriting income increased 23.8% to $129.7 million. However, it was adversely affected by $28.1 million of underwriting losses associated with the Tianjin explosion. In the reported quarter, combined ratio deteriorated 470 basis points to 64.2%.

RenaissanceRe reported total investment result (sum of net investment income, net realized and unrealized gains or losses on investments and change in net unrealized gains on fixed maturity investments available for sale) of $(13) million in the reported quarter as against $(6.5) million in the year-ago quarter. This deterioration stemmed from a dip in the equity markets and the low interest rate environment.

During the quarter, RenaissanceRe witnessed an increase in total expenses. This was mainly on account of higher net claims and claim expenses, acquisition costs, operational expenses, interest expenses and corporate expenses. Total expenses escalated 54.3% year over year to $250.5 million.

Segment Update

Catastrophe Reinsurance: Gross premiums written were $81.7 million, up 19.7% year over year. This was largely attributable to the underwriting of some new programs.

Underwriting income came in at $99.8 million, down from $104.1 million in the third quarter of 2014. The decrease in income was largely due to higher current accident year claims and claim expenses, mainly on account of the Tianjin explosion. Combined ratio deteriorated to 37.5% from 23.9% in the year-ago period.

Specialty Reinsurance: Gross premiums written were $214.4 million, up by a whopping 211.2% from the prior-year quarter. This was largely attributable to improvement across casualty and specialty credit lines of business. Particularly, the acquisition of Platinum Underwriters helped in this regard.

Underwriting income came in at $37.2 million, up 552.6%, while combined ratio improved to 74.5% from 91.1% in the third quarter of 2014.

Lloyd's: Gross premiums written were $73.6 million, up 15.2% from the year-ago quarter on organic growth at Syndicate 1458. Underwriting loss in the segment was $7 million, wider than $5.3 million loss in the year-ago period. This deterioration was largely attributable to higher ceded premiums earned and an increase in acquisition expenses. As a result, combined ratio deteriorated to 112.3% from 109.1% in the prior-year quarter.

Financial Position

As of Sep 30, 2015, total assets of RenaissanceRe were $11.9 billion, up from $8.2 billion as of Dec 31, 2014. The company had a total debt burden of $969.2 million as of Sep 30, 2015, significantly higher than $249.5 million as of Dec 31, 2014.

Cash and cash equivalents came in at $524.5 million as of Sep 30, 2015, down from $525.6 million as of Dec 31, 2014. Shareholders' equity totaled $4.7 billion at the end of the quarter, higher than $3.9 billion at the end of 2014.

RenaissanceRe's annualized operating return on average common equity (ROCE) was 10.7% as of Sep 30, 2015. This represents a decrease from 11.7% as of Sep 30, 2014.

Share Buybacks

RenaissanceRe repurchased 1.9 million shares worth $203.1 million in the third quarter. From Sep 30, 2015 through Nov 3, 2015, RenaissanceRe repurchased 0.29 million shares for $30.6 million.

Performance of Other Insurers

The bottom lines at PartnerRe Ltd. PRE , RLI Corporation RLI and Allstate Corporation ALL outperformed their respective Zacks Consensus Estimate in the third quarter.

Zacks Rank

RenaissanceRe currently carries a Zacks Rank #3 (Hold).

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RLI CORP (RLI): Free Stock Analysis Report

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RENAISSANCERE (RNR): Free Stock Analysis Report

ALLSTATE CORP (ALL): Free Stock Analysis Report

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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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