RenaissanceRe Holdings Ltd. RNR reported third-quarter 2024 operating income of $10.23 per share, which surpassed the Zacks Consensus Estimate by 29.7%. The bottom line advanced 21.6% year over year.
Total operating revenues soared 45.7% year over year to $3 billion. The top line beat the consensus mark by 3.7%.
Its shares lost 4.4% on Thursday. Despite the earnings beat, the quarterly results were hurt by a rise in total expenses due to increased claims and acquisition costs, alongside a deterioration in combined ratios, particularly in the Casualty and Specialty segment. Nevertheless, the downside was partly offset by strong premium growth, supported by the Validus acquisition and organic growth, as well as improved net investment income.
RenaissanceRe Holdings Ltd. Price, Consensus and EPS Surprise
RenaissanceRe Holdings Ltd. price-consensus-eps-surprise-chart | RenaissanceRe Holdings Ltd. Quote
RNR’s Quarterly Operational Update
Gross premiums written of $2.4 billion improved 48.3% year over year and were higher than our estimate of $1.9 billion.
Net premiums earned climbed 47.1% year over year to $2.6 billion. The metric surpassed the consensus mark of $2.5 billion and our estimate of $2.4 billion.
Net investment income was $423.9 million, which advanced 28.8% year over year on the back of an increase in average invested assets and higher-yielding assets in the fixed maturity investments portfolios. Also, the figure surpassed the Zacks Consensus Estimate of $417 million and our estimate of 416.5 million.
Total expenses escalated 58.8% year over year to $2.24 billion but were lower than our estimate of $2.25 billion. The year-over-year increase resulted from increased net claims and claim expenses incurred coupled with higher acquisition and operational expenses.
RenaissanceRe’s underwriting income amounted to $393.8 million, which grew 2.1% year over year. The combined ratio deteriorated 680 basis points (bps) year over year to 84.8%.
Book value per share was $202.01 as of Sept. 30, 2024, which climbed 51.2% year over year. Annualized operating return on average common equity of 21.7% deteriorated 360 bps year over year.
RNR’s Segmental Update
Property Segment
The segment’s gross premiums written surged 54.7% year over year to $790.7 million, higher than our estimate of $606.3 million. The metric benefited on the back of higher reinstatement premiums, along with organic growth, new business opportunities and the renewal of accounts acquired through the Validus buyout.
Net premiums earned of $994.8 million advanced 30.8% year over year and surpassed the Zacks Consensus Estimate of $939 million and our estimate of $926.1 million.
Underwriting income grew 10.9% year over year to $394.7 million. The combined ratio of 60.3% deteriorated 710 bps year over year.
Casualty and Specialty Segment
The unit recorded gross premiums written of $1.61 billion, which climbed 45.3% year over year and beat our estimate of $1.32 billion. The metric was aided by business renewals from the Validus Acquisition and organic growth within legacy lines.
Net premiums earned surged 59.5% year over year to $1.59 billion, higher than the Zacks Consensus Estimate of $1.53 billion and our estimate of $1.44 billion.
The segment incurred an underwriting loss of $0.9 million against the prior-year quarter’s underwriting income of $29.8 million. The combined ratio deteriorated 310 bps year over year to 100.1%.
RNR’s Financial Position (as of Sept. 30, 2024)
RenaissanceRe exited the third quarter with cash and cash equivalents of $1.6 billion, which fell 16.2% from the 2023-end level. Total assets of $52.8 billion increased 7.7% from the figure at 2023-end.
Debt amounted to $1.9 billion, which dipped 1.2% from the figure as of Dec. 31, 2023.
Total shareholders’ equity of $11.2 billion rose 18.9% from the 2023-end level.
RNR’s Capital Deployment Update
RNR bought back common shares worth $106.8 million in the third quarter. On Nov. 6, 2024, the board authorized an increase to the company's share repurchase program, thereby raising the total authorized amount to $750 million.
Management declared a quarterly dividend of 39 cents per share.
RNR’s 4Q24 Guidance
Hurricane Milton is projected to have a $275 million net negative impact on net income (loss) attributable to common shareholders in the fourth quarter of 2024.
RNR’s Zacks Rank
RenaissanceRe currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have reported third-quarter 2024 results so far, the bottom-line results of AXIS Capital Holdings Limited AXS, Chubb Limited CB and Arch Capital Group Ltd. ACGL beat the respective Zacks Consensus Estimate.
AXIS Capital posted third-quarter 2024 operating income of $2.71 per share, which beat the Zacks Consensus Estimate by 8.4%. The bottom line increased 16% year over year. Total operating revenues of $1.5 billion beat the consensus estimate by 0.4%. The top line rose 6.2% year over year. Net premiums written increased 27% to $1.2 billion, attributable to a 10% increase in the insurance segment and 189% in the reinsurance segment. Net investment income increased 33% year over year to $205 million.
Pre-tax catastrophe and weather-related losses and net of reinsurance were $78 million. AXIS Capital’s underwriting income of $135.1 million decreased 8% year over year. The combined ratio deteriorated 40 bps to 93.1. The Zacks Consensus Estimate was 94, while our estimate was 93.4. In the Insurance segment, net premiums earned increased 15.6% year over year to $1 billion. Meanwhile, the metric in the Reinsurance unit decreased 21.5% year over year to $342.8 million.
Chubb’s third-quarter core operating income of $5.72 per share beat the Zacks Consensus Estimate by 16%. The bottom line increased 15.6% year over year. Net premiums written improved 5.5% year over year to $13.8 billion. Pre-tax net investment income was $1.5 billion, up 14.7% year over year. Revenues of $15 billion missed the consensus estimate by 1.5% and improved 6.5% year over year.
Property and casualty (P&C) underwriting income was $1.4 billion, up 11.7% year over year. Chubb incurred a pre-tax P&C catastrophe loss, net of reinsurance and including reinstatement premiums, of $765 million, which was wider than the year-ago catastrophe loss of $670 million. The P&C combined ratio improved 70 bps on a year-over-year basis to 87.7%. In the North America Commercial P&C Insurance segment, net premiums written increased 7.2% year over year to $5.5 billion.
Arch Capital reported third-quarter operating income of $1.99 per share, which beat the Zacks Consensus Estimate by 2.6%. The bottom line decreased 13.6% year over year. Gross premiums written improved 20.2% year over year to $5.4 billion. Net premiums written climbed 20.6% year over year to $4 billion. Pre-tax net investment income increased 48.3% year over year to $399 million. Operating revenues of $4.4 billion rose 24.6% year over year. It beat the Zacks Consensus Estimate by 8.1%.
Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums, were $450 million, wider than a loss of $180 million incurred in the year-ago quarter. Arch Capital’s underwriting income decreased 25.4% year over year to $538 million. The combined ratio deteriorated 870 bps to 86.6. In the Insurance segment, net premiums written climbed 19.6% year over year to $1.8 billion. The unit’s underwriting income of $120 million was 7% lower than the year-ago number.
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