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RenaissanceRe's (RNR) Q3 Loss Wider Than Expected, Worsens Y/Y

RenaissanceRe Holdings Ltd. RNR incurred third-quarter 2020 operating loss per share of $2.64, comparing unfavorably with the Zacks Consensus Estimate of a loss of $2.03. The bottom line was also against the year-ago quarter’s earnings of 29 cents per share.

The company suffered an elevated expense level and lower net investment income.

Quarterly Operational Update

Total revenues of $1.1 billion improved 8.4% year over year on higher gross premiums written.

Gross premiums written increased 32.7% year over year to $1.1 billion owing to higher premiums at the Property as well as the Casualty and Specialty segments.

Net investment income of $83.5 million declined 25% year over year.

RenaissanceRe’s total expenses of $1.2 billion rose 34.8% year over year, primarily due to steep net claims and claim expenses, and acquisition costs plus corporate expenses
.
Underwriting loss of $206.1 million compared unfavorably with the year-ago quarter’s underwriting loss of $3.4 million.

Combined ratio of 120.6% in the third quarter compared unfavorably with the year-ago quarter’s 100.4%.

RenaissanceRe Holdings Ltd. Price, Consensus and EPS Surprise

RenaissanceRe Holdings Ltd. Price, Consensus and EPS Surprise

RenaissanceRe Holdings Ltd. price-consensus-eps-surprise-chart | RenaissanceRe Holdings Ltd. Quote

Quarterly Segment Update

Property Segment

Gross premiums written were $427.8, up 36.1% year over year in the third quarter.

Underwriting loss of $206.6 million compared unfavorably with an underwriting loss of $7.7 million in the third quarter of 2019.

Combined ratio of 140% expanded 3830 basis points (bps) year over year.

Casualty and Specialty Segment

Gross premiums written of $715.3 million were up 30.8% from the prior-year quarter. This upside is driven by growth in the current and new business opportunities within a few classes of business written in the present and the previous periods. However, the same was offset to some extent by the non-renewal of a portion of the business acquired in connection with the TMR buyout.

The segment’s underwriting income of $0.6 million was down 86.7% year over year in the third quarter.

Combined ratio of 99.9% in the third quarter was flat with the year-ago period.

Financial Position

As of Sep 30, 2020, total assets of RenaissanceRe were $30.9 billion, up 17.7% from the level at 2019 end.

The company had total debt of $1.1 billion as of Sep 30, 2020, down 17.9% from the level at 2019 end.

Cash and cash equivalents were $1.2 billion, down 6.6% from the figure at 2019 end.

Book value per share of $135.13 increased 12.1% from the number at 2019 end.

Annualized operating return on equity for the quarter under review was a negative 7.7%.

Zacks Rank

RenaissanceRe has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Of the insurance industry players, which already reported third-quarter results, earnings of Cincinnati Financial Corporation CINF and First American Financial Corporation FAF missed the respective Zacks Consensus Estimate while that of RLI Corp. RLI beat the same.

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