Recently, RenaissanceRe Holdings Ltd. ( RNR ) announced that it will redeem all the outstanding 6.6% Series D Preference Shares and half of the outstanding 6.08% Series C Preference Shares. The company has 6 million Series D and 10 million Series C Preference Shares outstanding at present.
RenaissanceRe will redeem both types of preference shares at a redemption price of $25 per share. The company will also pay the accrued and unpaid dividend till the date of redemption. The mandatory redemption will take place on Jun 27, 2013.
The 50% of the Series C shares to be redeemed will be chosen on the basis of a random lottery to be conducted by The Depository Trust Company (DTC) according to its rules and procedures. DTC is the holder of record for the preference shares.
This is not the first time RenaissanceRe is redeeming its preference shares. Earlier, on Dec 27, 2012, the company redeemed 6 million Series D Preference Shares at an average price of $25 per share along with accrued and unpaid dividend. This left another 6 million outstanding Series D Preference Shares, which are being redeemed now.
Following the redemption, RenaissanceRe will have only 5 million preference shares outstanding. The redemption will save a considerable amount of dividend for the company. Moreover, the sharp cut down in the number of outstanding preference shares will reduce the risk of equity shareholders as preference shares have priority in case of liquidation of a company.
RenaissanceRe currently caries a Zacks Rank #3 (Hold). Other property and casualty insurers worth considering are Montpelier Re Holdings Ltd. ( MRH ), XL Group plc ( XL ) and AXIS Capital Holdings Limited ( AXS ). All these companies carry a Zacks Rank #1 (Strong Buy).