Back to top

Analyst Blog

Fitch Ratings reiterated Issuer Default Rating ("IDR") at 'A' of RenaissanceRe Holdings Ltd. (RNR - Analyst Report). Concurrently the rating agency also reiterated Insurer Financial Strength ("IFS") rating at 'A+' of Renaissance Reinsurance Ltd., the company’s subsidiary.

The outlook of the ratings is stable.

RenaissanceRe’s rating affirmation came on the back of its dominant position in the property catastrophe reinsurance market, modest operating and financial leverage and solid liquidity. The affirmations also account for property catastrophe market rate environment, unstable underwriting performances and instability from alternative investments.

The company attained the dominant position by virtue of its ability to effectively write more catastrophe related risks. Further, both gross and net premiums written in the first quarter increased 9% over the prior-year quarter.

Fitch also noted that RenaissanceRe’s unstable underwriting profitability and returns on capital are to some extent offset by low combined ratios and strong returns on capital.

RenaissanceRe posted net income of $201 million in the first quarter of 2012, rebounding from the year-ago loss, mainly due to lower catastrophe loss. Combined ratio thus improved sequentially to 29.4% from 118.6% in the fourth of quarter 2011.

Nevertheless, Fitch stated that rating upgrade in the near term is unlikely, given the company’s earnings and capital instability. However, they might consider a rating upgrade over the long term if RenaissanceRe continues to deliver solid underwriting results, solidifies market position in specialty reinsurance and Lloyd's business and increases risk adjusted capital.

However, if profitability declines, premiums written to shareholders' equity moves beyond 0.5x, equity-credit adjusted financial leverage crosses the 25% mark, and catastrophe events loss equals 25% or more of shareholders' equity, the ratings will be subjected to downgrade.

We retain our Neutral recommendation on RenaissanceRe Holdings. The quantitative Zacks #2 Rank (short term Buy rating) for the company indicates slight boost on the stock over the near term.

Hamilton, Bermuda-based RenaissanceRe Holdings competes with ACE Limited (ACE - Analyst Report), PartnerRe Ltd. (PRE - Analyst Report) and XL Group plc (XL - Analyst Report).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.35 +4.82%
CENTURY ALU… CENX 22.42 +3.99%
ERBA DIAGNO… ERB 2.90 +3.94%
MALLINCKROD… MNK 71.93 +3.48%
GTT COMMUNI… GTT 12.03 +3.26%