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We have retained our Neutral recommendation on ReneissanceRe Holdings Ltd. (RNR - Analyst Report) as declining investment income, high competition and losses from Super Storm Sandy will likely weigh on the positives. The insurance and reinsurance provider currently carries a Zacks Rank #3 (Hold).

 Why Reiterate?
Over the last 30 days two of 14 estimates moved downwards, keeping the Zacks Consensus Estimate for the fourth quarter at 37 cents, translating into a year-over-year decline of nearly 66.4%.

The investment portfolio of RenaissanceRe is exposed to the weak credit and capital markets. While the company’s portfolio is strong, it is nevertheless vulnerable to the present volatile interest rate environment. Moreover, although the company experienced decline in natural disasters through the first nine months of 2012, the occurrence of Hurricane Sandy in Oct 2012 is estimated to invite losses worth $130 million in the fourth quarter of 2012 and thus weigh on underwriting margins.

Counting on the positives, ReneissanceRe’s declining total expenses, sturdy investment results and lack of any major catastrophe events in the third quarter helped it to post improved operating earnings. Premiums also grew at its Special and Lloyd’s unit along with additional premiums from its new reinsurance subsidiary — Timicuan Reinsurance III Limited. This, coupled with lower share count, buoyed the bottom line.

ReneissanceRe continues to increase shareholders’ value. The Board in Nov 2012 increased its share buyback program to $500 million. It repurchased 3.6 million shares for $271.9 million in the first nine months of 2012, with $459.6 million remaining under its authorization. The company also strongly scores with the credit rating agencies.

ReneissanceRe is scheduled to release its fourth quarter and full year 2012 on Feb 6, after the closing bell.   

Other Stocks to Consider
Among others from the industry, Cincinnati Financial Corporation (CINF - Analyst Report), RLI Corp. (RLI - Analyst Report) and First American Financial Corporation (FAF - Snapshot Report) carry Zacks Rank #1 (Strong Buy) and are worth considering.

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