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RenaissanceRe (RNR) Forms New JV Fontana With $475M Capital

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RenaissanceRe Holdings Ltd. (RNR - Free Report) recently created a joint venture (JV), Fontana Holdings L.P. and its subsidiaries, which is focused on casualty and specialty risk. The JV, launched with $475-million capital, targets institutional investors.

While RenaissanceRe will provide $150 million in capital, the remaining $325 million is contributed by institutional investors. The Bermuda Monetary Authority will regulate Fontana. It will be consolidated into the financial statements of RNR. The move is expected to enhance shareholder value with additional fee income.

The newly formed innovative JV has assumed a whole account quota share of the reinsurer’s global casualty and specialty book of business. It incorporates RNR’s credit portfolio and has the option of boosting the capital amount and scale in the future.

The company offers casualty and specialty reinsurance products principally on a proportional basis and provides excess of loss coverage. The segment accounted for 49.5% of the total gross premium written in 2021. Creating the new JV with added features reflects its value-generating capabilities from a strong and profitable business. Also, a steady source of fee income will generate higher shareholder value.

Price Performance

Shares of the company have declined 6.1% in the past year against a 17.9% increase of the industry it belongs to.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank & Key Picks

RenaissanceRe currently has a Zacks Rank #3 (Hold). Some better-ranked players in the Insurance - Property and Casualty space include Arch Capital Group Ltd. (ACGL - Free Report) , Berkshire Hathaway Inc. (BRK.B - Free Report) , and Palomar Holdings, Inc. (PLMR - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Based in Pembroke, Bermuda, Arch Capital has maintained a robust capital position over the years, reflecting financial flexibility. Arch Capital’s bottom line for 2022 is expected to jump 26.3% year over year to $4.52 per share. ACGL has witnessed three upward estimate revisions in the past 60 days and no movement in the opposite direction.

Headquartered in Omaha, NE, Berkshire Hathaway recently inked a deal to acquire property and casualty reinsurance company Alleghany Corporation for $11.6 billion to bolster its position in the insurance business. Berkshire Hathaway’s 2022 earnings per share are expected to rise 6.1% year over year to $12.86. BRK.B beat earnings estimates thrice in the last four quarters and missed once, with an average surprise of 11.9%.

Premiums of Palomar Holdings — headquartered in La Jolla, CA — should benefit from a solid product portfolio, geographic expansion and rate increases. The full-year 2022 bottom line of Palomar Holdings is expected to rise 43.4% year over year to $2.94 per share. In the past 60 days, it has witnessed two upward estimate revisions and no downward movement. PLMR beat earnings estimates thrice in the last four quarters and missed once.

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