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RenaissanceRe (RNR) Down 2% Since Q1 Earnings Miss on High Costs

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Shares of RenaissanceRe Holdings Ltd. (RNR - Free Report) have slid 2% since it reported weaker-than-expected March-quarter results on May 3. Increased expenses and lower gross premiums at the Property business affected the results. The ongoing Russia-Ukraine conflict can further erode its bottom line in the coming days. However, the negatives were partially offset by higher gross premiums at the Casualty and Specialty segment and a lower combined ratio reflecting improving business.

Q1 Results

RenaissanceRe reported first-quarter 2022 operating earnings per share of $3.50, which missed the Zacks Consensus Estimate of $4.63. However, the bottom line increased from 9 cents per share a year ago.

Total operating revenues of $1,571.3 million increased from $1,236 million a year ago. However, the top line missed the consensus mark of $1,587 million.

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 Operational Update

Gross premiums written increased to $2,943 million in the first quarter from $2,652.4 million a year ago, courtesy of increased premiums at the Casualty and Specialty segment. Net investment income rose to $83.7 million in the quarter under review from $79.8 million a year-ago.

Total expenses of RenaissanceRe increased to $1,310.6 million from the year-ago level of $1,211.9 million owing to higher operational, corporate and acquisition expenses, partially offset by lower net claims and claim expenses incurred.

In the reported quarter, RNR delivered an underwriting income of $200.3 million against the year-ago quarter's underwriting loss of $35.8 million. Combined ratio contracted 1,660 basis points (bps) year over year to 86.5% in the first quarter.

Quarterly Segment Update

Property Segment

Gross premiums written declined 16.9% year over year to $1,343.5 million due to a significant reduction in Upsilon RFO, lower impact assumed reinstatement premiums and a planned non-renewal of some deals.

The segment delivered an underwriting income of $184.8 million against the year-ago quarter’s loss of $41.8 million. Combined ratio contracted 3,680 bps year over year to 70.1%.

Casualty and Specialty Segment

Gross premiums written soared 54.4% year over year to $1,599.5 million in the quarter under review. The improvement can be attributed to a hike in professional liability, rate increases and growth in new and existing business written, general casualty and other specialty lines of business.

The segment’s underwriting income was $15.5 million compared with the year-ago quarter’s income of $6 million. Combined ratio contracted 70 bps year over year to 98.2%.

Financial Position (as of Mar 31, 2022)

RenaissanceRe exited the first quarter with cash and cash equivalents of $1,563.1 million, which decreased from the 2021-end level of $1,859 million. Total assets of $34.8 billion increased from $34 billion as of Dec 31, 2021.

RNR’s debt amounted to $1,168.9 million, which rose from $1,168.4 million at 2021 end.

Book value per share amounted to $121.44, which declined from $131.15 a year ago.

Annualized operating return on average common equity was 10.8% in the quarter under review.

Share Repurchase Update

In the first quarter, RenaissanceRe bought back shares worth $93.4 million.

Similar to currently Zacks Rank #3 (Hold) RenaissanceRe, another player from the Insurance - Property and Casualty space, The Allstate Corporation (ALL - Free Report) , missed on earnings in the first quarter due to surging operating expenses. Also, increased inflation affected ALL’s profits in the quarter under review. Management plans to fight inflation by changing its investment allocations, lowering costs and raising prices. It is to be seen what measures RNR take to lower its expenses.

Companies Expected to Beat Estimates

Following are some companies worth considering from the Finance space with the right combination of elements to beat on earnings this season:

Hamilton Lane Incorporated (HLNE - Free Report) currently has an Earnings ESP of +0.89% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hamilton Lane’s earnings beat estimates in each of the last four quarters, the average being 31%.

Banco Santander-Brazil (BSBR - Free Report) has an Earnings ESP of +1.54% and a Zacks Rank #2 (Buy), presently.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for Banco Santander-Brazil’s bottom line for the to-be-reported quarter indicates a 144.4% rise from the year-ago quarter’s actuals.

BSBR’s earnings have witnessed one upward estimate revision in the past 30 days against none in the opposite direction.