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RenaissanceRe (RNR) Up 3.7% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for RenaissanceRe (RNR - Free Report) . Shares have added about 3.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is RenaissanceRe due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
RenaissanceRe's Q4 Earnings Beat, Revenues Up Y/Y
RenaissanceRe reported a fourth-quarter 2022 operating income of $7.33 per share, which outpaced the Zacks Consensus Estimate by 11.4%. The bottom line soared 55.6% year over year.
The strong results stemmed from solid underwriting results, robust growth in net investment income and sound management fees.
Total operating revenues of $1,843 million advanced 29.1% year over year. The top line beat the consensus mark by 1.4%.
Quarterly Operational Update
Gross premiums written of RenaissanceRe improved 20.7% year over year to $1,585.3 million in the quarter under review.
Net premiums earned of $1,624.2 million climbed 21.1% year over year.
RNR’s net investment income increased nearly three-fold year over year to $211.2 million in the fourth quarter. The substantial rise in the metric came on the back of an improving interest rate scenario coupled with higher returns from fixed maturity trading and short-term investment portfolios as well as catastrophe bonds.
Total expenses of $1,331.8 million escalated 22.5% year over year in the quarter under review due to higher net claims and claim expenses incurred as well as acquisition and operational expenses.
enaissanceRe reported an underwriting income of $316.3 million, which rose 14.3% year over year. However, the combined ratio of 80.5% deteriorated 110 points (bps) year over year in the fourth quarter.
Book value per share came in at $104.65 as of Dec 31, 2022, which fell 20.8% year over year. Annualized operating return on average common equity improved 1,520 bps year over year to 29.6% in the quarter under review.
Segment Update
Property Segment
Gross premiums written amounted to $372.1 million, which slipped 3.3% year over year due to reduced reinstatement premiums. Net premiums earned of $688.2 million rose 9.9% year over year in the fourth quarter, which outpaced the consensus mark of $555 million and our estimate of $555.5 million.
The segment recorded an underwriting income of $257.2 million, up 15.3% year over year. The combined ratio improved 180 bps year over year to 62.6%, which is placed better than the Zacks Consensus Estimate of 98% and our estimate of 88.3%.
Casualty and Specialty Segment
Gross premiums written advanced 30.7% year over year to $1,213.2 million in the quarter under review due to continued rate increases and new business generation. Net premiums earned amounted to $935.9 million, which climbed 30.9% year over year but came lower than the consensus mark of $981 million and our estimate of $950.4 million.
The segment’s underwriting income of $59.1 million improved 10.3% year over year. The combined ratio of 93.7% deteriorated 120 bps year over year, which matches the consensus mark and is placed better than our estimate of 93.7%.
Financial Position (as of Dec 31, 2022)
RenaissanceRe exited the fourth quarter with cash and cash equivalents of $1,194.3 million, which increased 35.8% from the 2021-end level. Total assets of $36,552.9 million increased 7.6% from the figure in 2021 end.
Debt amounted to $1,170.4 million, up 0.2% from the figure as of Dec 31, 2022.
Total shareholders’ equity of $5,325.3 million dropped 19.6% from the 2021-end level.
Capital Deployment Update
RenaissanceRe did not buy back shares in the fourth quarter. It had $500 million in its share buyback program as of Dec 31, 2022.
Full-Year Update
The operating income of RNR in 2022 came in at $7.30 per share, which increased more than four-fold from the 2021 figure. Net premiums earned by the Property segment rose 6.2% year over year, while the same for the Casualty and Specialty segment climbed 37.8% year over year.
Consolidated combined ratio improved 440 bps year over year to 97.7% in 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 10.88% due to these changes.
VGM Scores
At this time, RenaissanceRe has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise RenaissanceRe has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
RenaissanceRe belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Progressive (PGR - Free Report) , has gained 3.1% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Progressive reported revenues of $13.54 billion in the last reported quarter, representing a year-over-year change of +12.2%. EPS of $1.50 for the same period compares with $1.05 a year ago.
Progressive is expected to post earnings of $1.62 per share for the current quarter, representing a year-over-year change of +44.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -7.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Progressive. Also, the stock has a VGM Score of A.
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RenaissanceRe (RNR) Up 3.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for RenaissanceRe (RNR - Free Report) . Shares have added about 3.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is RenaissanceRe due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
RenaissanceRe's Q4 Earnings Beat, Revenues Up Y/Y
RenaissanceRe reported a fourth-quarter 2022 operating income of $7.33 per share, which outpaced the Zacks Consensus Estimate by 11.4%. The bottom line soared 55.6% year over year.
The strong results stemmed from solid underwriting results, robust growth in net investment income and sound management fees.
Total operating revenues of $1,843 million advanced 29.1% year over year. The top line beat the consensus mark by 1.4%.
Quarterly Operational Update
Gross premiums written of RenaissanceRe improved 20.7% year over year to $1,585.3 million in the quarter under review.
Net premiums earned of $1,624.2 million climbed 21.1% year over year.
RNR’s net investment income increased nearly three-fold year over year to $211.2 million in the fourth quarter. The substantial rise in the metric came on the back of an improving interest rate scenario coupled with higher returns from fixed maturity trading and short-term investment portfolios as well as catastrophe bonds.
Total expenses of $1,331.8 million escalated 22.5% year over year in the quarter under review due to higher net claims and claim expenses incurred as well as acquisition and operational expenses.
enaissanceRe reported an underwriting income of $316.3 million, which rose 14.3% year over year. However, the combined ratio of 80.5% deteriorated 110 points (bps) year over year in the fourth quarter.
Book value per share came in at $104.65 as of Dec 31, 2022, which fell 20.8% year over year. Annualized operating return on average common equity improved 1,520 bps year over year to 29.6% in the quarter under review.
Segment Update
Property Segment
Gross premiums written amounted to $372.1 million, which slipped 3.3% year over year due to reduced reinstatement premiums. Net premiums earned of $688.2 million rose 9.9% year over year in the fourth quarter, which outpaced the consensus mark of $555 million and our estimate of $555.5 million.
The segment recorded an underwriting income of $257.2 million, up 15.3% year over year. The combined ratio improved 180 bps year over year to 62.6%, which is placed better than the Zacks Consensus Estimate of 98% and our estimate of 88.3%.
Casualty and Specialty Segment
Gross premiums written advanced 30.7% year over year to $1,213.2 million in the quarter under review due to continued rate increases and new business generation. Net premiums earned amounted to $935.9 million, which climbed 30.9% year over year but came lower than the consensus mark of $981 million and our estimate of $950.4 million.
The segment’s underwriting income of $59.1 million improved 10.3% year over year. The combined ratio of 93.7% deteriorated 120 bps year over year, which matches the consensus mark and is placed better than our estimate of 93.7%.
Financial Position (as of Dec 31, 2022)
RenaissanceRe exited the fourth quarter with cash and cash equivalents of $1,194.3 million, which increased 35.8% from the 2021-end level. Total assets of $36,552.9 million increased 7.6% from the figure in 2021 end.
Debt amounted to $1,170.4 million, up 0.2% from the figure as of Dec 31, 2022.
Total shareholders’ equity of $5,325.3 million dropped 19.6% from the 2021-end level.
Capital Deployment Update
RenaissanceRe did not buy back shares in the fourth quarter. It had $500 million in its share buyback program as of Dec 31, 2022.
Full-Year Update
The operating income of RNR in 2022 came in at $7.30 per share, which increased more than four-fold from the 2021 figure. Net premiums earned by the Property segment rose 6.2% year over year, while the same for the Casualty and Specialty segment climbed 37.8% year over year.
Consolidated combined ratio improved 440 bps year over year to 97.7% in 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 10.88% due to these changes.
VGM Scores
At this time, RenaissanceRe has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise RenaissanceRe has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
RenaissanceRe belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Progressive (PGR - Free Report) , has gained 3.1% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Progressive reported revenues of $13.54 billion in the last reported quarter, representing a year-over-year change of +12.2%. EPS of $1.50 for the same period compares with $1.05 a year ago.
Progressive is expected to post earnings of $1.62 per share for the current quarter, representing a year-over-year change of +44.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -7.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Progressive. Also, the stock has a VGM Score of A.