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Why Is RenaissanceRe (RNR) Down 12.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for RenaissanceRe (RNR - Free Report) . Shares have lost about 12.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is RenaissanceRe due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
RenaissanceRe Q1 Earnings Beat on Solid Property Segment
RenaissanceRe reported first-quarter 2023 operating income of $8.16 per share, which beat the Zacks Consensus Estimate by 11.2%. The bottom line more than doubled year over year.
Total operating revenues increased 22.9% year over year to $1,931 million in the quarter under review. The top line outpaced the consensus mark by 1.4%.
Despite reporting better-than-expected results, its shares have declined 6.6% since it released first-quarter earnings on May 2. An elevated expense level might have acted as a partial offset to its quarterly results. Nevertheless, strong underwriting results, improved net investment income, higher Capital Partners fees and solid contributions from segments provided an impetus to its quarterly performance.
Quarterly Operational Update
Gross premiums written of $2,790.3 million fell 5.2% year over year in the first quarter.
Net premiums earned improved 13.1% year over year to $1,680.6 million. The figure surpassed the Zacks Consensus Estimate of $1,667 million.
The net investment income of RenaissanceRe amounted to $254.4 million, which increased more than three-fold year over year in the quarter under review on the back of improved yields from its fixed maturity and short-term portfolios. The reported figure surpassed the consensus mark of $202 million.
Total expenses increased 1.9% year over year to $1,335.9 million due to increased acquisition and operational expenses.
RNR reported an underwriting income of $369.6 million, which soared 84.6% year over year. The combined ratio improved 850 points (bps) year over year to 78% in the first quarter.
Book value per share came in at $116.44 as of Mar 31, 2023, which declined 4.1% year over year. Annualized operating return on average common equity of 29.7% improved 1,890 bps year over year.
Segmental Update
Property Segment
The segment’s gross premiums written amounted to $1,304.2 million, which declined 2.9% year over year in the first quarter due to softness in other property classes of business. Net premiums earned improved 11.1% year over year to $687.4 million, higher than the Zacks Consensus Estimate of $677 million and our estimate of $677.4 million.
Underwriting income of $298.7 million surged 61.6% year over year. The combined ratio improved 1,350 bps year over year to 56.6%.
Casualty and Specialty Segment
Gross premiums written of $1,486.1 million tumbled 7.1% year over year in the quarter under review. The metric was hurt by weakness in casualty classes of business. Net premiums earned increased 14.4% year over year to $993.1 million, higher than the consensus mark of $981 million.
The segment recorded an underwriting income of $70.9 million, which increased nearly five-fold year over year. The combined ratio of 92.9% improved 530 bps year over year.
Financial Position (as of Mar 31, 2023)
RenaissanceRe exited the first quarter with cash and cash equivalents of $1,063.7 million, which decreased 10.9% from the figure at 2022 end. Total assets of $38,270.3 million increased 4.7% from the 2022-end level.
Debt amounted to $1,141 million, which slipped 2.5% from the figure as of Dec 31, 2022.
Total shareholders’ equity of $5,865.5 million rose 10.1% from the 2022-end level.
In the reported quarter, net cash provided by operating activities of $435.7 million increased nearly three-fold year over year.
Capital-Deployment Update
RenaissanceRe did not buy back shares in the first quarter. It had a leftover buyback capacity of $500 million as of Mar 31, 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
Currently, RenaissanceRe has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. 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
RenaissanceRe has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is RenaissanceRe (RNR) Down 12.2% Since Last Earnings Report?
A month has gone by since the last earnings report for RenaissanceRe (RNR - Free Report) . Shares have lost about 12.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is RenaissanceRe due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
RenaissanceRe Q1 Earnings Beat on Solid Property Segment
RenaissanceRe reported first-quarter 2023 operating income of $8.16 per share, which beat the Zacks Consensus Estimate by 11.2%. The bottom line more than doubled year over year.
Total operating revenues increased 22.9% year over year to $1,931 million in the quarter under review. The top line outpaced the consensus mark by 1.4%.
Despite reporting better-than-expected results, its shares have declined 6.6% since it released first-quarter earnings on May 2. An elevated expense level might have acted as a partial offset to its quarterly results. Nevertheless, strong underwriting results, improved net investment income, higher Capital Partners fees and solid contributions from segments provided an impetus to its quarterly performance.
Quarterly Operational Update
Gross premiums written of $2,790.3 million fell 5.2% year over year in the first quarter.
Net premiums earned improved 13.1% year over year to $1,680.6 million. The figure surpassed the Zacks Consensus Estimate of $1,667 million.
The net investment income of RenaissanceRe amounted to $254.4 million, which increased more than three-fold year over year in the quarter under review on the back of improved yields from its fixed maturity and short-term portfolios. The reported figure surpassed the consensus mark of $202 million.
Total expenses increased 1.9% year over year to $1,335.9 million due to increased acquisition and operational expenses.
RNR reported an underwriting income of $369.6 million, which soared 84.6% year over year. The combined ratio improved 850 points (bps) year over year to 78% in the first quarter.
Book value per share came in at $116.44 as of Mar 31, 2023, which declined 4.1% year over year. Annualized operating return on average common equity of 29.7% improved 1,890 bps year over year.
Segmental Update
Property Segment
The segment’s gross premiums written amounted to $1,304.2 million, which declined 2.9% year over year in the first quarter due to softness in other property classes of business. Net premiums earned improved 11.1% year over year to $687.4 million, higher than the Zacks Consensus Estimate of $677 million and our estimate of $677.4 million.
Underwriting income of $298.7 million surged 61.6% year over year. The combined ratio improved 1,350 bps year over year to 56.6%.
Casualty and Specialty Segment
Gross premiums written of $1,486.1 million tumbled 7.1% year over year in the quarter under review. The metric was hurt by weakness in casualty classes of business. Net premiums earned increased 14.4% year over year to $993.1 million, higher than the consensus mark of $981 million.
The segment recorded an underwriting income of $70.9 million, which increased nearly five-fold year over year. The combined ratio of 92.9% improved 530 bps year over year.
Financial Position (as of Mar 31, 2023)
RenaissanceRe exited the first quarter with cash and cash equivalents of $1,063.7 million, which decreased 10.9% from the figure at 2022 end. Total assets of $38,270.3 million increased 4.7% from the 2022-end level.
Debt amounted to $1,141 million, which slipped 2.5% from the figure as of Dec 31, 2022.
Total shareholders’ equity of $5,865.5 million rose 10.1% from the 2022-end level.
In the reported quarter, net cash provided by operating activities of $435.7 million increased nearly three-fold year over year.
Capital-Deployment Update
RenaissanceRe did not buy back shares in the first quarter. It had a leftover buyback capacity of $500 million as of Mar 31, 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
Currently, RenaissanceRe has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. 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
RenaissanceRe has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.