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RenaissanceRe (RNR) Q4 Earnings Beat on Solid Investment Income
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RenaissanceRe Holdings Ltd. (RNR - Free Report) reported fourth-quarter 2023 operating income of $11.77 per share, which beat the Zacks Consensus Estimate by 44.8%. The bottom line increased 60.6% year over year.
Total operating revenues increased 42.5% year over year to $2.6 billion in the fourth quarter. The top line outpaced the consensus mark by 19.6%.
Strong quarterly results were supported by improved underwriting, improved net investment income and solid contributions from the property segment, providing an impetus to its quarterly performance. An elevated expense level might have acted as a partial offset to its fourth-quarter results.
RenaissanceRe Holdings Ltd. Price, Consensus and EPS Surprise
Gross premiums written of $1.8 billion increased 13.7% year over year in the fourth quarter. The metric outpaced our estimate by 12.5%.
Net premiums earned improved 38.5% year over year to $2.2 billion. The figure surpassed our estimate by 35.2%.
The net investment income of RenaissanceRe amounted to $377 million, which increased 11.6% year over year in the quarter under review on the back of improved yields from its fixed maturity and short-term portfolios.
Total expenses increased 35.6% year over year to $1.8 billion due to increasedacquisition and operational expenses.
RNR reported an underwriting income of $541 million, which surged 71% year over year. The combined ratio improved 450 points (bps) year over year to 76% in the fourth quarter.
Book value per share came in at $165.2 as of Dec 31, 2023, which increased 57.9% year over year. Annualized operating return on average common equity of 33% improved 340 bps year over year.
Segmental Update
Property Segment
The segment’s gross premiums written amounted to $344.6 million, which declined 7.4% year over year in the fourth quarter due to a decline in other property partially offset by improved reinstatement premiums. However, net premiums earned improved 28.5% year over year to $884.3 million, higher than our estimate of $704.5 million.
Underwriting income of $503.6 million improved nearly one-fold year over year. The combined ratio improved 1950 bps year over year to 43.1%.
Casualty and Specialty Segment
Gross premiums written of $1.5 billion improved 20.1% year over year in the quarter under review. The metric was supported by growing other specialty class of business. Net premiums earned increased 45.9% year over year to $1.4 billion.
The segment recorded an underwriting income of $37.4 million, which deteriorated 36.8% year over year. The combined ratio of 97.3% declined 360 bps year over year.
Financial Position (as of Dec 31, 2023)
RenaissanceRe exited the fourth quarter with cash and cash equivalents of $1.9 billion from $1.2 billion at 2022-end. Total assets increased to $49 billion from $36.6 billion at 2022-end.
Debt amounted to $2 million, which increased from $1.2 billion at 2022-end.
Total shareholders’ equity of $9.5 billion rose from $5.3 billion in 2022-end.
Acquisition Update
The company completed the acquisition of Validus Re on Nov 1, 2023.
Full-Year Update
The operating income of RNR in 2023 came in at $37.54 per share, which increased more than four-fold from the 2022 figure. Net premiums earned by the Property segment rose 11.6% year over year, while the same for the Casualty and Specialty segment climbed 22.9% year over year.
Consolidated combined ratio improved 1980 bps year over year to 77.9% in 2023.
Here are some other Finance sector players that have reported fourth-quarter results so far. The bottom-line results of Synchrony Financial (SYF - Free Report) , Ally Financial Inc. (ALLY - Free Report) and State Street Corporation (STT - Free Report) beat the respective Zacks Consensus Estimate.
Synchrony Financial reported fourth-quarter 2023 adjusted EPS of $1.03, which beat the Zacks Consensus Estimate by 7.3%. However, the bottom line declined 18.3% year over year. Net interest income improved 8% year over year to $4.5 billion, beating the consensus mark by 0.3%. Other income amounted to $71 million, which surged 136.7% year over year in the fourth quarter.
Total loan receivables of SYF grew 11.4% year over year to $103 billion. Total deposits were $81.2 billion, which rose 13.1% year over year. Its purchase volume advanced 3% year over year to $49.3 billion in the fourth quarter. Interest and fees on loans of $5.3 billion improved 16.3% year over year. Net interest margin deteriorated 48 basis points year over year to 15.10%. New accounts of 6.2 million slipped 3% year over year.
Ally Financial’s fourth-quarter adjusted earnings of 45 cents per share surpassed the Zacks Consensus Estimate by a penny. However, the bottom line reflects a decline of 58.3% from the year-ago quarter. Total quarterly GAAP net revenues were $2.07 billion, down 6.1% from the prior-year quarter. However, the top line surpassed the Zacks Consensus Estimate of $1.99 billion.
Quarterly net financing revenues of ALLY were down 10.8% from the prior-year quarter to $1.49 billion. The adjusted net interest margin was 3.20%, down 48 basis points year over year. In the reported quarter, the company recorded net charge-offs of $623 million, up 59.7% from the prior-year quarter. As of Dec 31, 2023, total net finance receivables and loans amounted to $135.9 billion, down marginally from the prior-quarter end.
State Street reported fourth-quarter 2023 adjusted earnings of $2.04 per share, which surpassed the Zacks Consensus Estimate of $1.81. The bottom line, however, declined 1.4% from the prior-year quarter. Quarterly total revenues of $3.04 billion declined 3.5% year over year. However, the top line beat the Zacks Consensus Estimate of $2.94 billion.
Net interest revenues were $678 million, down 14.3% year over year. The net interest margin declined 13 basis points to 1.16%. Total fee revenues of STT were relatively stable at $2.37 billion. Provision for credit losses was $20 million, up from $10 million in the prior-year quarter. The return on common equity was 3.1% compared with 11.8% in the year-ago quarter. Assets under management were $4.13 trillion as of Dec 31, 2023, up 18.6% year over year.
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RenaissanceRe (RNR) Q4 Earnings Beat on Solid Investment Income
RenaissanceRe Holdings Ltd. (RNR - Free Report) reported fourth-quarter 2023 operating income of $11.77 per share, which beat the Zacks Consensus Estimate by 44.8%. The bottom line increased 60.6% year over year.
Total operating revenues increased 42.5% year over year to $2.6 billion in the fourth quarter. The top line outpaced the consensus mark by 19.6%.
Strong quarterly results were supported by improved underwriting, improved net investment income and solid contributions from the property segment, providing an impetus to its quarterly performance. An elevated expense level might have acted as a partial offset to its fourth-quarter results.
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 of $1.8 billion increased 13.7% year over year in the fourth quarter. The metric outpaced our estimate by 12.5%.
Net premiums earned improved 38.5% year over year to $2.2 billion. The figure surpassed our estimate by 35.2%.
The net investment income of RenaissanceRe amounted to $377 million, which increased 11.6% year over year in the quarter under review on the back of improved yields from its fixed maturity and short-term portfolios.
Total expenses increased 35.6% year over year to $1.8 billion due to increasedacquisition and operational expenses.
RNR reported an underwriting income of $541 million, which surged 71% year over year. The combined ratio improved 450 points (bps) year over year to 76% in the fourth quarter.
Book value per share came in at $165.2 as of Dec 31, 2023, which increased 57.9% year over year. Annualized operating return on average common equity of 33% improved 340 bps year over year.
Segmental Update
Property Segment
The segment’s gross premiums written amounted to $344.6 million, which declined 7.4% year over year in the fourth quarter due to a decline in other property partially offset by improved reinstatement premiums. However, net premiums earned improved 28.5% year over year to $884.3 million, higher than our estimate of $704.5 million.
Underwriting income of $503.6 million improved nearly one-fold year over year. The combined ratio improved 1950 bps year over year to 43.1%.
Casualty and Specialty Segment
Gross premiums written of $1.5 billion improved 20.1% year over year in the quarter under review. The metric was supported by growing other specialty class of business. Net premiums earned increased 45.9% year over year to $1.4 billion.
The segment recorded an underwriting income of $37.4 million, which deteriorated 36.8% year over year. The combined ratio of 97.3% declined 360 bps year over year.
Financial Position (as of Dec 31, 2023)
RenaissanceRe exited the fourth quarter with cash and cash equivalents of $1.9 billion from $1.2 billion at 2022-end. Total assets increased to $49 billion from $36.6 billion at 2022-end.
Debt amounted to $2 million, which increased from $1.2 billion at 2022-end.
Total shareholders’ equity of $9.5 billion rose from $5.3 billion in 2022-end.
Acquisition Update
The company completed the acquisition of Validus Re on Nov 1, 2023.
Full-Year Update
The operating income of RNR in 2023 came in at $37.54 per share, which increased more than four-fold from the 2022 figure. Net premiums earned by the Property segment rose 11.6% year over year, while the same for the Casualty and Specialty segment climbed 22.9% year over year.
Consolidated combined ratio improved 1980 bps year over year to 77.9% in 2023.
Zacks Rank
RenaissanceRe currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Sector Players
Here are some other Finance sector players that have reported fourth-quarter results so far. The bottom-line results of Synchrony Financial (SYF - Free Report) , Ally Financial Inc. (ALLY - Free Report) and State Street Corporation (STT - Free Report) beat the respective Zacks Consensus Estimate.
Synchrony Financial reported fourth-quarter 2023 adjusted EPS of $1.03, which beat the Zacks Consensus Estimate by 7.3%. However, the bottom line declined 18.3% year over year. Net interest income improved 8% year over year to $4.5 billion, beating the consensus mark by 0.3%. Other income amounted to $71 million, which surged 136.7% year over year in the fourth quarter.
Total loan receivables of SYF grew 11.4% year over year to $103 billion. Total deposits were $81.2 billion, which rose 13.1% year over year. Its purchase volume advanced 3% year over year to $49.3 billion in the fourth quarter. Interest and fees on loans of $5.3 billion improved 16.3% year over year. Net interest margin deteriorated 48 basis points year over year to 15.10%. New accounts of 6.2 million slipped 3% year over year.
Ally Financial’s fourth-quarter adjusted earnings of 45 cents per share surpassed the Zacks Consensus Estimate by a penny. However, the bottom line reflects a decline of 58.3% from the year-ago quarter. Total quarterly GAAP net revenues were $2.07 billion, down 6.1% from the prior-year quarter. However, the top line surpassed the Zacks Consensus Estimate of $1.99 billion.
Quarterly net financing revenues of ALLY were down 10.8% from the prior-year quarter to $1.49 billion. The adjusted net interest margin was 3.20%, down 48 basis points year over year. In the reported quarter, the company recorded net charge-offs of $623 million, up 59.7% from the prior-year quarter. As of Dec 31, 2023, total net finance receivables and loans amounted to $135.9 billion, down marginally from the prior-quarter end.
State Street reported fourth-quarter 2023 adjusted earnings of $2.04 per share, which surpassed the Zacks Consensus Estimate of $1.81. The bottom line, however, declined 1.4% from the prior-year quarter. Quarterly total revenues of $3.04 billion declined 3.5% year over year. However, the top line beat the Zacks Consensus Estimate of $2.94 billion.
Net interest revenues were $678 million, down 14.3% year over year. The net interest margin declined 13 basis points to 1.16%. Total fee revenues of STT were relatively stable at $2.37 billion. Provision for credit losses was $20 million, up from $10 million in the prior-year quarter. The return on common equity was 3.1% compared with 11.8% in the year-ago quarter. Assets under management were $4.13 trillion as of Dec 31, 2023, up 18.6% year over year.