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Will Higher Cat Loss Limit RenaissanceRe's (RNR) Growth?
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On Sep 9, 2016, we issued an updated research report on RenaissanceRe Holdings Ltd. (RNR - Free Report) .
RenaissanceRe is a globally renowned Property and Casualty insurer. However, the company’s bottom line has been weak since 2008 due to its exposure to substantial losses associated with several catastrophic events worldwide. The continuous plunge in underwriting income and deteriorating combined ratio also impacted its underwriting results adversely. The last reported quarter was no exception to the trend, wherein the company reported cat loss of $41 million from weather events in Texas and the Fort McMurray wildfires in Canada.
Moreover, in this face of sustained catastrophic events, the pricing pressure caused by the overflow of alternative capital and increased retentions of primary companies have put pressure on the profit margin of the company’s catastrophe reinsurance business. In fact, the company suffered severely in the initial quarters of 2016 due to continuous reduction in gross premium written in the particular segment. Based on the current market conditions, the company now expects 10% deterioration in its managed catastrophe business for full-year 2016.
Nevertheless, the Zacks Rank #4 (Sell) insurer’s relentless efforts and several inorganic growth strategies to establish its presence across the globe has started to bear fruit. Also, the company remains committed to creating shareholders’ value and hence, engages in effective capital deployment through share repurchases and dividend payments. In addition, divesture of risky and non-performing businesses and frequent reframing of its product portfolio have helped it retain its market position over the years.
The recent reiteration of issuer credit ratings of “a-” and all issue ratings by rating giant A.M Best also reflects the company’s level of risk-adjusted capitalization, its strong management team and potential to deliver long-term profitability.
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Will Higher Cat Loss Limit RenaissanceRe's (RNR) Growth?
On Sep 9, 2016, we issued an updated research report on RenaissanceRe Holdings Ltd. (RNR - Free Report) .
RenaissanceRe is a globally renowned Property and Casualty insurer. However, the company’s bottom line has been weak since 2008 due to its exposure to substantial losses associated with several catastrophic events worldwide. The continuous plunge in underwriting income and deteriorating combined ratio also impacted its underwriting results adversely. The last reported quarter was no exception to the trend, wherein the company reported cat loss of $41 million from weather events in Texas and the Fort McMurray wildfires in Canada.
Moreover, in this face of sustained catastrophic events, the pricing pressure caused by the overflow of alternative capital and increased retentions of primary companies have put pressure on the profit margin of the company’s catastrophe reinsurance business. In fact, the company suffered severely in the initial quarters of 2016 due to continuous reduction in gross premium written in the particular segment. Based on the current market conditions, the company now expects 10% deterioration in its managed catastrophe business for full-year 2016.
Nevertheless, the Zacks Rank #4 (Sell) insurer’s relentless efforts and several inorganic growth strategies to establish its presence across the globe has started to bear fruit. Also, the company remains committed to creating shareholders’ value and hence, engages in effective capital deployment through share repurchases and dividend payments. In addition, divesture of risky and non-performing businesses and frequent reframing of its product portfolio have helped it retain its market position over the years.
The recent reiteration of issuer credit ratings of “a-” and all issue ratings by rating giant A.M Best also reflects the company’s level of risk-adjusted capitalization, its strong management team and potential to deliver long-term profitability.
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Stocks to Consider
Some better-ranked stocks from the same space include Allied World Assurance Company Holdings, AG (AWH - Free Report) , National Interstate Corporation (NATL - Free Report) and NMI Holdings Inc (NMIH - Free Report) . All of the stocks sport Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>