A month has gone by since the last earnings report for RenaissanceRe (RNR - Free Report) . Shares have added about 6.5% 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 catalysts.
RenaissanceRe Holdings’s Q3 Earnings Beat
RenaissanceRe Holdings Ltd.’s third-quarter 2018 operating earnings per share of 52 cents beat the Zacks Consensus Estimate by a whopping 420%. Moreover, the bottom line even rebounded from its year-ago loss of $13.74. The upside was backed by positive net and operating income.
The quarter under review witnessed many large catastrophic events, positive net and operating income, along with growth in tangible book value per share along with other accumulated dividends.
Quarterly Operational Update
RenaissanceRe’s third-quarter operating revenues of $613 million beat the Zacks Consensus Estimate by 0.6%. The topline even improved 3.7% year over year driven by higher net investment income.
Gross premiums written decreased 2.3% year over year to $626 million, due to lower premiums in the Property segments. However, the reduction was partially offset by the increase in premiums in the Casualty and Specialty segment.
Net investment income is $80.6 million for the reported quarter, skyrocketing 100.5% year over year.
RenaissanceRe’s total expenses were $579.4 million, down 57.3% year over year due to lower net claims and claim expenses.
Underwriting loss of $29 million was narrower than the year-ago quarter’s loss of $793.2 million.
Combined ratio was 105.5% for the third quarter, compared to the year-ago quarter’s result of 244.8%.
Quarterly Segment Update
Gross premiums written were $301.4 million, down 7.4% year over year, led by a decrease in premium written in catastrophe class of business.
Underwriting loss of $43.9 million due to catastrophe events that occurred in the third quarter, compared favorably with the underwriting loss of $750.2 million in the year-ago quarter. Combined ratio of 115% improved from 322.7% in the year-ago quarter.
Casualty and Specialty Segment
Gross premiums written were $324.3 million, up 3% from the prior-year quarter, driven by continued and selective growth from new business opportunities within a few classes of business.
Underwriting income of $14.9 decreased by 65.4% from the year ago quarter’s income of $43.1 million.
Combined ratio of 93.8% declined from 120.4% by 2660 basis points in the third quarter of 2017. This upside was particularly driven by a 23.5% decrease in the net claims and claim expense ratio as a result of significant net claims and claim expenses from 2017’s third quarter Large Loss Events.
As of Sep 30, 2018, total assets of RenaissanceRe were $17 billion, up 13% from 2017-end level.
The company had total debt of $990 million as of Sep 30 2018, up 0.1% from the 2017-end level.
Cash and cash equivalents were $453 million, down by 66.7% from 2017 end.
Book Value per share is $105.21 improved by 0.6% year-over-year.
Return on equity for the quarter is 3.1%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -80.22% due to these changes.
At this time, RenaissanceRe has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, RenaissanceRe has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.