A month has gone by since the last earnings report for RenaissanceRe (RNR - Free Report) . Shares have added about 10.8% 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's Q1 Earnings Beat Estimates, Up Y/Y
RenaissanceRe Holdings’ first-quarter 2019 operating earnings per share of $3.60 beat the Zacks Consensus Estimate by 12.5%. Moreover, the bottom line improved 6% year over year on the back of solid revenues.
Quarterly Operational Update
RenaissanceRe’s first-quarter operating revenues of $635 million surpassed the Zacks Consensus Estimate by 9.1%. The top line even soared 53% year over year, driven by higher gross premiums written and net investment income.
Gross premiums written surged 34.9% year over year on the back of Property segment as well as Casualty and Specialty segment.
Net investment income is $81.5 million for the reported quarter, rising 44.2% year over year.
RenaissanceRe’s total expenses were $446.5 million, up 36% year over year due to higher net claims and claim expenses, corporate expenses as well as acquisition expenses.
Underwriting income of $154.1 million was up nearly 19% year over year on the back of solid segmental results.
Combined ratio was 72% in the first quarter compared with the year-ago quarter’s tally of 70.6%.
Quarterly Segment Update
Gross premiums written were $1 billion, up 46% year over year.
Underwriting income of $152.4 million was up 20% year over year because of lower current accident-year net claims along with claim expenses and less number of insured catastrophe events. Combined ratio of 47.6% expanded 410 bps year over year.
Casualty and Specialty Segment
Gross premiums written were $531.9 million, up 17.5% from the prior-year quarter, driven by steady growth in new and current business.
Underwriting income of $1.7 million plunged 65.4% from the year-earlier quarter’s income.
Combined ratio of 99.3% deteriorated 50 basis points in the first quarter of 2019.
In the first quarter of 2019, the company’swholly owned subsidiary, RenaissanceRe Specialty Holdings, closed its buyouts of Tokio Millennium Re AG, Tokio Millennium Re (UK) Limited and their units.
As of Mar 31, 2019, total assets of RenaissanceRe were $24.6 billion, up 31.5% from the level as of 2018 end.
The company had total debt of $1991 million as of Mar 31, 2019, up 20.2% from the 2018-end level.
Cash and cash equivalents were $1021 million, down 7.8% from the figure at 2018 end.
Book value per share was $111.05, up 6.6% year over year.
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 11.1% due to these changes.
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. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise RenaissanceRe has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.