A month has gone by since the last earnings report for RenaissanceRe (RNR Quick QuoteRNR - Free Report) . Shares have added about 30.6% 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 its most recent earnings report in order to get a better handle on the important drivers.

RenaissanceRe's Q1 Earnings Miss Estimates, Drop Y/Y

RenaissanceRe delivered first-quarter 2020 operating earnings per share of 76 cents, missing the Zacks Consensus Estimate of $3.87 by 80.4% due to the COVID-19 effect. Moreover, the bottom line plunged 78.8% year over year.

Quarterly Operational Update

Total revenues of $896 million improved 11% year over year on the back of higher gross premium written and solid net investment income.

Gross premiums written increased 29.5% year over year to $2 billion owing to higher premiums at the Property as well as the Casualty and Specialty segments.

Net investment income of $99.4 million rose 21.2% year over year.

RenaissanceRe’s total expenses of $880 million escalated 97.1% year over year, primarily due to steep net claims and claim expenses, acquisition costs and operational expenses.

Underwriting income of $64.1 million slumped 58.4% year over year. The company’s underwriting results were negatively impacted by an underwriting loss at the Casualty and Specialty segment.

Combined ratio of 93% in the first quarter compared with the year-ago quarter’s 72%.

Quarterly Segment Update

Property Segment

Gross premiums written were $1.2 billion, up 18.2% year over year in the first quarter.

Underwriting income of $147.1 million was down 3.5% year over year due to higher current accident year net claims and claim expenses and a greater number of small insured catastrophe events.

Combined ratio of 65.1% expanded 1750 basis points (bps) year over year.

Casualty and Specialty Segment

Gross premiums written of $805.2 million were up 51.4% from the prior-year quarter. This upside is driven by the buyouts in connection with TMR Group Entities and growth in the current and new business opportunities within a few classes of business.

The segment’s underwriting loss of $83.2 million was against the year-ago quarter’s underwriting gain of $1.7 million.

Combined ratio of 116.9% expanded 1760 bps year over year.

Share Repurchase Update

RenaissanceRe bought back shares worth $62.6 million in the quarter under review.

Business Update

The company successfully closed the buyout of Tokio Millennium Re AG (now known as RenaissanceRe Europe AG) and Tokio Millennium Re (UK) Limited in March.

Financial Position

As of Mar 31, 2020, total assets of RenaissanceRe were $27.4 billion, up 4.3% from the level at 2019 end.

The company had total debt of $1.1 billion as of Mar 31, 2020, down 18% from the level at 2019 end.

Cash and cash equivalents were $896.2 million, down 35% from the figure at 2019 end.

Book value per share of $117.15 decreased 2.8% from the number at 2019 end.

Annualized operating return on equity for the quarter under review was 2.6%.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, RenaissanceRe has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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.