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RenaissanceRe Up 44.5% in a Year: Further Upside Left?

Zacks Equity Research

RenaissanceRe Holdings Ltd. RNR has been favored by investors on the back of revenue growth and inorganic strategies.

Shares of the Zacks Rank #3 (Hold) company have surged 44.5% in a year’s time, outperforming the industry’s growth of 5.7%. Increasing premiums and inorganic growth story should continue to drive the stock going forward.

The company’s return on equity — a profitability measure — came in at 8.2%, higher than the industry's average of 6.9%.

Is the Bull Run Likely to Continue?

This reinsurance and insurance products provider has a decent record of delivering positive earnings surprises in three of the last four quarters, the average beat being 23.3%.

The company has been witnessing stable gross premiums written growth over the past few years. Premiums surged nearly 41.2% in the first nine months of 2019 on the back of solid segmental contributions. The constant increase in premiums is likely to drive the top line further.

The company’s solid inorganic growth profile also impresses. It has been undertaking measures to streamline its operations. Meanwhile, it is also acquiring and expanding businesses, which provide scope for growth. In March 2019, the company bought Tokio Millennium Re for $1.5 billion to increase its scale and boost portfolio.

RenaissanceRe has been witnessing growing free cash flow over the past few years. In the first nine months of 2019, cash flow from operations was up 42.3% year over year. The company has also been deploying excess capital to business over the last several quarters. It has been raising dividend since the past many years. In February 2019, the company again increased its payout by 3.1%, which should buoy investor’s confidence in the stock. We believe, the company’s financial strength will continue to retain investors’ faith.

Stocks to Consider

Investors interested in the insurance industry can check out some better-ranked stocks like RLI Corp. RLI, First American Financial Corporation FAF and NMI Holdings Inc NMIH. You can see the complete list of today’s Zacks #1 Rank stocks here.

RLI Corporation underwrites property and casualty insurance in the United States and around the globe. The company delivered a positive surprise of 154.9% in the last reported quarter. It sports a Zacks Rank #1 (Strong Buy).

First American Financial provides financial services and issues title insurance policies. The company came up with a positive surprise of 12.2% in the last reported quarter. It is a Zacks #1 Ranked player.

NMI Holdings provides private mortgage guaranty insurance services. The company has a Zacks Rank of 1 and average four-quarter beat of 8.4%.

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RenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis Report
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