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RenaissanceRe Holdings (RNR) Ups Dividend, Share Repurchase

Zacks Equity Research

The board of directors of RenaissanceRe Holdings Ltd. RNR approved a 3.2% hike in the company’s quarterly common stock dividend. The revised quarterly payout now comes in at 32 cents per share. The meatier dividend will be paid on Mar 31, 2017, to shareholders of record as of Mar 15.

This marks the 22st consecutive annual dividend raise by this reinsurer, reflecting its commitment to return value to its shareholders. Prior to this hike, the company had increased its dividend by 3.3% in Feb 2016.

Over the past year, the company outperformed the broader industry. While the company returned 29.23%, the Zacks categorized Insurance- Property and Casualty Title industry gained 26%. The outperformance is reflective of the company’s disciplined underwriting and a niche position in the property catastrophe reinsurance market.

Considering the last day’s closing price of $146.28 per share, the dividend yield is 0.88%, a lot below the industry yield of 3.67%.

Alongside, the company’s share repurchase program was expanded, bringing the total current authorization to $500 million. The company did not repurchase any share in the last reported quarter.

The consistent increase in dividend year after year reflects the company’s commitment toward rewarding its shareholders irrespective of the operating environment.

The recent dividend hike is supported by the company’s strong capital position with modest leverage and efficient access to capital through multiple sources.

During the recently-reported quarter, the company came up with better-than-expected earnings. The quarter’s results benefitted from higher reserve releases, lower catastrophe loss from the hurricane Matthew, and a modest tax benefit.

RenaissanceRe carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the insurance space are Everest Re Group, Ltd. RE, The Progressive Corp. PGR and American Financial Group Inc. AFG. Each of these stocks sport a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Everest Re posted a positive earnings surprise of 121.86% in the fourth quarter. It beat earnings estimates in three out of the last four reported quarters with an average positive surprise of 44%.

American Financial Group posted a positive earnings surprise of 22.2% in the fourth quarter. It beat earnings estimates in three out of the last four reported quarters, with the average being 6.45%.

The Progressive Corp. posted a positive earnings surprise of 22% in the fourth quarter. It beat earnings estimates in two out of the last four reported quarters with an average beat of 1.32%.


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