RenaissanceRe Outshines in 2019: Will the Rally Continue?
RenaissanceRe Holdings Ltd. RNR has been performing well on solid segmental contributions and balance sheet flexibility.
In a year, the company, with a Zacks Rank #2 (Buy), has gained 52.8%, outperforming its industry’s growth of 18.6%. This looks better when compared to the performance of its peers such as Everest Re Group, Ltd. RE, Axis Capital Holdings Limited AXS and Argo Group International Holdings, Ltd. ARGO, which have gained 29.6% and 16.4%, and lost 2.5%, respectively, over the same time frame.
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RenaissanceRe’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with a positive surprise of 23.3%, on average.
Solid 2019 Performance
The company has been witnessing a positive trend in gross premiums written, which has doubled over five years, driven by strength in its Casualty and Specialty, and Property segments. Premiums further rose 41.2% in the first nine months of 2019, with the Casualty and Specialty segment contributing 44% of the total premiums, and the Property segment contributing 56%.
The company has been undertaking divestitures to streamline its operations by getting rid of low-return, high-risk businesses. It is also acquiring and expanding businesses, which provide scope to grow. In March 2019, the company bought Tokio Millennium Re for $1.5 billion to increase the scale and boost its portfolio. The deal is expected to help RenaissanceRe further penetrate the reinsurance market.
The company has been witnessing growing free cash flow over the past few years. In the first nine months of 2019, the same was up 42.3% year over year. The company has been deploying excess capital in business over the past several quarters. It has been raising dividends for the past many years.
Expectations for 2020
Analysts remain positive about the company’s performance in 2020. It is well-poised for growth on its initiatives and solid segmental performances.
A consistent increase in premiums is likely to drive RenaissanceRe’s top line further.
Banking on its financial strength, the company would likely continue adding shareholder value.
The Zacks Consensus Estimate for its 2020 earnings is pegged at $14.95, hinting at 68% growth from the year-earlier reported figure.
Over the past 60 days, the stock has seen its 2020 earnings estimates being revised 0.7% upward.
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Everest Re Group, Ltd. (RE) : Free Stock Analysis Report
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