RenaissanceRe (RNR) Q2 Earnings Beat on Solid Investment Income
RenaissanceRe Holdings Ltd. RNR reported second-quarter 2023 operating income of $8.79 per share, which beat the Zacks Consensus Estimate by 16%. The bottom line increased 59.5% year over year.
Total operating revenues increased 33.3% year over year to $2,081.8 million in the second quarter. The top line outpaced the consensus mark by 5.6%.
Strong underwriting results, improved net investment income, higher Capital Partners fees and solid contributions from segments provided an impetus to its quarterly performance. An elevated expense level might have acted as a partial offset to its second-quarter results.
RenaissanceRe Holdings Ltd. Price, Consensus and EPS Surprise
RenaissanceRe Holdings Ltd. price-consensus-eps-surprise-chart | RenaissanceRe Holdings Ltd. Quote
Quarterly Operational Update
Gross premiums written of $2,651.6 million increased 7.6% year over year in the second quarter. The metric outpaced our estimate by 1.1%.
Net premiums earned improved 22.6% year over year to $1,785.3 million. The figure surpassed our estimate by 9.7%
The net investment income of RenaissanceRe amounted to $292.7 million, which increased more than 1.5 times year over year in the quarter under review on the back of improved yields from its fixed maturity and short-term portfolios.
Total expenses increased 26.5% year over year to $1,472.5 million due to increased acquisition and operational expenses.
RNR reported an underwriting income of $351 million, which increased 10.9% year over year. The combined ratio deteriorated 200 points (bps) year over year to 80.3% in the second quarter.
Book value per share came in at $129.98 as of Jun 30, 2023, which increased 14.3% year over year. Annualized operating return on average common equity of 28.8% improved 1,040 bps year over year.
Segmental Update
Property Segment
The segment’s gross premiums written amounted to $1,402.6 million, which improved 15.1% year over year in the second quarter due to an increase in catastrophe class of business. Net premiums earned improved 21.7% year over year to $758.7 million, higher than our estimate of $689.3 million.
Underwriting income of $281 million improved 6.3% year over year. The combined ratio deteriorated 540 bps year over year to 63%.
Casualty and Specialty Segment
Gross premiums written of $1,249 million improved 0.2% year over year in the quarter under review. The metric was supported by growing other specialty class of business. Net premiums earned increased 23.3% year over year to $1,027 million.
The segment recorded an underwriting income of $70 million, which increased 34.8% year over year. The combined ratio of 93.2% improved 60 bps year over year.
Financial Position (as of Jun 30, 2023)
RenaissanceRe exited the second quarter with cash and cash equivalents of $943.9 million, which decreased 26.5% from 2022-end. Total assets of $41,399.9 million increased 13.1% from 2022-end.
Debt amounted to $1,882 million, which increased 60.7% from December 2022-end.
Total shareholders’ equity of $7,402.8 million rose 39% from the 2022-end level.
Zacks Rank
RenaissanceRe currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Some other top-ranked stocks from the broader Finance space are WisdomTree, Inc. WT, Moody's Corporation MCO and StoneX Group Inc. SNEX. Each of these companies presently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
WisdomTree’s bottom line outpaced estimates in one of the trailing four quarters, met twice and missed once. The average of earnings surprises is 6.9%.
The Zacks Consensus Estimate for WT’s 2023 earnings indicates a 46.2% rise, while the same for revenues suggests 15.7% growth from the respective prior-year reported figures.
The bottom line of Moody’s Corporation outpaced estimates in three of the trailing four quarters, while it missed once, the average surprise being 9.3%.
The Zacks Consensus Estimate for MCO’s 2023 earnings per share is pegged at $9.92, while the same for revenues is pegged at $5.9 billion for 2023. The consensus mark for MCO’s 2023 earnings has moved 1.2% north in the past 30 days.
The bottom line of StoneX Group outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 20.5%. The consensus mark for SNEX’s 2023 earnings has moved 0.8% north in the past 30 days.
The Zacks Consensus Estimate for SNEX’s 2023 earnings indicates a 3.4% rise, while the same for revenues suggests 38.7% growth from the respective prior-year reported figures
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