Will the Specialty Unit Drive RenaissanceRe (RNR) Q4 Earnings?
RenaissanceRe Holdings Ltd. RNR is scheduled to release fourth-quarter 2023 results on Jan 30, 2024, after the closing bell.
Q4 Estimates
The Zacks Consensus Estimate for RenaissanceRe’s fourth-quarter earnings per share is pegged at $8.13, which indicates an improvement of 10.9% from the prior-year quarter’s reported figure.
The consensus mark for revenues is pinned at $2.2 billion, indicating 19.2% growth from the year-ago quarter’s reported number.
Earnings Surprise History
RenaissanceRe’s bottom line beat estimates in each of the trailing four quarters, the average surprise being 16.48%. This is depicted in the chart below:
RenaissanceRe Holdings Ltd. Price and EPS Surprise
RenaissanceRe Holdings Ltd. price-eps-surprise | RenaissanceRe Holdings Ltd. Quote
What Our Quantitative Model Unveils
Our proven model predicts an earnings beat for RenaissanceRe this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.
Earnings ESP: RenaissanceRe has an Earnings ESP of +0.33% because the Most Accurate Estimate of $8.16 is pegged higher than the Zacks Consensus Estimate of $8.13. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: RNR currently carries a Zacks Rank of 3.
Factors at Play
RenaissanceRe's top line is likely to have benefited on the back of higher premiums earned in its Property, and Casualty and Specialty segments in the fourth quarter. The Zacks Consensus Estimate for overall net premiums earned is pegged at $1.8 billion, which indicates a 12.4% rise from the prior-year quarter’s reported figure.
Improved net investment income is likely to have contributed to RNR’s revenues. The revenue component is expected to have been aided by an increase in average invested assets and higher returns from its fixed maturity and short-term portfolios in the fourth quarter. The consensus mark for net investment income is pegged at $368 million, indicating a 74.4% surge from the year-ago quarter’s reported number. Our estimate for the metric is pinned at $337.9 million.
Results of the Property unit are likely to have benefited from rate increases, new business growth and policy renewals in the to-be-reported quarter. The Zacks Consensus Estimate for the segment’s net premiums earned is pegged at $720 million, which implies a 4.7% rise from the prior-year quarter’s reported figure. Meanwhile, strength in other specialty business line is expected to have driven the Casualty and Specialty segment’s performance. The consensus mark for the unit’s net premiums earned is pegged at $1 billion, suggesting 8.3% growth from the year-ago quarter’s reported number.
However, the continued incidence of catastrophe losses may have dampened the underwriting results of RenaissanceRe and is expected to have led to a deterioration in the combined ratio in the fourth quarter. We anticipate the company’s overall underwriting income to decline 6.1% year over year. The Zacks Consensus Estimate for the combined ratio is pinned at 83%, which indicates a deterioration of 200 basis points year over year.
In addition to this, RNR’s margins are likely to have taken a hit from elevated net claims and claim expenses incurred, which, in turn, may have resulted from numerous catastrophic events. Operational costs may also have weighed on its bottom line in the to-be-reported quarter. We expect total expenses to be $1.4 billion in the fourth quarter, up 5.6% year over year.
Other Stocks to Consider
Here are some other companies from the insurance space, which according to our model, also have the right combination of elements to beat on earnings this time around:
Aflac Incorporated AFL currently has an Earnings ESP of +0.57% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AFL’s fourth-quarter 2023 earnings is pegged at $1.47 per share, indicating an improvement of 14% from the prior-year quarter’s reported number.
Aflac’s earnings beat estimates in each of the trailing four quarters, the average surprise being 14.50%.
Primerica, Inc. PRI has an Earnings ESP of +0.44% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for PRI’s fourth-quarter 2023 earnings is pegged at $4.26 per share, implying 22.1% growth from the prior-year quarter’s reported figure.
Primerica’s earnings beat estimates in each of the trailing four quarters, the average surprise being 7.84%.
The Hartford Financial Services Group, Inc. HIG has an Earnings ESP of +0.54% and a Zacks Rank of 3 at present. The Zacks Consensus Estimate for HIG’s fourth-quarter 2023 earnings is pegged at $2.39 per share, indicating an improvement of 3.5% from the prior-year quarter’s reported number.
Hartford Financial’s earnings beat estimates in three of the trailing four quarters and met the mark once, the average surprise being 10.81%.
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The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report
Aflac Incorporated (AFL) : Free Stock Analysis Report
RenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis Report
Primerica, Inc. (PRI) : Free Stock Analysis Report
