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Why Should You Retain RenaissanceRe (RNR) in Your Portfolio?

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RenaissanceRe Holdings Ltd. RNR continues to be in investors’ good books on the back of its strategic initiatives and an encouraging solvency level.

Over the past 60 days, the stock has witnessed its 2020 and 2021 earnings estimates move 1.4% and 2% north, respectively.

Here we discuss the reasons for retaining this currently Zacks Rank #3 (Hold) player in your investment portfolio.

The company is witnessing a continued positive trend in gross premiums written, which doubled over a span of five years, driven by premium growth at both its Casualty and Specialty, and Property segments. This upside is quite obvious from the 24.6% CAGR witnessed in the 2014-2020 forecast period, primarily led by strong segmental results. During the first quarter of 2021, gross premiums written also surged 30.9% year over year.

Further, the property and casualty insurer took initiatives to streamline its business by getting rid of low-return, high-risk businesses.

Additionally, it is buying units to expand business. In March 2019, it purchased Tokio Millennium Re for a deal value of $1.5 billion to increase the business scale and strengthen its portfolio. We expect such strategic initiatives to enable the company to focus and grow its core operating business.

Its solvency level impresses as well. Its free cash flow, which rose over the last few years, reflects its solid capital position. Total debt of the company represents 13.8% of its capital, lower than the industry’s average of 20.2%. As of Dec 31, 2020, it had cash and cash equivalents worth $1.3 billion, higher than its debt level of $1.2 billion. Moreover, it doesn’t have any additional debt maturing until 2025.

This property and casualty insurer constantly deploys excess capital to its business over the last several quarters. It has been raising dividend since several years. In February 2021, the company’s board of directors approved a 2.9% hike in its quarterly dividend. It currently has a dividend yield of 0.9%, higher than the industry average of 0.4%. Management expects to enhance its shareholder value in the ongoing year and beyond.

However, dealing in property and casualty insurance, it is always exposed to cat activities, the occurrence of which imparts volatility to its results.

In the past year, shares of the company have lost 14.8% against its industry's growth of 40.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research
Zacks Investment Research

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Stocks to Consider

Some better-ranked companies in the same space are Fidelity National Financial, Inc. FNF, Axis Capital Holdings Limited AXS and Hallmark Financial Services, Inc. HALL, each presently holding a Zacks Rank #2 (Buy).

Fidelity National Financial, Axis Capital and Hallmark Financial managed to deliver a trailing four-quarter surprise of 38.7%, 34.5% and 115.5%, respectively, on average.

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

Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report

Fidelity National Financial, Inc. (FNF) : Free Stock Analysis Report

Hallmark Financial Services, Inc. (HALL) : Free Stock Analysis Report

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