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RenaissanceRe (RNR) Up 12.6% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for RenaissanceRe (RNR - Free Report) . Shares have added about 12.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is RenaissanceRe due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
RenaissanceRe Q2 Earnings Top on Strong Property Results
RenaissanceRe Holdings reported second-quarter 2024 operating income of $12.41 per share, which outpaced the Zacks Consensus Estimate by 14.1%. The bottom line climbed nearly 40% year over year.
Total operating revenues of around $3 billion surged 41.8% year over year. The top line beat the consensus mark by 0.8%.
The quarterly results were driven by improved underwriting performance, enhanced net investment income and significant contributions from the Property segment. The Validus acquisition also played a crucial role, increasing average invested assets. These factors collectively propelled the company's financial performance despite elevated expenses.
Quarterly Operational Update
Gross premiums written improved 29.2% year over year to $3.4 billion but fell short of our estimate of $3.5 billion.
Net premiums earned were $2.54 billion, which soared 42.3% year over year. The metric surpassed the Zacks Consensus Estimate of $2.49 billion and our estimate of $2.36 billion.
Net investment income of $410.8 million rose 40.4% year over year, attributable to an increase in average invested assets, largely due to the Validus acquisition, and the inclusion of higher-yielding assets in the fixed maturity and short-term portfolios. The figure beat the consensus mark of $398.5 million and our estimate of $396.9 million.
Total expenses escalated 44% year over year to $2.1 billion, higher than our estimate of $1.9 billion. The year-over-year increase was due to higher net claims and claim expenses incurred coupled with increased acquisition and operational expenses.
RenaissanceRe generated an underwriting income of $479.3 million, which advanced 36.6% year over year in the second quarter. The combined ratio of 81.1% deteriorated 80 basis points (bps) year over year.
Book value per share was $179.87 as of Jun 30, 2024, which increased 38.4% year over year. Annualized operating return on average common equity deteriorated 90 bps year over year to 28.2%.
Segmental Update
Property Segment
The segment recorded gross premiums written of $1.75 billion in the second quarter, which grew 25% year over year on the back of favorable business renewal rates acquired in the Validus buyout and organic growth initiatives. However, the metric lagged our estimate of $1.77 billion. Net premiums earned advanced 29.3% year over year to $980.8 million, higher than the Zacks Consensus Estimate of $929.1 million and our estimate of $921.1 million.
Underwriting income was $451.7 million, which surged 60.7% year over year. The combined ratio of 53.9% improved 910 bps year over year.
Casualty and Specialty Segment
The unit’s gross premiums written rose 33.9% year over year to $1.67 billion but fell short of our estimate of $1.71 billion. The metric benefited from business renewals gained from the Validus acquisition and organic growth in legacy lines. Net premiums earned of $1.56 billion climbed 52% year over year, higher than the Zacks Consensus Estimate of $1.54 billion and our estimate of $1.44 billion.
Underwriting income of $27.6 million declined more than two-fold year over year. The combined ratio deteriorated 500 bps year over year to 98.2%.
Financial Position (as of Jun 30, 2024)
RenaissanceRe exited the second quarter with cash and cash equivalents of $1.6 billion, which slipped 13.3% from the 2023-end level. Total assets of $51.6 billion increased 5.2% from the figure at 2023 end.
Debt amounted to $2 billion, which inched up marginally from the figure as of Dec 31, 2023.
Total shareholders’ equity of $10.2 billion improved 7.7% from the 2023-end level.
Capital Deployment Update
RNR bought back common shares worth $108.5 million in the second quarter. It repurchased additional shares of $61.2 million between Jul 1 and Jul 22.
Management declared a quarterly dividend of 39 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 18.68% due to these changes.
VGM Scores
At this time, RenaissanceRe has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, RenaissanceRe has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
RenaissanceRe is part of the Zacks Insurance - Property and Casualty industry. Over the past month, W.R. Berkley (WRB - Free Report) , a stock from the same industry, has gained 10.5%. The company reported its results for the quarter ended June 2024 more than a month ago.
W.R. Berkley reported revenues of $3.37 billion in the last reported quarter, representing a year-over-year change of +14.8%. EPS of $1.04 for the same period compares with $0.76 a year ago.
For the current quarter, W.R. Berkley is expected to post earnings of $0.95 per share, indicating a change of +5.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.6% over the last 30 days.
W.R. Berkley has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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RenaissanceRe (RNR) Up 12.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for RenaissanceRe (RNR - Free Report) . Shares have added about 12.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is RenaissanceRe due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
RenaissanceRe Q2 Earnings Top on Strong Property Results
RenaissanceRe Holdings reported second-quarter 2024 operating income of $12.41 per share, which outpaced the Zacks Consensus Estimate by 14.1%. The bottom line climbed nearly 40% year over year.
Total operating revenues of around $3 billion surged 41.8% year over year. The top line beat the consensus mark by 0.8%.
The quarterly results were driven by improved underwriting performance, enhanced net investment income and significant contributions from the Property segment. The Validus acquisition also played a crucial role, increasing average invested assets. These factors collectively propelled the company's financial performance despite elevated expenses.
Quarterly Operational Update
Gross premiums written improved 29.2% year over year to $3.4 billion but fell short of our estimate of $3.5 billion.
Net premiums earned were $2.54 billion, which soared 42.3% year over year. The metric surpassed the Zacks Consensus Estimate of $2.49 billion and our estimate of $2.36 billion.
Net investment income of $410.8 million rose 40.4% year over year, attributable to an increase in average invested assets, largely due to the Validus acquisition, and the inclusion of higher-yielding assets in the fixed maturity and short-term portfolios. The figure beat the consensus mark of $398.5 million and our estimate of $396.9 million.
Total expenses escalated 44% year over year to $2.1 billion, higher than our estimate of $1.9 billion. The year-over-year increase was due to higher net claims and claim expenses incurred coupled with increased acquisition and operational expenses.
RenaissanceRe generated an underwriting income of $479.3 million, which advanced 36.6% year over year in the second quarter. The combined ratio of 81.1% deteriorated 80 basis points (bps) year over year.
Book value per share was $179.87 as of Jun 30, 2024, which increased 38.4% year over year. Annualized operating return on average common equity deteriorated 90 bps year over year to 28.2%.
Segmental Update
Property Segment
The segment recorded gross premiums written of $1.75 billion in the second quarter, which grew 25% year over year on the back of favorable business renewal rates acquired in the Validus buyout and organic growth initiatives. However, the metric lagged our estimate of $1.77 billion. Net premiums earned advanced 29.3% year over year to $980.8 million, higher than the Zacks Consensus Estimate of $929.1 million and our estimate of $921.1 million.
Underwriting income was $451.7 million, which surged 60.7% year over year. The combined ratio of 53.9% improved 910 bps year over year.
Casualty and Specialty Segment
The unit’s gross premiums written rose 33.9% year over year to $1.67 billion but fell short of our estimate of $1.71 billion. The metric benefited from business renewals gained from the Validus acquisition and organic growth in legacy lines. Net premiums earned of $1.56 billion climbed 52% year over year, higher than the Zacks Consensus Estimate of $1.54 billion and our estimate of $1.44 billion.
Underwriting income of $27.6 million declined more than two-fold year over year. The combined ratio deteriorated 500 bps year over year to 98.2%.
Financial Position (as of Jun 30, 2024)
RenaissanceRe exited the second quarter with cash and cash equivalents of $1.6 billion, which slipped 13.3% from the 2023-end level. Total assets of $51.6 billion increased 5.2% from the figure at 2023 end.
Debt amounted to $2 billion, which inched up marginally from the figure as of Dec 31, 2023.
Total shareholders’ equity of $10.2 billion improved 7.7% from the 2023-end level.
Capital Deployment Update
RNR bought back common shares worth $108.5 million in the second quarter. It repurchased additional shares of $61.2 million between Jul 1 and Jul 22.
Management declared a quarterly dividend of 39 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 18.68% due to these changes.
VGM Scores
At this time, RenaissanceRe has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, RenaissanceRe has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
RenaissanceRe is part of the Zacks Insurance - Property and Casualty industry. Over the past month, W.R. Berkley (WRB - Free Report) , a stock from the same industry, has gained 10.5%. The company reported its results for the quarter ended June 2024 more than a month ago.
W.R. Berkley reported revenues of $3.37 billion in the last reported quarter, representing a year-over-year change of +14.8%. EPS of $1.04 for the same period compares with $0.76 a year ago.
For the current quarter, W.R. Berkley is expected to post earnings of $0.95 per share, indicating a change of +5.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.6% over the last 30 days.
W.R. Berkley has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.