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RenaissanceRe Adds Nearly $4B in Market Cap in 2024: Still a Buy?
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Leading insurer RenaissanceRe Holdings Ltd. (RNR - Free Report) has seen impressive gains in 2024, with shares jumping 39%, outpacing the industry’s 28.1% growth and the S&P 500’s 20.6% rise. It also outpaced its peers like Everest Group, Ltd. (EG - Free Report) and Chubb Limited (CB - Free Report) . This rally has boosted RenaissanceRe’s market capitalization by $3.92 billion in 2024 alone.
With this sharp rally, the question for investors is whether to ride the momentum for more potential upside or lock in profits. A deeper look at RNR's future prospects and fundamentals can provide insight into the best move forward.
RNR’s YTD Price Performance Comparison
Image Source: Zacks Investment Research
Understanding RNR’s Bright Prospects
RenaissanceRe is focused on expanding its business through strategic acquisitions and growth initiatives. Its recent purchase of Validus Re and associated businesses from AIG has bolstered its global property and casualty reinsurance capabilities, boosting profitability. Additionally, the company refines its portfolio by selling off non-core assets to focus on its primary operations.
The company’s strong cash position supports its growth initiatives and shareholder returns. It generated nearly $3.2 billion in net operating cash flow over the trailing 12-month period, up 66.4%. It repurchased $108.5 million in shares in the second quarter alone. Its dividend yield of 0.6% remains higher than the industry’s average of 0.3%.
Increasing premiums from its Property and Casualty & Specialty segments are expected to further drive performance. We expect its overall gross premiums written to jump 31% year over year in 2024. Also, we expect net investment income to reach $1.64 billion this year. Strong underwriting results are contributing to profit growth, evident in recent upward estimate revisions.
Estimate Revision Favoring RNR Stock
Reflecting the positive sentiment around RenaissanceRe, the Zacks Consensus Estimate for earnings per share has seen upward revisions. The consensus estimate for 2024 adjusted earnings for RNR is currently pegged at $39.01 per share, indicating a 3.9% year-over-year surge. It beat earnings estimates in each of the past four quarters, with an average surprise of 27.4%. The consensus estimate for 2024 and 2025 revenues suggests 32.3% and 2.6% year-over-year growth, respectively.
Image Source: Zacks Investment Research
RNR Stock Still Trading Cheap
Despite the surge in share price and growing cash flow, RenaissanceRe is trading at a discount compared to the industry average. It presents a compelling investment opportunity, with its 1.51X trailing 12-month tangible book value, lower than the industry average of 1.62X. Since insurers and reinsurers often have fluctuating earnings due to the nature of their business, the Price-to-Book (P/B) ratio provides a better picture of valuation by focusing on the company’s assets and liabilities rather than its earnings. RNR has a Value Score of B.
Grab RNR Stock for Higher Gains
RNR's stock closed at $272.40, just shy of its 52-week high of $272.73, which it reached yesterday. While it may seem like there's limited upside at this level, it actually highlights strong investor confidence and market optimism about this insurance company’s prospects. Despite being at its peak, RenaissanceReremains a compelling buy due to its solid cash position, favorable valuation and upward trend in earnings estimates.
If RNR continues to generate robust cash flow, boost shareholder value and focus on expanding its business, investors could see significant gains.
Image: Bigstock
RenaissanceRe Adds Nearly $4B in Market Cap in 2024: Still a Buy?
Leading insurer RenaissanceRe Holdings Ltd. (RNR - Free Report) has seen impressive gains in 2024, with shares jumping 39%, outpacing the industry’s 28.1% growth and the S&P 500’s 20.6% rise. It also outpaced its peers like Everest Group, Ltd. (EG - Free Report) and Chubb Limited (CB - Free Report) . This rally has boosted RenaissanceRe’s market capitalization by $3.92 billion in 2024 alone.
With this sharp rally, the question for investors is whether to ride the momentum for more potential upside or lock in profits. A deeper look at RNR's future prospects and fundamentals can provide insight into the best move forward.
RNR’s YTD Price Performance Comparison
Understanding RNR’s Bright Prospects
RenaissanceRe is focused on expanding its business through strategic acquisitions and growth initiatives. Its recent purchase of Validus Re and associated businesses from AIG has bolstered its global property and casualty reinsurance capabilities, boosting profitability. Additionally, the company refines its portfolio by selling off non-core assets to focus on its primary operations.
The company’s strong cash position supports its growth initiatives and shareholder returns. It generated nearly $3.2 billion in net operating cash flow over the trailing 12-month period, up 66.4%. It repurchased $108.5 million in shares in the second quarter alone. Its dividend yield of 0.6% remains higher than the industry’s average of 0.3%.
Increasing premiums from its Property and Casualty & Specialty segments are expected to further drive performance. We expect its overall gross premiums written to jump 31% year over year in 2024. Also, we expect net investment income to reach $1.64 billion this year. Strong underwriting results are contributing to profit growth, evident in recent upward estimate revisions.
Estimate Revision Favoring RNR Stock
Reflecting the positive sentiment around RenaissanceRe, the Zacks Consensus Estimate for earnings per share has seen upward revisions. The consensus estimate for 2024 adjusted earnings for RNR is currently pegged at $39.01 per share, indicating a 3.9% year-over-year surge. It beat earnings estimates in each of the past four quarters, with an average surprise of 27.4%. The consensus estimate for 2024 and 2025 revenues suggests 32.3% and 2.6% year-over-year growth, respectively.
RNR Stock Still Trading Cheap
Despite the surge in share price and growing cash flow, RenaissanceRe is trading at a discount compared to the industry average. It presents a compelling investment opportunity, with its 1.51X trailing 12-month tangible book value, lower than the industry average of 1.62X. Since insurers and reinsurers often have fluctuating earnings due to the nature of their business, the Price-to-Book (P/B) ratio provides a better picture of valuation by focusing on the company’s assets and liabilities rather than its earnings. RNR has a Value Score of B.
Grab RNR Stock for Higher Gains
RNR's stock closed at $272.40, just shy of its 52-week high of $272.73, which it reached yesterday. While it may seem like there's limited upside at this level, it actually highlights strong investor confidence and market optimism about this insurance company’s prospects. Despite being at its peak, RenaissanceReremains a compelling buy due to its solid cash position, favorable valuation and upward trend in earnings estimates.
If RNR continues to generate robust cash flow, boost shareholder value and focus on expanding its business, investors could see significant gains.
RenaissanceRecurrently carries a Zacks Rank #2 (Buy) and has a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.