RenaissanceRe Shares Hit 52-Week High - Analyst Blog
18 Mars 2013 - 12:40PM
Zacks
On Mar 15, 2013, shares of RenaissanceRe Holdings
Ltd. (RNR) hit a 52-week high of $91.10. After dismal
performances in the last two quarters, the company had managed to
post solid fourth-quarter 2012 results with an earnings surprise of
70.3%. This property & casualty insurer witnessed positive
earnings surprises in 2 of 4 quarters of 2012, with an average beat
of 14.6%.
On Feb 20, 2013, the board of directors of RenaissanceRe approved a
3.7% increase in the quarterly dividend to 28 cents per share from
27 cents paid earlier. This marks the 18th consecutive year of
dividend increase. In addition, the board of directors approved an
increase in RenaissanceRe's stock repurchase program, bringing the
total current authorization to $500 million.
In addition, RenaissanceRe created a new special purpose insurance
vehicle – Upsilon Reinsurance II Ltd., thereby increasing its
reinsurance capacity to cater to the global retrocessional
reinsurance market.
On Feb 6, RenaissanceRe reported fourth-quarter 2012 operating
income of 65 cents per share, up 28 cents from the Zacks Consensus
Estimate. Improved premiums aided the bottom line.
RenaissanceRe posted total revenue of $348.4 million, up 67% year
over year from $208.5 million in the fourth quarter of 2011. Total
revenue also surpassed the Zacks Consensus Estimate of $307
million.
Valuation for RenaissanceRe looks attractive. The shares are
trading at a 17.7% discount to the peer group average on a forward
price-to-earnings basis and at only 1.9% premium to the peer group
on a price-to-book basis. Return on equity is 129.5% above the peer
group average. The one-year return for the stock came in at 22.4%,
much above S&P 500’s return of 11.2%.
Over the long-term, the company faces headwinds such as declining
investment income, high competition and weather-related risks in
the catastrophe insurance and reinsurance business. Nevertheless,
strategic divestitures, efficient capital deployment via repurchase
and dividend hikes and continued focus to enhance its operation
should help RenaissanceRe deliver solid numbers going forward. The
long-term expected earnings growth rate for this stock is
9.5%.
RenaissanceRe presently carries a Zacks Rank #3 (Hold). Property
and casualty insurers like XL Group plc (XL),
Cincinnati Financial Corp. (CINF) and Arch
Capital Group Ltd. (ACGL), among others, carry a favorable
Zacks Rank #1 (Strong Buy).
ARCH CAP GP LTD (ACGL): Free Stock Analysis Report
CINCINNATI FINL (CINF): Free Stock Analysis Report
RENAISSANCERE (RNR): Free Stock Analysis Report
XL GROUP PLC (XL): Free Stock Analysis Report
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