Renaissance Re Holdings Limited (RNR) recently inked a deal to sell its U.S. based weather and weather related energy risk management unit – RenRe Energy Advisors Ltd. (REAL) to Germany-based reinsurance company Munich Re Group. Munich Re has been a long-term trading partner for Renaissance Re and is associated with the company’s REAL for more than three years as a risk capacity provider.
The deal is expected to close in the fourth quarter of 2013 and is pending regulatory approval. As per the deal, Munich Re will pay a mid-two digit million dollar amount for acquiring REAL. With the divestiture Renaissance Re intends to focus on its core operations that include property catastrophe reinsurance and insurance business written through Syndicate 1458.
RenRe Energy Advisors is a wholly owned subsidiary of Renaissance Re and provides certain derivative-based risk management products that deal with the weather and energy risks globally. REAL has clients that consists of U.S. energy companies who seek protection against income fluctuations that arise from adverse weather conditions.
The company has been reviewing potential strategic transactions to improve its business portfolio and expand its distribution capacities. Towards business expansion in Jul 2013 Renaissance Re formed Renaissance Re Underwriting Managers U.S. LLC – a specialty reinsurance agency. The launch of this Renaissance Re Underwriting Managers was aimed at enhancing its specialty business.
Renaissance carries a Zacks Rank #3 (Hold). Among other reinsurers, EMC Insurance Group Inc. (EMCI), Everest Re Group Ltd (RE) and Global Indemnity Plc (GBLI) carry a favorable Zacks Rank #1 (Strong Buy) and are worth considering.
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