On Mar 18, 2014, shares of RenaissanceRe Holdings Ltd. (RNR) touched a 52-week high of $98.00. The positive momentum was driven by a recent dividend hike, increased share buyback authorization and strong performance delivered by the company for the fourth quarter and full-year 2013. The shares gained about 8.6% since it reported its results on Feb 4.
In the fourth quarter, RenaissanceRe reported operating earnings per share of $4.64, ahead of the Zacks Consensus Estimate by about 63%. Results fared better than expected on the back of premium growth in the Specialty Reinsurance and Lloyd segments coupled with lower catastrophes.
RenaissanceRe revealed healthy top-line growth with revenues escalating 19% year over year and surpassed the Zacks Consensus Estimate by 12.2%. The improvement was mainly driven by increased investment income and gains on investment.
In 2014, the company expects to witness growth in the Lloyds business as it continues to expand its franchise into profitable, diversifying classes of business.
Given increasing competition, RenaissanceRe is focusing on adding value to its current set of customers by introducing new products.
Moreover, the company has made attempts to reduce uncertainties associated with the weather and weather-related energy risk management operations of REAL by divesting RenRe Energy Advisors Ltd. (RLBY) in Oct 2013.
The global expansion of RenaissanceRe’s reinsurance business with the introduction of its U.S. platform – RenaissanceRe Underwriting Managers U.S. LLC – in Connecticut is also expected to generate long-term growth at the company. The expected long term earnings growth for the stock comes at 9.5%
With respects to returning value to shareholders, the company declared a 3.6% increase in its quarterly dividend to 29 cents per share in Feb 2014, making it nineteenth consecutive dividend increase. The company also increased its current share repurchase authorization to $500 million.
RenaissanceRe, carrying a Zacks Rank #3 (Hold), boasts of solid asset quality and overall sound capital position, liquidity and financial flexibility, which compels credit rating agencies to give it a strong credit score. .
Some better ranked stocks like Alleghany Corp. (Y) and Atlas Financial Holdings, Inc. (AFH), both sporting a Zacks Rank #1 (Strong Buy), are worth considering.
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