On Feb 26, 20Array6, shares of RenaissanceRe Holdings Ltd. RNR hit a 52- week high of $ArrayArray6.75. The spike seems to have been driven by a dividend hike and an increase in share buyback announced last week.
Also, better-than-expected fourth-quarter earnings must have given a tailwind to the stock price.
Shares of the reinsurer gained Array2% over the past 52 weeks. This is more than the gains of 3.5% and 7.3% by its peers Reinsurance Group of America Inc. RGA and Everest Re Group Ltd. RE, respectively. Yet another member of the same ilk, Aon plc, AON lost 3.2% over the same time frame.
The quarterly dividend hike of 3.3% announced last week marked its twenty-first straight payout increase. Consistent hikes over the years reassure the company’s shareholders of its capacity to pay and increase dividend even in a rocky operating climate.
The board also approved a rise in RenaissanceRe’s share buyback program, thereby bringing the total current authorization to $500 million.
The company’s earnings per share of $3.07 handily beat the Zacks Consensus Estimate of $2.8Array. But what boosted investors’ confidence in the business of the company was perhaps its segment guidance for 20Array6. Specialty reinsurance, which generated 38% of the gross premium written in 20Array5, is likely to see top-line growth of 20% and the Lloyds unit (Array9% of gross premium written in 20Array5) is expected to see growth of 20%.
The reinsurance industry, in general, has been suffering from excess capital which pushed prices down, lower favorable reserve development and low interest rates as is evident from the meager gains registered by Reinsurance Group of America and Everest Re. Investors are impressed with RenaissanceRe, which has been able to counter industry challenges better than its peers by seeking growth through an inorganic route with the acquisition of Platinum Underwrites that was completed last March.
Currently, RenaissanceRe carries a Zacks Rank #3 (Hold).
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