On May 30, 2014, RenaissanceRe Holdings Ltd. (RNR) reached a new 52-week high of $104.53. The rally was driven by the company’s strong first quarter-earnings, core business strengthening initiatives and strong capital deployment over the past one year.
RenaissanceRe’s solid first-quarter 2014 results comprised an 11.89% positive earnings surprise. Notably, this property and casualty insurer beat earnings estimates in three out of the trailing four quarters with an average surprise of 29.76%.
Following RenaissanceRe’s earnings release on Apr 29, 2014, its shares gained 2.3% to close at $104.17 in the last trading session. The one-year return of the stock was 21.17%, much above the S&P 500’s return of 17.96% and that of other players in the industry like Platinum Underwriters Holdings Ltd. (PTP) and PartnerRe Ltd. (PRE) with returns of 12.34% and 18.44% respectively, over the same period.
Over the past one year, RenaissanceRe has been adept in strengthening its core operations, which contributed to the price appreciation of its shares. The company divested its U.S.-based weather and weather related energy risk management unit, RenRe Energy Advisors Ltd. (REAL) to MunichRe. Moreover, to strengthen its global operations, ReaniassanceRe rolled out its U.S. platform, RenaissanceRe Underwriting Managers U.S. LLC in Jul 2013.
The company’s capital deployment initiatives have also been impressive. In Feb 2014, RenaissanceRe increased its quarterly dividend by 3.6% to 29 cents per share. This marked the nineteenth consecutive increase in annual dividend by the company. Moreover, RenaissanceRe increased its share repurchase authorization twice within the last six months. All these endeavors reflect the company’ strong commitment toward enhancing shareholders’ worth, which would help it to retain their confidence going forward.
Such business strengthening initiatives and capital deployment keep us optimistic about the stock’s performance. The full-year 2014 Zacks Consensus Estimate increased 1.6% to $9.65 after the company reported its first-quarter results, as most of the estimates moved north.
Currently, RenaissanceRe caries a Zacks Rank #2 (Buy). Other players in the same sector, which look attractive at current levels, include PartnerRe, Platinum Underwriters and Endurance Specialty Holdings Ltd. (ENH). While Endurance Specialty sports a Zacks Rank #1 (Strong Buy), Partner Re and Platinum Underwriters have the same Zacks Rank as RenaissanceRe.
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