Why Is RenaissanceRe (RNR) Up 8% Since Last Earnings Report?

A month has gone by since the last earnings report for RenaissanceRe (RNR). Shares have added about 8% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is RenaissanceRe due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. RenaissanceRe's Q3 Earnings Beat Despite Rising Claims CostsRenaissanceRe reported third-quarter 2024 operating income of $10.23 per share, which surpassed the Zacks Consensus Estimate by 29.7%. The bottom line advanced 21.6% year over year.Total operating revenues soared 45.7% year over year to $3 billion. The top line beat the consensus mark by 3.7%.Despite the earnings beat, the quarterly results were hurt by a rise in total expenses due to increased claims and acquisition costs, alongside a deterioration in combined ratios, particularly in the Casualty and Specialty segment. Nevertheless, the downside was partly offset by strong premium growth, supported by the Validus acquisition and organic growth, as well as improved net investment income.RNR’s Quarterly Operational UpdateGross premiums written of $2.4 billion improved 48.3% year over year and were higher than our estimate of $1.9 billion.  Net premiums earned climbed 47.1% year over year to $2.6 billion. The metric surpassed the consensus mark of $2.5 billion and our estimate of $2.4 billion. Net investment income was $423.9 million, which advanced 28.8% year over year on the back of an increase in average invested assets and higher-yielding assets in the fixed maturity investments portfolios. Also, the figure surpassed the Zacks Consensus Estimate of $417 million and our estimate of 416.5 million.  Total expenses escalated 58.8% year over year to $2.24 billion but were lower than our estimate of $2.25 billion. The year-over-year increase resulted from increased net claims and claim expenses incurred coupled with higher acquisition and operational expenses.RenaissanceRe’s underwriting income amounted to $393.8 million, which grew 2.1% year over year. The combined ratio deteriorated 680 basis points (bps) year over year to 84.8%.  Book value per share was $202.01 as of Sept. 30, 2024, which climbed 51.2% year over year. Annualized operating return on average common equity of 21.7% deteriorated 360 bps year over year.RNR’s Segmental UpdateProperty SegmentThe segment’s gross premiums written surged 54.7% year over year to $790.7 million, higher than our estimate of $606.3 million. The metric benefited on the back of higher reinstatement premiums, along with organic growth, new business opportunities and the renewal of accounts acquired through the Validus buyout. Net premiums earned of $994.8 million advanced 30.8% year over year and surpassed the Zacks Consensus Estimate of $939 million and our estimate of $926.1 million.Underwriting income grew 10.9% year over year to $394.7 million. The combined ratio of 60.3% deteriorated 710 bps year over year.Casualty and Specialty SegmentThe unit recorded gross premiums written of $1.61 billion, which climbed 45.3% year over year and beat our estimate of $1.32 billion. The metric was aided by business renewals from the Validus Acquisition and organic growth within legacy lines. Net premiums earned surged 59.5% year over year to $1.59 billion, higher than the Zacks Consensus Estimate of $1.53 billion and our estimate of $1.44 billion.The segment incurred an underwriting loss of $0.9 million against the prior-year quarter’s underwriting income of $29.8 million. The combined ratio deteriorated 310 bps year over year to 100.1%.RNR’s Financial Position (as of Sept. 30, 2024)RenaissanceRe exited the third quarter with cash and cash equivalents of $1.6 billion, which fell 16.2% from the 2023-end level. Total assets of $52.8 billion increased 7.7% from the figure at 2023-end. Debt amounted to $1.9 billion, which dipped 1.2% from the figure as of Dec. 31, 2023. Total shareholders’ equity of $11.2 billion rose 18.9% from the 2023-end level.RNR’s Capital Deployment UpdateRNR bought back common shares worth $106.8 million in the third quarter. On Nov. 6, 2024, the board authorized an increase to the company's share repurchase program, thereby raising the total authorized amount to $750 million.Management declared a quarterly dividend of 39 cents per share.RNR’s 4Q24 GuidanceHurricane Milton is projected to have a $275 million net negative impact on net income (loss) attributable to common shareholders in the fourth quarter of 2024.How Have Estimates Been Moving Since Then?It turns out, estimates review have trended downward during the past month.The consensus estimate has shifted -24.2% due to these changes.VGM ScoresCurrently, RenaissanceRe has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, RenaissanceRe has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerRenaissanceRe belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, American Financial Group (AFG), has gained 7.6% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.American Financial reported revenues of $2.28 billion in the last reported quarter, representing a year-over-year change of +10.4%. EPS of $2.31 for the same period compares with $2.45 a year ago.For the current quarter, American Financial is expected to post earnings of $3.10 per share, indicating a change of +9.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.5% over the last 30 days.American Financial has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.1% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report RenaissanceRe Holdings Ltd. (RNR): Free Stock Analysis Report American Financial Group, Inc. (AFG): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks