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RenaissanceRe's (RNR) Q1 Earnings Miss Estimates, Drop Y/Y

RenaissanceRe Holdings Ltd. RNR delivered first-quarter 2020 operating earnings per share of 76 cents, missing the Zacks Consensus Estimate of $3.87 by 80.4% due to the COVID-19 effect. Moreover, the bottom line plunged 78.8% year over year.

Quarterly Operational Update

Total revenues of $896 million improved 11% year over year on the back of higher gross premium written and solid net investment income.

Gross premiums written increased 29.5% year over year to $2 billion owing to higher premiums at the Property as well as the Casualty and Specialty segments.

Net investment income of $99.4 million rose 21.2% year over year.

RenaissanceRe’s total expenses of $880 million escalated 97.1% year over year, primarily due to steep net claims and claim expenses, acquisition costs and operational expenses.

Underwriting income of $64.1 million slumped 58.4% year over year. The company’s underwriting results were negatively impacted by an underwriting loss at the Casualty and Specialty segment.

Combined ratio of 93% in the first quarter compared with the year-ago quarter’s 72%.

RenaissanceRe Holdings Ltd Price, Consensus and EPS Surprise

RenaissanceRe Holdings Ltd price-consensus-eps-surprise-chart | RenaissanceRe Holdings Ltd Quote

Quarterly Segment Update

Property Segment

Gross premiums written were $1.2 billion, up 18.2% year over year in the first quarter.

Underwriting income of $147.1 million was down 3.5% year over year due to higher current accident year net claims and claim expenses and a greater number of small insured catastrophe events.

Combined ratio of 65.1% expanded 1750 basis points (bps) year over year.

Casualty and Specialty Segment

Gross premiums written of $805.2 million were up 51.4% from the prior-year quarter. This upside is driven by the buyouts in connection with TMR Group Entities and growth in the current and new business opportunities within a few classes of business.

The segment’s underwriting loss of $83.2 million was against the year-ago quarter’s underwriting gain of $1.7 million.

Combined ratio of 116.9% expanded 1760 bps year over year.

Share Repurchase Update

RenaissanceRe bought back shares worth $62.6 million in the quarter under review.

Business Update

The company successfully closed the buyout of Tokio Millennium Re AG (now known as RenaissanceRe Europe AG) and Tokio Millennium Re (UK) Limited in March.

Financial Position

As of Mar 31, 2020, total assets of RenaissanceRe were $27.4 billion, up 4.3% from the level at 2019 end.

The company had total debt of $1.1 billion as of Mar 31, 2020, down 18% from the level at 2019 end.

Cash and cash equivalents were $896.2 million, down 35% from the figure at 2019 end.

Book value per share of $117.15 decreased 2.8% from the number at 2019 end.

Annualized operating return on equity for the quarter under review was 2.6%.

Zacks Rank

RenaissanceRe has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Of the other insurance players that reported first-quarter results so far, The Allstate Corporation’s ALL bottom line beat the Zacks Consensus Estimate while that of The Progressive Corporation PGR and Berkshire Hathaway Inc. BRK.B missed the mark.

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