Send me real-time posts from this site at my email

Here's Why You Should Add RenaissanceRe to Your Portfolio

RenaissanceRe Holdings Ltd. RNR has been in investor’s good books on the back of solid segmental contributions and balance sheet flexibility.

The Zacks Rank #2 (Buy) company carries a VGM Score of B. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.

Its return-on-equity (ROE) reflects growth potential. The company’s trailing 12-month ROE of 8.5% compares favorably with the industry average of 6.4%, reflecting its efficiency in utilizing shareholders’ funds.

Now let’s see what has been working in favour of the company.

The company has been witnessing a positive trend in gross premiums written, which has doubled over a span of five years, driven by premium growth at both its Casualty and Specialty plus Property segments. This upside is evident from its five-year CAGR (2014 to 2019) of 25.4%, primarily led by strong segmental results. This consistent increase in premiums is likely to drive the company’s top line further.

RenaissanceRe has also taken certain initiatives to streamline operations by getting rid of its low-return high-risk businesses. Meanwhile, it is also buying units to expand business. In March 2019, it bought Tokio Millennium Re for a value of $1.5 billion to increase the scale and strengthen portfolio. We expect such strategic initiatives to enable the company to focus and grow its core operating business.

Its financial strength also impresses. Its free cash flow, which has been increasing over the last few years, reflects its solid capital position.

RenaissanceRe has been deploying excess capital in business over the past several quarters. It has been raising dividend since the past many years. In February 2019, the company again increased its payout by 3.1%. This is likely to instill investor confidence in the stock.

Its long-term growth rate is projected at 9%, above the industry's average of 8.5%.

For 2020, its earnings estimate is projected at $15.28, suggesting an improvement of 67.4% year over year on revenues of $4.5 billion, up 10.3% year over year.

Shares of RenaissanceRe have lost 8.5% in a year's time, compared with the industry’s decline of 22.2%. This looks better than the price performance of other companies in the same space, such as Axis Capital Holdings Limited AXS, First American Financial Corporation FAF and Everest Re Group, Ltd. RE, which have lost 35.9%, 31.9%, 19.9%, respectively over the same timeframe. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks 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
Axis Capital Holdings Limited (AXS): Free Stock Analysis Report
First American Financial Corporation (FAF): Free Stock Analysis Report
Everest Re Group, Ltd. (RE): Free Stock Analysis Report
To read this article on click here.
Zacks Investment Research

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue