It has been about a month since the last earnings report for RenaissanceRe (RNR). Shares have lost about 2.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is RenaissanceRe due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
RenaissanceRe Q4 Earnings Beat on Premium Growth in Property Unit
RenaissanceRe reported fourth-quarter 2024 operating income of $8.06 per share, which beat the Zacks Consensus Estimate by 5.9%. However, the bottom line declined 31.5% year over year.
Total operating revenues of $3 billion advanced 12.6% year over year. Yet, the top line fell short of the consensus mark by 1.2%.
The quarterly results were aided by strong premium growth, supported by the Validus acquisition and organic growth. Higher net investment income also benefited the quarterly performance. However, the upside was partly offset by softer underwriting results as a result of the Hurricane Milton, coupled with an elevated expense level.
RenaissanceRe’s Quarterly Operational Update
Gross premiums written of $1.9 billion rose 6.4% year over year but missed our estimate of $2.1 billion.
Net premiums earned advanced 12.4% year over year to $2.53 billion. The metric lagged the consensus mark of $2.56 billion but was higher than our estimate of $2.5 billion.
Net investment income was $428.8 million, which improved 13.8% year over year in the fourth quarter, attributable to an increase in average invested assets and higher-yielding assets in the fixed maturity investments portfolios. However, the figure missed the Zacks Consensus Estimate of $430.3 million and our estimate of $430.5 million.
Total expenses of $2.38 billion escalated 31.6% year over year but were lower than our estimate of $2.4 billion. The year-over-year increase was due to elevated net claims and claim expenses incurred, coupled with higher acquisition and operational expenses.
RenaissanceRe reported an underwriting income of $208.6 million, which declined nearly three-fold year over year. The combined ratio deteriorated 1,570 basis points (bps) year over year to 91.7%.
Book value per share was $195.77 as of Dec. 31, 2024, which increased 18.5% year over year. Annualized operating return on average common equity deteriorated 580 bps year over year to 23.5%.
RenaissanceRe’s Segmental Update
Property Segment
The segment recorded gross premiums written of $390 million, which advanced 13.2% year over year but fell short of our estimate of $410 million. The metric benefited on the back of organic growth and the renewal of accounts acquired through the Validus buyout.
Net premiums earned improved 6.1% year over year to $938.7 million but missed the Zacks Consensus Estimate of $969.8 million and our estimate of $984.1 million.
Underwriting income of $266.9 million plunged 47% year over year. The combined ratio deteriorated 2,850 bps year over year to 71.6% mainly due to the adversities inflicted by Hurricane Milton.
Casualty & Specialty Segment
The unit’s gross premiums written advanced 4.8% year over year to $1.5 billion but lagged our estimate of $1.7 billion. The metric was aided by growing other specialty and professional liability business lines.
Net premiums earned were $1.59 billion, which rose 16.4% year over year and surpassed the Zacks Consensus Estimate of $1.58 billion and our estimate of $1.51 billion.
The segment incurred an underwriting loss of $58.3 million against the prior-year quarter’s underwriting income of $37.4 million. The combined ratio deteriorated 640 bps year over year to 103.7%.
RenaissanceRe’s Financial Position (As of Dec. 31, 2024)
RenaissanceRe exited the fourth quarter with cash and cash equivalents of $1.7 billion, which tumbled 10.7% from the 2023-end level. Total assets of $50.7 billion increased 3.5% from the figure at 2023-end.
Debt amounted to $1.9 billion, down 3.7% from the figure as of Dec. 31, 2023.
Total shareholders’ equity of $10.6 billion advanced 11.8% from the 2023-end level.
RenaissanceRe’s Capital Deployment Update
RenaissanceRebought back common shares worth $462.3 million in the fourth quarter. From Jan. 1, 2025, to Jan. 24, 2025, additional share repurchases of $137.7 million were made.
Management declared a quarterly dividend of 39 cents per share.
RenaissanceRe’s Full-Year Update
Gross premiums written of $11.7 billion rose 32.4% year over year. Net premiums earned advanced 35.1% year over year to $10.1 billion.
Operating income of $42.99 per share improved 14.5% year over year.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -84.06% due to these changes.
VGM Scores
At this time, RenaissanceRe has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates 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 Player
RenaissanceRe is part of the Zacks Insurance - Property and Casualty industry. Over the past month, W.R. Berkley (WRB), a stock from the same industry, has gained 4.6%. The company reported its results for the quarter ended December 2024 more than a month ago.
W.R. Berkley reported revenues of $3.51 billion in the last reported quarter, representing a year-over-year change of +9.2%. EPS of $1.13 for the same period compares with $0.97 a year ago.
For the current quarter, W.R. Berkley is expected to post earnings of $1.07 per share, indicating a change of +2.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for W.R. Berkley. Also, the stock has a VGM Score of B.
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