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RenaissanceRe (RNR) Q1 Earnings Beat on Solid Property Segment

RenaissanceRe Holdings Ltd. RNR reported first-quarter 2023 operating income of $8.16 per share, which beat the Zacks Consensus Estimate by 11.2%. The bottom line more than doubled year over year.

Total operating revenues increased 22.9% year over year to $1,931 million in the quarter under review. The top line outpaced the consensus mark by 1.4%.

Despite reporting better-than-expected results, its shares have declined 6.6% since it released first-quarter earnings on May 2. An elevated expense level might have acted as a partial offset to its quarterly results. Nevertheless, strong underwriting results, improved net investment income, higher Capital Partners fees and solid contributions from segments provided an impetus to its quarterly performance.

RenaissanceRe Holdings Ltd. Price, Consensus and EPS Surprise

 

RenaissanceRe Holdings Ltd. Price, Consensus and EPS Surprise
RenaissanceRe Holdings Ltd. Price, Consensus and EPS Surprise

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

 

Quarterly Operational Update

Gross premiums written of $2,790.3 million fell 5.2% year over year in the first quarter.

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Net premiums earned improved 13.1% year over year to $1,680.6 million. The figure surpassed the Zacks Consensus Estimate of $1,667 million.

The net investment income of RenaissanceRe amounted to $254.4 million, which increased more than three-fold year over year in the quarter under review on the back of improved yields from its fixed maturity and short-term portfolios. The reported figure surpassed the consensus mark of $202 million.

Total expenses increased 1.9% year over year to $1,335.9 million due to increased acquisition and operational expenses.

RNR reported an underwriting income of $369.6 million, which soared 84.6% year over year. The combined ratio improved 850 points (bps) year over year to 78% in the first quarter.

Book value per share came in at $116.44 as of Mar 31, 2023, which declined 4.1% year over year. Annualized operating return on average common equity of 29.7% improved 1,890 bps year over year.

Segmental Update

Property Segment

The segment’s gross premiums written amounted to $1,304.2 million, which declined 2.9% year over year in the first quarter due to softness in other property classes of business. Net premiums earned improved 11.1% year over year to $687.4 million, higher than the Zacks Consensus Estimate of $677 million and our estimate of $677.4 million.

Underwriting income of $298.7 million surged 61.6% year over year. The combined ratio improved 1,350 bps year over year to 56.6%.

Casualty and Specialty Segment

Gross premiums written of $1,486.1 million tumbled 7.1% year over year in the quarter under review. The metric was hurt by weakness in casualty classes of business. Net premiums earned increased 14.4% year over year to $993.1 million, higher than the consensus mark of $981 million.

The segment recorded an underwriting income of $70.9 million, which increased nearly five-fold year over year. The combined ratio of 92.9% improved 530 bps year over year.

Financial Position (as of Mar 31, 2023)

RenaissanceRe exited the first quarter with cash and cash equivalents of $1,063.7 million, which decreased 10.9% from the figure at 2022 end. Total assets of $38,270.3 million increased 4.7% from the 2022-end level.

Debt amounted to $1,141 million, which slipped 2.5% from the figure as of Dec 31, 2022.

Total shareholders’ equity of $5,865.5 million rose 10.1% from the 2022-end level.

In the reported quarter, net cash provided by operating activities of $435.7 million increased nearly three-fold year over year.

Capital-Deployment Update

RenaissanceRe did not buy back shares in the first quarter. It had a leftover buyback capacity of $500 million as of Mar 31, 2023.

Zacks Rank

RenaissanceRe currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Some Other Insurers

Of the other insurance industry players that have reported first-quarter 2023 results so far, the bottom-line results of Kinsale Capital Group, Inc. KNSL, Cincinnati Financial Corporation CINF and Aflac Incorporated AFL beat the respective Zacks Consensus Estimate.

Kinsale Capital delivered first-quarter 2023 net operating earnings of $2.44 per share, which outpaced the Zacks Consensus Estimate by 8.9% and our estimate of earnings of $2.20 per share. The bottom line improved 49.7% year over year. Total revenues amounted to $256.9 million, surpassing the Zacks Consensus Estimate by 3.2% and our estimate of $242.1 million. The metric rose 42.8% year over year in the quarter under review.

Net written premiums increased 38.1% year over year to $299 million in the quarter. The net investment income of KNSL increased 127.7% to $20.7 million. Underwriting income of $51.6 million improved 37.5% year over year, while the combined ratio improved 80 bps to 78.2.

Cincinnati Financial reported first-quarter 2023 operating income of 89 cents per share, which beat the Zacks Consensus Estimate by 30.9% and our estimate of 61 cents per share. However, the bottom line decreased 43.7% year over year. Total operating revenues in the quarter under review were $2,135 million, which beat the Zacks Consensus Estimate by 5.4% and our estimate of $1,820.8 million. The top line improved 13.5% year over year.

Net written premiums of CINF climbed 6% year over year to $2,019 million. Investment income, net of expenses, increased 14% year over year to $210 million.  The combined ratio deteriorated 1080 bps year over year to 100.7%.

Aflac reported first-quarter 2023 adjusted earnings per share of $1.55, which beat the Zacks Consensus Estimate by 12.3% and our estimate by 17.4%. The bottom line increased 7.6% year over year. AFL’s revenues dropped 7.2% year over year to $4,800 million in the quarter under review. The top line beat the consensus mark by 4.4% and our estimate by 6%.

Adjusted net investment income fell 3.9% year over year to $845 million. Adjusted revenues in the Aflac U.S. segment climbed 1.3% year over year, while the same for the Aflac Japan unit decreased 15.8% year over year.

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Aflac Incorporated (AFL) : Free Stock Analysis Report

Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

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Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report

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