RenaissanceRe Holdings Ltd. (RNR), a global provider of reinsurance and insurance products, reported a wider-than-expected third-quarter loss driven by weather-related losses. The season witnessed a multitude of natural catastrophes, including Hurricane Ida and severe flooding in North-Western Europe. Shares rose 1.5% to close at $149.78 on October 25.
The company reported a loss of $8.98 per share, much larger than the consensus-estimated loss of $7.75 per share. In the prior-year quarter, RNR posted a quarterly loss of $2.64 per share.
Total revenues climbed 15.8% year-over-year to $1.54 billion. RNR’s net premiums earned grew 51%, while its net investment income declined 6.3% compared to the year-ago period.
RNR’s weather-related losses had a net negative impact on its underwriting results to the tune of $1.05 billion and negatively impacted its earnings to shareholders by $726.79 million. (See Insiders’ Hot Stocks on TipRanks)
Noting that the third-quarter results were impacted by natural catastrophes, Kevin J. O’Donnell, President, and CEO of RNR said, “As we look forward to 2022, our fortress balance sheet provides us with great flexibility to create value for shareholders. We believe we will have ample capacity to renew existing risk and underwrite new opportunities if sufficiently profitable, but are equally motivated to return excess capital to shareholders at what we consider very attractive multiples.”
In response to RNR’s quarterly performance, Wells Fargo analyst Elyse Greenspan maintained a Buy rating on the stock with a price target of $189, implying 26.2% upside potential to current levels.
Greenspan said, “Ren was able to fully deploy its $1 billion of newly raised equity capital at 1/1/21 and still has capital for potential opportunities that could emerge during the other renewal seasons this year. As a result, we expect Ren to show significant premium growth in 2021 and do not think this is factored into where the shares are trading today.”
Overall, the stock has a Hold consensus rating based on 1 Buy, 2 Holds, and 1 Sell. The average RenaissanceRe price target of $169 implies 12.8% upside potential to current levels. Shares have lost 14.4% over the past year.
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