2. RenaissanceRe Holdings Ltd.
Shares of RenaissanceRe Holdings (RNR) of Pembroke, Bermuda, closed at $74.20 Thursday, returning 1% Year-to-date, following a 19% return last year. Based on a quarterly payout of 27 cents, the shares have a dividend yield of 1.46%.
The shares trade for 1.2 times tangible book value, and for less than eight times the consensus 2013 EPS estimate of $9.42. The consensus 2012 EPS estimate is $9.24.RenaissanceRe Holdings focuses primarily on property catastrophe reinsurance. The company reported first-quarter net income available to common shareholders of $201.4 million, or $3.88 a share, compared to a net loss of $248.0 million, or $4.66 a share, in the first quarter of 2011, when the company's claims and expenses totaled $658 million, from the earthquakes in Japan and New Zealand, and the flooding in Australia. During the first quarter of 2012, the company's net claims and expenses totaled just $15.6 million, reflecting "a light catastrophe quarter," according to CEO Neill Currie. The company's net premiums written grew during the first quarter to $492.6 million from $452.6 million a year earlier, while net premiums earned declined to $278.7 million from $305.5 million. First-quarter underwriting income was $196.6 million, for a combined ratio of 29.4%, again reflecting the light losses. The company reported other losses of $39.1 million during the first quarter, compared to other income of $50.1 million during the first quarter of 2011, "primarily due to trading losses within the Company's weather and energy risk management operations as a result of the unusually warm weather experienced in parts of the United Kingdom and parts of the United States during the first quarter of 2012." Deutsche Bank analyst Joshua Shanker has a "Sell" rating on RenaissanceRe Holdings, although the analyst on May 21 raised his price target for the shares by five dollars to $74, and raised his 2012 earnings estimate to $8.50 from $6.40, to reflect the light losses so far this year, while saying that forecasting earnings for a property reinsurer "is literally like trying to predict the weather." Shanker said that "Assuming no additional losses in the Catastrophe segment through year-end, we forecast an 18.5% [return on equity, or ROE]," while pointing out that non-catastrophe "quarters used to produce ROEs in the 20-40% range," and adding that "the industry has become commoditized and ROEs have declined." The analyst said that "RenRe is not a damaged company," but that "its market advantages have declined with time." Interested in more on RenaissanceRe Holdings? See TheStreet Ratings' report card for this stock.
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