RenaissanceRe Holdings (NYSE:RNR)
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The Company with its operating subsidiaries, is a provider of reinsurance and insurance.
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The Company with its operating subsidiaries, is a provider of reinsurance and insurance.
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RenaissanceRe Holdings Ltd. (RNR) is primarily involved in the business of providing reinsurance and insurance to a wide range of customers. The Renaissance Reinsurance Ltd. is its principal subsidiary that offers property catastrophe and specialty reinsurance coverages to insurers and reinsurers on a worldwide basis. The company has two segments namely Reinsurance and Individual Risk.
RenaissanceRe has been registering record results, with annual net income of $761.6 million and 37.6% return on equity, in 2006. The company has also been able to notch better net claims and claim expense ratio due to favorable market conditions. Since past two years, reinsurance and individual risk contributes to revenue more or less 64% and 36% respectively. With combined ratio of 55.2% for first nine months it has second best combined ratio in Bermuda market.
In spite of good performance in 2006, it has reduced its estimated premium growth for catastrophe reinsurance business from 15% to 5%, as a result of legislative changes in Florida, which will be in effect from June 2007. Conversely, the company’s strategy to shrink in areas that do not meet its standards and concentrate in core growth areas might prove to be the driving force in coming years.
RNR is prepared to consider opportunities in lines of insurance and reinsurance business in which they have limited experience on basis of following criteria: attractive return on equity, the ability to develop or capitalize on a competitive advantage and opportunities that will not detract the company from its core reinsurance and individual risk operations.
Thus considering all factors, as of now company is expected to outperform. Its long term performance will depend on how it tackles legislative change in Florida and impact of catastrophic events, if it occurs.