+ Watch RNR
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The Company with its operating subsidiaries, is a provider of reinsurance and insurance.
large cash position; value
Low P/E, D/E, and EV/EBITDA. High ROE. Positive free cash flow. Has a dividend, with low dividend payout ratio.
I love the reinsurance business. Fantastic showing in return on equity.Price Target: $149
s&p 3 star (hold)
Identified with "Value-At-a-Reasonable-Price" screen from EVA dimensions. Identifies in a sector with the largest gap between price and worth. Cap shot score is 8/12
RNR is making a very decent money at its market and has (as I understand) built a good reputation in its market. The company's valuation is quite low and I presume that with time that will correct itself. When I look at the historical trends I see that compared to book value per share RNR:s value has declined greatly lately. Either the market was wrong a while ago, or it is wrong now. RNR:s Investor relations material has some extremely sound thinking and risk management factors in it. If they honestly think the same way that they write, I venture to say that this company will continue to do well.What is disturbing with companies like RNR is that if a extremely big catastrophe hits USA, RNR might go under with that. I guess a similar risk goes for many other companies also though, whether they are in insurance business or not.
An undervalued insurance company.
Morningstar 5-star pick, expecting 30% annualized return.
Were there any major hurricanes this year?
Low P/E, loads of cash, they would have to be a bunch of chimps to not grow the company.
Good growth rate vs. industry average
Look at the P/E !!!4.75 at the time of this rating. Seems like a great value play to me. Nice returns, solid business, good management.
The main issue here seems to be the effect of the new Florida insurance legislation. At $50 it seems that the lower estimates are already priced into the stock.
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.
Reinsurance sector should be in good position with increased pricing/reduced-exposure since Katrina. If we don't get another catastrophic storm season for a while results should be excellent.
RNR is conservative, high quality reinsurance company that's benefitting from a year of lower hurricane damage and increased pricing. The net effect is dramatically increased profitability that has made this stock undervalued. Earnings of $8.65 in '07 and long-term growth of 10% are the key numbers to think about. I'm buying this stock on a dip. The stock could rise past it's recent high of 60 to the 75 to 85 range from around 52 1/2 in the next year or so. I almost forgot to mention that there's a nice dividend while you wait.
Property insurance will do well at least until the next hurricane season. RNR has low debt and is going to rake in gigantic profits on premium hikes.
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