Opinions
Neil Murdock
RenaissanceRe Holdings
RNR-N
TOP PICK
Jan 13, 2003
Stock price when the opinion was issued
You might be interested:
Has this had an over correction and is a time to get in? A reinsurance company is effectively an insurer of insurance companies. An insurance company will take a portion of risk and then will sell 50% of your insurance policy to other insurance companies. The reinsurance business in the last few years has suffered from excess capacity, too much capital in the system. The good thing for reinsurance companies are higher interest rates, and a bunch of catastrophic insurance hits. What ended up happening in the last few years is that there hasn’t really been any major catastrophes and people kept putting money in because they thought there weren’t a lot of risks. We are clearly going to see some issues from hurricane Harvey and Irma. If they take a bite out of the reinsurance market, then we will have an opportunity to exit the market as well as looking for higher returns. Because of this, it is an interesting category to look at. He would prefer others.
RNR is a reinsurance provider, managing risks for property, casualty and specific perils. The company managed its way way through this years severe storms in Q4. It trades at 10x earnings, 1.6x book and supports a 20% ROE. We recommend placing a stop-loss at $170, looking to achieve $242 -- upside potential of 16%. Yield 0.7%
(Analysts’ price target is $241.62)We reiterate this provider of insurance and reinsurance as a TOP PICK. It trades at 6x earnings, 1.3x book and supports a 28% ROE. We like that quarterly cash reserves continue to grow. It is a well placed niche operator, that avoids credit decay and the threat of rising deposit costs like banks. We recommend trailing up the stop (from $198) to $208, looking to achieve $268 -- upside potential of 20%. Yield 0.7%
(Analysts’ price target is $268.40)We again reiterate RNR, a reinsurer of catastrophic natural disaster insurance, as a TOP PICK. Cash reserves are growing, along with premiums collected. It trades at 7x earnings and 1.3x book value, while supporting a 24% ROE. We continue to recommend a stop at $208, looking to achieve $269 -- upside potential of 18%. Yield 0.7%
(Analysts’ price target is $269.00)With analysts expecting a 23% increase in EPS and revenues up 38% when earnings get reported this week, we reiterate RNR as a TOP PICK. The reinsurance specialist trades at 7x earnings, 1.3x book value and supports a 24% ROE. We continue to recommend a stop at $208, looking to achieve $268 -- upside potential of 18%. Yield 0.6%
(Analysts’ price target is $268.00)Our PAST TOP PICK with RNR has triggered its stop at $253. To remain disciplined, we recommend covering the position at this time. When combined with our previous guidance, this will result in a net investment gain of 17%.