I believe there are many standards by which RenaissanceRe Holdings (NYSE:RNR)
(or "RenRe") can be called an excellent, if not one of the best,
reinsurance companies in the business. Since its founding in 1993, RenRe
has generated some of the best returns on equity within the space (a
20%-plus ROE since inception) due to very sophisticated risk analytics
and modeling. RenRe has also been one of the pioneers in managed cat
vehicles, an alternative capital option that generates significant
returns on capital for the company.
The problem is that the
property catastrophe market has too much capital today and pricing is
getting undisciplined, with underwriters like RenRe and Validus (NYSE:VR)
looking for double-digit declines in premiums. Although RenRe has been
growing its specialty reinsurance and Lloyds businesses, it's going to
be difficult to withstand the pressures in a business that makes up
close to 70% of premiums. Although RenRe's shares are still a little
undervalued relative to my long-term ROE assumptions, I see better
overall opportunities in life insurance.
Continue here:
Is Renaissance Re Still A Safe Haven Among Reinsurance Companies?
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