RenaissanceRe Holdings Ltd. (RNR) announced its fifteenth consecutive annual increase in quarterly dividend on Wednesday. The Board of RenaissanceRe also approved an increase in the stock repurchase program.
RenaissanceRe declared its quarterly dividend of 25 cents per share. The dividend will be paid on March 31, 2010, to shareholders of record as on March 15, 2010. This represents an increase of 4.2% over the last paid dividend of 24 cents.
Concurrently, the Board of Directors of RenaissanceRe’s has also approved an increase in the stock repurchase authorization to $500 million with no set expiration date. The current authorization includes the remainder under prior authorizations.
Over the last 30 days, 4 of the 11 analysts covering the stock have lowered estimates for the first quarter of 2010, while no upward revisions were witnessed. Currently, the Zacks Consensus Estimate for first quarter is operating earnings of $2.01 per share, which would be up by 32% over the year-ago quarter. The absence of upward estimate revisions for the first quarter indicates a likelihood of downward pressure on the performance of the stock in the near term.
With respect to earnings surprises, the stock has been almost steady over the last four quarters, with three positive surprises. The average remained positive at 29.9%. This implies that RenaissanceRe has surpassed the Zacks Consensus Estimate by 29.9% over that period. The downside potential for the estimate for the first quarter, essentially a proxy for future earnings surprises, currently stands at 1%.
RenaissanceRe’s fourth-quarter operating earnings of $2.82 per share was substantially ahead of the Zacks Consensus Estimate of $2.47. This also compares much favorably with operating earnings of 47 cents in the year-ago quarter. The better-than-expected results were primarily aided by substantially higher revenues and lower expenses. Also, a relatively low level of insured catastrophe losses, favorable development on prior-year reserves and solid investment results were among the positives.
We anticipate limited upside potential for RenaissanceRe shares in the coming quarters as the company faces increasing challenges in its investment portfolio, though it continues to benefit from underwriting discipline, capital strength, and strong reputation.
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