Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at RenaissanceRe (NYSE: RNR) and the best and worst performers in the reinsurance industry.
This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. The primary headwind remains the immense and concentrated exposure to large-scale catastrophe losses, as the growing impact of climate change challenges traditional risk models and creates significant earnings volatility. Additionally, they face the risk of adverse prior-year reserve development, where claims prove more costly than anticipated, while the eventual influx of new capital from alternative sources threatens to soften the market and compress future returns.
The 6 reinsurance stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 4.1%.
Thankfully, share prices of the companies have been resilient as they are up 5.6% on average since the latest earnings results.
RenaissanceRe (NYSE: RNR)
Born in Bermuda after the devastating Hurricane Andrew created a crisis in the catastrophe insurance market, RenaissanceRe (NYSE: RNR) provides property, casualty, and specialty reinsurance and insurance solutions to customers worldwide, primarily through intermediaries.
RenaissanceRe reported revenues of $3.21 billion, up 13.4% year on year. This print exceeded analysts’ expectations by 8.7%. Overall, it was an exceptional quarter for the company with a beat of analysts’ EPS and revenue estimates.
Interestingly, the stock is up 9.3% since reporting and currently trades at $259.42.
Best Q2: Hamilton Insurance Group (NYSE: HG)
Founded in 2013 and operating through three distinct underwriting platforms across four countries, Hamilton Insurance Group (NYSE: HG) operates global specialty insurance and reinsurance platforms across Lloyd's, Ireland, Bermuda, and the United States.
Hamilton Insurance Group reported revenues of $740.8 million, up 26% year on year, outperforming analysts’ expectations by 22.1%. The business had an exceptional quarter with a beat of analysts’ EPS and revenue estimates.
Hamilton Insurance Group scored the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 13.6% since reporting. It currently trades at $24.47.
Is now the time to buy Hamilton Insurance Group? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q2: Reinsurance Group of America (NYSE: RGA)
Operating behind the scenes of the insurance industry since 1973, Reinsurance Group of America (NYSE: RGA) provides life and health reinsurance services to insurance companies, helping them manage risk and meet regulatory requirements.
Reinsurance Group of America reported revenues of $5.68 billion, up 10.9% year on year, exceeding analysts’ expectations by 1.1%. Still, it was a slower quarter as it posted a significant miss of analysts’ net premiums earned and EPS estimates.
Interestingly, the stock is up 1.1% since the results and currently trades at $194.69.
Read our full analysis of Reinsurance Group of America’s results here.
AXIS Capital (NYSE: AXS)
Founded in the aftermath of the 9/11 attacks when insurance capacity was scarce, AXIS Capital Holdings Limited (NYSE: AXS) is a global specialty insurer and reinsurer that provides coverage for complex risks across property, liability, professional lines, cyber, and other specialty markets.
AXIS Capital reported revenues of $1.63 billion, up 8.6% year on year. This print was in line with analysts’ expectations. More broadly, it was a mixed quarter as it also logged a beat of analysts’ EPS estimates but a significant miss of analysts’ net premiums earned estimates.
The stock is flat since reporting and currently trades at $96.79.
Read our full, actionable report on AXIS Capital here, it’s free for active Edge members.
Fidelis Insurance (NYSE: FIHL)
Founded in Bermuda in 2014 and designed to adapt nimbly to evolving market conditions, Fidelis Insurance (NYSE: FIHL) is a global specialty insurer and reinsurer that provides customized coverage across property, specialty, and bespoke risk solutions.
Fidelis Insurance reported revenues of $589.3 million, up 9.1% year on year. This number missed analysts’ expectations by 8.9%. Zooming out, it was a satisfactory quarter as it also produced a beat of analysts’ EPS estimates but a significant miss of analysts’ revenue estimates.
Fidelis Insurance had the weakest performance against analyst estimates among its peers. The stock is up 4.9% since reporting and currently trades at $18.31.
Read our full, actionable report on Fidelis Insurance here, it’s free for active Edge members.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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