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Written by: Philip van Doorn 06/18/12 - 6:49 AM EDT
Tickers in this article: RE PRA RNR BRK.B AFSI MRH MET

RenaissanceRe Holdings focuses primarily on property catastrophe reinsurance. The company reported first-quarter net income available to common shareholders of $201.4 million, or $3.88 a share, compared to a net loss of $248.0 million, or $4.66 a share, in the first quarter of 2011, when the company's claims and expenses totaled $658 million, from the earthquakes in Japan and New Zealand, and the flooding in Australia. During the first quarter of 2012, the company's net claims and expenses totaled just $15.6 million, reflecting "a light catastrophe quarter," according to CEO Neill Currie.

The company's net premiums written grew during the first quarter to $492.6 million from $452.6 million a year earlier, while net premiums earned declined to $278.7 million from $305.5 million. First-quarter underwriting income was $196.6 million, for a combined ratio of 29.4%, again reflecting the light losses.

The company reported other losses of $39.1 million during the first quarter, compared to other income of $50.1 million during the first quarter of 2011, "primarily due to trading losses within the Company's weather and energy risk management operations as a result of the unusually warm weather experienced in parts of the United Kingdom and parts of the United States during the first quarter of 2012."

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Deutsche Bank analyst Joshua Shanker has a "Sell" rating on RenaissanceRe Holdings, although the analyst on May 21 raised his price target for the shares by five dollars to $74, and raised his 2012 earnings estimate to $8.50 from $6.40, to reflect the light losses so far this year, while saying that forecasting earnings for a property reinsurer "is literally like trying to predict the weather."

Shanker said that "Assuming no additional losses in the Catastrophe segment through year-end, we forecast an 18.5% return on equity, or ROE," while pointing out that non-catastrophe "quarters used to produce ROEs in the 20-40% range," and adding that "the industry has become commoditized and ROEs have declined."

The analyst said that "RenRe is not a damaged company," but that "its market advantages have declined with time."

Interested in more on RenaissanceRe Holdings? See TheStreet Ratings' report card for this stock.

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